Good Morning,
We're making solid progress on our Advance Primary Care tracker this week, which a number of clients have asked about, and are getting close to finishing it off. Send us an email if you have any questions or would like to see/discuss any of the data. - .
KEY CALL OUT
ABT reported a decent quarter that looks similar to the healthcare #reopen momentum we've been seeing so far in earnings, but they didn't raise guidance and will continue to have COVID comp headwinds through 2H21. ABT's revenue MicroQuad shows estimate momentum continues to slope negative, although less worse now as things accelerate and MicroQuad 4 rotates into MicroQuad 1. In Macro Quad 3 the factor set up for ABT is positive, big cap, liquid, low beta, low leverage, but estimate momentum has more work to be done to get into MicroQuad 2, either the passage of time or upward revisions. On the upward revision front, we're reasonably unconcerned about the delta variant; it's bullish for COVID testing, which could be a tailwind for ABT, but not for lockdowns. The unvaccinated population is now almost exclusively below 65 yo where the risk of hospitalization and death are extremely low. A new variant could change this, but more likely a little dose of media fear likely boosts vaccination rates, heading off the threat.
POSITION MONITOR
Hedgeye Health Care Position Monitor
NEWS & POSITION MONITOR/WATCHLIST COMPANY UPDATES
ABT, a MicroQuad 1 stock and a smaller short allocation in the model portfolio, reported strong results yesterday, continuing the trend we've seen with HCA, JNJ, and ISRG, but reaffirmed guidance for the year. Without estimates moving higher, there won't be a move out of MicroQuad 1. A quick link to an easy read highlights the plusses and [big] minus: Abbott latest to report pandemic recovery in Q2 as procedures return, COVID-19 tests drag diagnostics (MedTech Dive): "Like J&J, Abbott saw medical device sales return to pre-pandemic levels in the second quarter as the coronavirus impact continued to wane. Compared to pre-pandemic sales in 2019, Abbott's medical device sales increased 15.6% on an organic basis in the second quarter." Unlike JNJ, ABT is COVID-comp(+) and its results were dampened by worse than expected testing trends. A quick quote from the earnings call on Libre: "...Diabetes Care, where strong growth was led by FreeStyle Libre sales of more than $900 million. The global user base for Libre grew to approximately 3.5 million users, including approximately 1 million users in the U.S."
ILMN / Grail (-) - European Commission launches months-long antitrust investigation into Illumina’s $8B bid for Grail (Fierce Biotech) - "The European Commission has opted for a deeper probe into the DNA sequencing giant’s $8 billion proposal for the cancer blood test maker Grail, citing concerns that the vertical takeover of its former spinout could harm R&D efforts at competing diagnostic companies." The FDA is taking a wait-and-see approach after sounding bearish on the deal initially, but things appear to be escalating w/ European regulators.
WBA / VillageMD Expand to Northern Indiana, Opening New Full-Service Primary Care Practices This Year (PR) - The physician/pharmacist strategy continues to expand, as a quick reminder, the "overall goal of opening at least 600 Village Medical at Walgreens in more than 30 U.S. markets over the next four years, with the intent to build hundreds more thereafter. The expansion is part of the $1 billion accelerated investment effort announced in January 2021 to deliver high-quality healthcare to patients, with Village Medical primary care physicians and Walgreens pharmacy services through a coordinated care delivery model."
SEM will release 2Q21 financial results on Thurs, August 5, after the market closes, but the conference call is on the 6th in the morning (9:00 am ET). ATIP will have already reported earnings, but we'll pay close attention to SEM's outpatient [therapy] commentary.
HIMS will report 2Q21 financial results on Wed., August 11, after market close (conference call at 5:00 pm ET). We'll be scanning this one for clues about customer acquisition costs, churn, and overall growth.
MICROQUADS* & BACKTESTS
As a reminder, if you have questions about the MicroQuad process, please try to find ~20 minutes to watch our Dec 30, 2020 call replay: Process & Utility of the Hedgeye Health Care #MicroQuads - CLICK HERE for event details (includes video link and materials link).
CALENDAR
All data available upon request. Please reach out to with any feedback or inquiries.
Have a great day out there!
Thomas Tobin
Managing Director
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Justin Venneri
Director, Primary Research
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William McMahon
Analyst
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*Please note, not all Position Monitor names make it into the MicroQuad output - most likely due to a lack of sufficient historical trading and estimate data.
