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 pushed our Quad-Factor model into the XHE and XBI yesterday and confirmed with data what Quad 4 has been showing us for weeks. XBI is a short not because it feels like one, or because we can narrate the decline as what the market likes or doesn't like, but rather its the factor quartiles for revenue estimate momentum, short interest, EV/Sales, EBITDA margin, debt to total capital. Just as the XBI is a short based on the weighted factors, XLV is a long for the same reason.
The weighted estimate momentum for XLV is negative, a hangover from Omicron, but we think we're close to seeing the turn to positive based on trends we're seeing in the US Medical Economy; easing labor pressures and accelerating volume. We heard specific anecdotes out of THC and ACHC (listed below) in their sell side conferences appearances yesterday. THC confirmed our view that rates are coming in and that surgical cases are insulated from the wild swings that Omicron caused. ACHC said the same thing on labor costs and touched on the specifics of staffing their CTCs which we highlighted when we moved it from the short side to the Long Bench on our position monitor.
POSITION MONITOR
CLICK HERE for the updated workbook.
ESTIMATE MONITOR
We like the opportunity for DOCS even as pharma marketing moves back to in person detailing. The factors for DOCS are negative in Quad 4, so we’ll be patient, but with both 2022 and 2023 estimates moving higher, estimate momentum (slope of the line) is positive and driving share price.
PERFORMANCE MONITOR
DOCS following the estimate trend in performance terms. Still a factor short in Quad 4, but we like the backdrop for digital marketing in pharma. Still looking for a spot on LFST which is on our Short Bench.
FACTOR MONITOR
The Quad 4 playbook reversal with short interest outperforming. The estimate momentum (MicroQuad) has been less differentiating as has EV and Debt.
NEWS & POSITION MONITOR/WATCHLIST COMPANY UPDATES
ACHC UBS Global Healthcare Conference
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We do not see the need for contract labor across all of our markets. It really depends on of which market we're looking at and where they are with recruiting and other efforts or just where the market is in terms of the supply of nurses.
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So we don't have the full 24/7 staffing of those CTCs. And there are nurses that we hire. There's a physician, and then there's counselors as well as a clinic director. But the nurses, usually, you only need about 1 RN, and then the other nurses tend to be LPNs. So that -- it makes it a very different nursing profile compared to an in-patient facility that does have a higher level of RNs.
THC Barclays High Yield Bond & Syndicated Loan Conference
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And a significant proportion of the free cash flow in USPI and Conifer are insulated largely from the situation that we see with respect to nursing contract labor.
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But I think many people, including in the acute care industry, the broad acute care industry signed up for 12- to 16-week contracts, which are now starting to come up. That's releasing some of the pressure on the contract labor rate today. So I think that's important.
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Less than 10% of -- the contract labor cost of USPI and Conifer are less than 10% of what a typical acute care hospital has as far as our portfolio goes. So very little contract labor. The USPI's total labor spend is only $0.25 on the dollar, okay? So I mean, it's incredibly important.
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So I think we're really encouraged by the way that the last few months of the quarter ended up after the Omicron wave and see continued growth in the volume. So we hope to [ equip ] that 100% level... More screenings and just general routine GI that they may have pushed off or avoided for a couple of years.
TDOC, AMWL, Telemedicine: Michigan hospital adds telemedicine program for specialty care patients (Becker's). I hadn't heard of VeeOne Health, which recently changed its name, so I thought maybe we had heard of them. The company's name was VeeOne Health, so I'm a little confused. Is this really another "global leader in the Virtual Care as-a-Service (VCaaS)" space? Regardless, there's a lot of competition and very little white space out there.
Hospitals, Health Plans: Insurers estimate No Surprises Act blocked 2M bills in two months (Modern Healthcare, 5/24). 2 million fewer surprise bills in January and February!? Potentially 12 million fewer this year? A good thing for patients = a headwind for hospital revenue.
Pharmacies/PBMs, CVS, UNH, CI: Pharmacy groups pressure FTC to ramp up scrutiny and enforcement of PBMs (Fierce Healthcare). Will this time be different?
Genetic Testing: Genetics Startup Pleno Launches Out of Stealth with $15M (HIT Consultant). The founder, Pieter van Rooyen, sold his last company - Edico Genome - to ILMN for $100M. "The newly raised funds will support the development of Pleno’s Hypercoding™ instrument platform, capable of detecting up to 10,000 targets per sample and processing up to 10,000 samples per day, via a simple, low-cost workflow. This is equivalent to 1,000 times the target multiplexing of polymerase chain reaction technology (PCR) and 100 times the sample throughput of next-generation sequencing (NGS)."
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
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.
