Good morning, If you have questions or anything else on your mind, email and we'll get back to you ASAP.
KEY CALL OUT
We added TFX to the long bench this week based on our Quad-Factor screen that combines a Macro Quad overlay, our estimate momentum measure MicroQuad, and the most relevant factors across macro environments. TFX trades at high EV/EBITDA multiple which "feels high" and based on the back test is high as it sits in the upper quartile which back tests negatively for Quad 4 performance. A few more turns of the multiple, though, and most of the remaining factors will line up. And the fundamentals should begin to come into focus, as we touched on yesterday, the comp set up for med tech begins to improve for both Health Care macro and Delta Variant as we enter 3Q22.
This morning we also applied the Quad-Factor back test to the XBI and XHE ETFs and weighted the key factors by the holdings. While the macro set up for XHE should be similar to TFX and other med tech names. but short interest, margins, and estimate momentum are less favorable; shortable on factors, but not a strong signal. XBI lines up way better on the short side, which really isn't a surprise, but still helpful to quantify the key factors as it hits the negative quartiles for short interest, EV/Sales, and margins.
POSITION MONITOR
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ESTIMATE MONITOR
AMN continues to show positive momentum for 2022, with no follow through for 2023. DOCS on the other hand showing momentum for both 2022-2023, a positive back drop. Eyecare weak at both COO and EYE for next year as well. We’ve stayed short EYE, although that seems played out to an extent.
PERFORMANCE MONITOR
Med tech and Hospitals seem likely to turn positive as we get into 2Q earnings and 3Q22 guidance. For now factors and Quad 4 dominate. Fundamentally we are not seeing the deceleration in medical spending yet. Biotech should remain weak and continue to underperform.
NEWS & POSITION MONITOR/WATCHLIST COMPANY UPDATES
PGNY: Progyny Lands Employer Benefits Expert in Expansion of Leadership Team (Company News). Bogorad sounds like a great addition to PGNY's team - a former client (Cerner) with a + experience using the benefit. "Bogorad joins Progyny as the company comes off a record-breaking sales season..."
PGNY, TDOC, Benefits: How employers can think about designing benefits for diverse workforces (Fierce Healthcare). Quick read and reminder that it can be challenging to engage employees even if a company has a great benefits package. "Designing benefits for a diverse workforce—and ensuring they use them—also requires employers to dig deep on navigation, said Ginger Miller, director of health and benefits at Utz Brands, a national snack food company. Such outreach must be culturally competent and available in multiple languages, she said." Another data point on fertility benefits demand -> about 1/3 of employees are interested in family planning/fertility benefits.
CTKB: Cytek® Biosciences Receives CE Marking for Series of cFluor® Reagents, TBNK Kit (Company News). Positive news on the expansion to clinical for CTKB. "This achievement makes cFluor reagents available for clinical diagnostic use in hospitals, laboratories and clinics across Europe, and positions the company on a path to offering a total cell analysis solution to the European market – from instruments to reagents."
GH: First Guardant Health Liquid Biopsy Testing Service in Europe Now Operational at Vall d’Hebron Institute of Oncology (bw). Positive for GH and its tech/liquid platform. "Guardant Health and VHIO established the partnership in January 2021 to give more patients access to Guardant Health’s industry leading liquid biopsy technology. This testing service will provide essential genomic information through comprehensive genomic profiling (CGP) for patients with any solid cancerous tumor... We have performed an in-house extensive analytical validation of the assay and we attain very high levels of sensitivity and specificity with the test,” said Dr Ana Vivancos, Group Leader of the VHIO Cancer Genomics Group."
ACHC: Management presented at a sell side conference yesterday, and when asked about ACHC's ability to control labor costs relatively well, Christopher Hunter said, "It's good old-fashioned blocking and tackling and execution, but that really is what has enabled the company to put up the results that it has and I think that we'll be able to continue to do so into the future." Management also noted that ACHC hasn't historically tracked to the BLS metric(s), which may include more premium pay and service line differences.
Telehealth/Hybrid Care (ONEM, OSH, CANO, et al.): In-person, telehealth combo expands access while maintaining quality, study finds (Becker's, RAND). "A hybrid approach to primary care that offers in-person, video and occasional audio-only appointments can increase access to medical services while maintaining quality, a recent Rand Corp. report concluded."
CALENDAR
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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
Associate
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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.
