>>> Abbott gets FTC notice for information on infant formula products
February 17, 2023
(Reuters) -Abbott Laboratories said on Friday it received a civil investigative demand in January from the Federal Trade Commission related to a probe of the companies participating in bids for women, infants and children formula contracts.
Panicked parents had emptied baby formula aisles at supermarkets last year as a recall of formulas produced at an Abbott facility in Michigan over complaints of bacterial infections worsened a shortage started by pandemic-led supply chain issues.
The FTC had launched an inquiry last year into the shortage for infant formula in the United States and had said it would examine the pattern of mergers and acquisitions in the formula market.
The agency declined to comment on the matter on Friday.
The Wall Street Journal had reported in January that Abbott's Michigan plant faced a criminal investigation by the Justice Department.
On Friday, Abbott said in a regulatory filing that multiple civil lawsuits have been filed against the company regarding its manufacturing of certain powder infant formula products.
Shares of the company were down 1.4% in extended trading.
United Healthcare - >>> Why you should care about CVS acquiring Oak Street Health
by Anjalee Khemlani
February 13, 2023
CVS's (CVS) announcement of its $10.6 billion deal for Oak Street Health (OSH) is just the latest example of how major health-care players are slowly expanding their reach throughout different segments of the industry.
In the past two decades, CVS has acquired an insurance company (Aetna), a pharmacy benefits manager (Caremark), launched its Minute Clinic, and is now expanding into more clinical care services. In addition, it is pursuing a strategy to help to diversify clinical trials.
All the major health care companies are in some way pursuing what is known as "vertical integration," or combining their business with other segments of the health industry.
Take for example the biggest commercial insurer, United Healthcare (UNH). It has the Optum brand, a pharmacy benefit manager and a healthcare provider used in physician's offices, and OptumRx which helps United compete in the pharmacy benefits space.
Experts have ongoing worries about the impact of these behemoth companies, especially the quality of care received by patients.
But there may not be enough data yet to determine if the benefits — ideally lower costs and better patient adherence to care plans — outweigh the risks of more centralized industry control.
In a separate, recent report from the New England Journal of Medicine's Catalyst group, CVS chief medical officer Dr. David Fairchild said the pandemic showed patients' affinity for convenience in health care.
"I think the health care industry still needs to focus on how to make health care more convenient and accessible because this is what people want and need," Fairchild said.
Oak Street Health, whose patients are older adults, is focused on a type of payment model that has been long-discussed but which has never taken off in a big way: value-based care.
This, according to health economist Craig Garthwaite, is key.
"If people have always said the problem with U.S. health care is the fee-for-service system where we don't really have a system to buy health, we have a system to buy health care services and everyone in this system makes money when you consumer more care...this takes away that incentive," said Garthwaite, director of the Program on Healthcare at the Kellogg School of Management at Northwestern University.
"They make money, now that they are owned by an insurance company ... when you use less health care," Garthwaite explained.
But despite being owned by an insurer, the company says it will remain agnostic toward insurers that reimburse it for services.
CVS sees growth opportunity in Oak Street, which has already been able to scale to 169 clinics and is expected to reach 300 by 2026. CVS benefits from the transaction as it can contribute to Oak Street patient growth through its channels, as well as driving greater utilization of CVS pharmacy and Caremark, according to CFO Shawn Guertin during a recent earnings call.
"There's obviously things we can do for plan design offerings to highlight the Oak network or the Oak clinics. We can do that with the Aetna members. I mentioned Signify before as a potential sort of source of members, but when you just think about the vast array of members that we interact with and the vast array of seniors that we interact with every year, across this company, this is a much wider catch basin if you will for potential growth," Guertin said.
Analysts have hailed the move, even while criticizing the price tag.
David Larsen, an analyst at BTIG, said in a note that this new primary care business, along with its recent acquisition of Signify, makes CVS "one of the most dominant forces in health care services."
Larsen noted that while the transaction has been talked about for a while — CVS said it had been doing due diligence for 15 months prior — he was "somewhat surprised at the pace with which the market is moving" with regard to primary care acquisitions.
