Below is an excerpt from a complimentary research note by our Healthcare Team of Tom Tobin, William McMahon, and Justin Venneri. If you are interested for more Healthcare research, check out our Sector Pro Product Health Care Pro. Click HERE to learn more.
As we referenced yesterday, the percentage of COVID-19 cases that are being hospitalized is dropping as we head into the current wave.
We pointed out that Quest Diagnostics (DGX) and AMN Healthcare Services (AMN) are likely beneficiaries. For DGX, there is a straightforward connection between COVID cases: the forecast from IHME that shows this wave peaking in January 2022 impacts volume, revenue, EBITDA, and EPS.
For now, we're assuming that Quest's base business continues to ramp as in-person care returns, but that assumption rests squarely on the ratio of COVID cases to COVID Hospitalizations remaining controlled.
For AMN, COVID drives pricing significantly higher on the margin as demand for critical care staff reaccelerates and labor supply shrinks (see UHS' recent comments below for some more detail).
But this next wave is likely to also be characterized by more labor strife and disruption, a key driver for AMN's Nurse and Allied revenue.
The Health Care Labor Force is already on thin ice with record Quit Levels and unfilled vacancies reflecting burnout and dissatisfaction with management, alongside rising inflation facing all consumers.
Another COVID-19 wave seems likely to push more staff members over the edge.
Click HERE to listen to Healthcare analyst Tom Tobin discussing the ratio of Covid cases to hospitalizations, noting AMN Healthcare Services, Inc. (AMN), Quest Diagnostics Incorporated (DGX), and Teladoc Health, Inc. (TDOC)