Cigna (CI) and Walgreens (WBA) recently invested in VillageMD, and Walgreens is acquiring Summit Health for $8.9 billion, while Amazon (AMZN) acquired One Medical (ONEM).
Scott Dunn, lead healthcare analyst at CB Insights said major health-care brands like CVS are no longer simply insurers or drug store chains.
"These moves demonstrate the continued push by many high-profile pharmacies into fast-growing healthcare markets such as senior care, primary care, and home health," Dunn said in a recent note.
InMode - >>> Better Medtech Stock to Buy: InMode or Outset Medical?
By Keith Speights
Feb 15, 2023
Both InMode and Outset Medical have solid growth prospects.
The main knock against Outset is that it isn't profitable yet, while InMode already generates strong profits.
The better medtech stock to buy could depend on your investing time horizon.
Sometimes the best opportunities are found in the laggards. Take medical technology (or medtech) stocks, for example. As a group, medtech stocks haven't performed well over the last year. However, their long-term potential should be great.
Two underperforming medtech stocks especially stand out. Both InMode (INMD 0.78%) and Outset Medical (OM -1.71%) reported their fourth-quarter results this week.
Which is the better medtech stock to buy? Here's how InMode and Outset stack up against each other.
InMode is an Israel-based company that makes radio-frequency (RF) energy technology used for face and body contouring, medical aesthetics, and women's health. Outset Medical is a California-based company that makes hemodialysis systems. The growth prospects for both companies appear to be strong.
On Tuesday, InMode reported record revenue of $133.6 million in the fourth quarter of 2022, up 21% year over year. It also achieved record adjusted earnings of $66.4 million. The company projects full-year 2023 revenue of between $525 million and $530 million. The midpoint of this range reflects 16% growth.
Wall Street thinks that InMode will be able to deliver average annual earnings growth of 33% over the next five years. Unsurprisingly, analysts are bullish about the stock, with the average 12-month price target reflecting an upside potential of nearly 40%.
Outset Medical announced its Q4 results after the market closed on Monday. The company's revenue jumped 15% year over year to $32 million. However, Outset remains unprofitable, posting a Q4 net loss of $41.4 million.
The company expects to increase its revenue by 22% to 30% in 2023. Over the longer term, Outset hopes to capture a big chunk of the U.S. total addressable market of $11.4 billion. The majority of this market is in home dialysis. Outset thinks that its Tablo system offers significant competitive advantages for home use.
InMode had a cash stockpile (including cash, cash equivalents, marketable securities, and short-term bank deposits) of $547.4 million at the end of 2022. The company should continue to be profitable. Therefore, it won't need to tap its cash to fund ongoing operations.
Outset Medical's cash position totaled $290.8 million as of Dec. 31, 2022. The company isn't likely to turn a profit in the near future, though. This means that Outset will use some of its cash to fund operations.
The good news is that management expects to burn less cash in 2023 than in 2022. Outset also has around $200 million that it can draw down with its term loan facilities.
InMode's shares currently trade at 13.2 times expected earnings and nearly 6.9 times trailing-12-month sales. The stock's price-to-earnings-to-growth (PEG) ratio is 2.9. This level indicates a relatively high valuation based on growth projections.
Because Outset Medical isn't profitable yet, earnings-based valuation metrics aren't applicable. However, the stock trades at nearly 12 times sales.
Better medtech stock?
So which of these two medtech stocks is the better pick right now? I think that InMode is more likely to beat the market in 2023 than Outset Medical is.
Analysts absolutely love the stock. Investors cheered InMode's Q4 update. Barring a severe recession, the stock should deliver solid returns this year.
Over the longer term, though, I suspect that Outset Medical will be the bigger winner. The company is currently only scratching the surface of its opportunity in the home dialysis market.
In my view, investors don't have to go with only "in" or "out." Both InMode and Outset are great picks.
>>> Quipt Acquires $60 Million in Revenues and $13 Million Adjusted EBITDA with Strategic Acquisition of Great Elm Healthcare, LLC
Quipt Home Medical Corp.
January 3, 2023
Quipt Reaches $220 Million in Annualized Revenues and $49 Million of Anticipated Annualized Adjusted EBITDA
CINCINNATI, Jan. 03, 2023 (GLOBE NEWSWIRE) -- Quipt Home Medical Corp. (“Quipt” or the “Company”) (NASDAQ:QIPT; TSXV:QIPT), a U.S. based home medical equipment provider, focused on end-to-end respiratory care, is very pleased to announce that it has acquired Great Elm Healthcare, LLC (“Great Elm”), a division of Great Elm Group, Inc. (NASDAQ:GEG) (the “Acquisition”), with an effective date of December 31, 2022. Great Elm operates a complete line of respiratory related durable medical equipment service locations across eight states in the Midwest, Southwest and Pacific Northwest. Based on an independent quality of earnings report, Great Elm had unaudited revenues for the 12 months ended August 31, 2022 of $60 million ?with an Adjusted EBITDA (defined below) of $13 million. As a reminder, all figures stated are in USD.
Establishes Quipt as a leading respiratory-focused home medical equipment suppliers in the United States with significant scale, serving 270,000 patients with 32,500 referring physicians across 115 locations in 26 states.
The combination of Quipt and Great Elm has a combined Annualized Revenue (defined below) and Annualized Adjusted EBITDA (defined below) of $220 million and $47 million, respectively, based on Quipt’s reported audited results for the fourth quarter ended September 30, 2022 and Great Elm’s unaudited results for the 12 months ended August 31, 2022.
Pursuant to the membership interest purchase agreement dated January 3, 2022, the total purchase price is $80 million (subject to customary adjustments of Great Elm’s working capital, existing debt and expenses), comprised of $73 million in cash, $5 million in assumed debt, and 431,996 Quipt common shares at a deemed price per share equal to $4.63, representing a purchase price of 6.0x Adjusted EBITDA pre cost savings and synergies.
Quipt has identified $2 million in cost savings and synergies, which is expected to be captured over the first six months and is expected to result in Great Elm’s Anticipated Annualized Adjusted EBITDA (defined below) of $15 million, representing a purchase price of 5.2x Adjusted EBITDA post cost savings and synergies. The Anticipated Annualized Adjusted EBITDA is $49 million for Quipt.
Post-Acquisition, Quipt’s Recurring Revenue (defined below) are expected to increase from 77% for the fiscal year ended September 30, 2022, to 82%, on a pro forma basis.
Quipt to drawdown a total of $73 million from its $110 million senior secured credit facility (announced on September 19, 2022), maintaining a conservative balance sheet with net debt to Adjusted EBITDA of 1.96x on a pro forma basis.
Expected to be financially accretive to overall growth and cash flow.
Adds tremendous cross-selling opportunities in which Quipt may sell products in Great Elm locations, including ventilation and oxygen.
Adds significant opportunity to increase resupply revenue and margins once Great Elm’s sleep patients are onboarded to Quipt’s resupply program.
Great Elm's footprint is expected to create additional opportunities to expand Quipt’s access for accretive tuck-in acquisitions.
The combination of two leading clinical respiratory providers is expected to enhance Quipt’s patient-centric ecosystem across the entire company by further collaborating with key sales touchpoints, including healthcare providers like hospitals, doctors, rehab centres, and long-term care facilities.
With this Acquisition Quipt successfully surpasses its previously announced outlook of achieving Annualized ?Revenue by the end of calendar 2022 (Q1 2023) of $180-$190 million.?
Great Elm is a leading operator of respiratory related durable medical equipment service with 21 locations across eight states in the Midwest, Southwest, and Pacific Northwest, adding seven new states to Quipt’s current geographic coverage including Arizona, Alaska, Iowa, Kansas, Nebraska, Oregon, and Washington. The combination of Great Elm and Quipt positions Quipt to become a national HME provider with near coast to coast operations. The Acquisition adds 8,500 referring physicians bringing Quipt’s referring network base to over 32,500, and increases Quipt’s active patient count by 70,000, bringing Quipt’s total to 270,000 active patients. As a result of Great Elm’s significantly weighted respiratory product mix, respiratory products will now make up approximately 79% of Quipt’s product mix. By opening new markets and fostering connections with referral partners, patients, and payors, Great Elm considerably increases the Company’s scale and geographic reach.
Great Elm represents a turnkey platform acquisition for Quipt as it dramatically enhances Quipt’s operations and provides the Company with significant additional inorganic and organic growth opportunities. The advanced infrastructure of Great Elm, which includes strong leadership and strong internal processes, is expected to significantly expedite the integration process, and will greatly complement Quipt’s existing infrastructure. The Acquisition will also allow Quipt to cross sell its products in Great Elm locations with the opportunity to significantly increase revenue associated with Quipt’s subscription-based resupply program through the onboarding of Great Elm patients. Quipt has identified $2 million in cost savings and synergies, which is expected to be captured over the first six months.
Great Elm is focused on clinical excellence, and like Quipt, offers a high-quality, full-service line of respiratory equipment, and supplies. Great Elm has a diversified payor mix and several difficult to obtain insurance contracts. Additionally, Great Elm’s operating footprint aligns closely with regions that have a high prevalence of Chronic Obstructive Pulmonary Disease (“COPD”), a key target patient group of Quipt. The eight states in which Great Elm operates includes over 1.5 million1 people suffering from COPD.
“We are extremely thrilled to start 2023 with the milestone acquisition of Great Elm Healthcare, which gives us significant coast-to-coast presence across the United States and firmly establishes Quipt as one of the top clinical at-home respiratory providers in the nation. I would like to use this opportunity to extend a warm welcome from the Quipt family to the entire Great Elm team. We are eager to get started. Over 1.5 million people in the jurisdictions serviced by Great Elm suffer from COPD2, and this acquisition positions us to make progress in this primary target market,” said Greg Crawford, Chairman and CEO of Quipt. “Great Elm represents a true platform investment for Quipt and provides us with the opportunity to serve pulmonary and neurological disease states by utilizing the patient-centric ecosystem we have built focused on ventilation therapy, oxygen therapy and sleep therapy. This creates immediate and actionable revenue synergies for us. Moreover, the valuable commercial insurance contracts, strong referring physician network, and significant patient base we have accumulated across seven new states will give us the ability to cross sell our products into these new geographies. The highly skilled and seasoned leadership team at Great Elm bolsters our ability to further enhance organic growth and margin expansion across the combined organization when joined with our current executive team. On a combined basis, we expect to have Annualized Revenue of $220 million and Anticipated Annualized Adjusted EBITDA of $49 million on a pro forma basis, putting us in a formidable position to continue to capitalize on the opportunities in front of us as we continue to increase shareholder value.”
Chief Financial Officer, Hardik Mehta added, “Our prudent capital deployment strategy has once again yielded fantastic results. We wanted to focus on closing our largest deal first and the acquisition of Great Elm is a major accomplishment, providing us with a turnkey acquisition at a prudent purchase price while maintaining our conservative balance sheet and allowing for financial flexibility on a go forward basis. We fully expect to be able to expand our senior credit facilities when opportunities arise, and we will continue to leverage technology and data driven decision-making to unlock additional profitability and to ensure we continue to improve upon our patient centric ecosystem. We look forward to a seamless integration process and believe the increased geography of our business will allow us to create additional opportunities to further expand on our proven acquisition and integration approach with highly accretive tuck-in acquisitions for our full suite of respiratory care products and services. The Great Elm acquisition is a fantastic way to start the new year and we look forward to keeping investors apprised of our continued success.”
The Company will post updated corporate slides at www.quipthomemedical.com.
ABOUT QUIPT HOME MEDICAL CORP.
The Company provides in-home monitoring and disease management services including end-to-end respiratory solutions for patients in the United States healthcare market. It seeks to continue to expand its offerings to include the management of several chronic disease states focusing on patients with heart or pulmonary disease, sleep disorders, reduced mobility, and other chronic health conditions. The primary business objective of the Company is to create shareholder value by offering a broader range of services to patients in need of in-home monitoring and chronic disease management. The Company’s organic growth strategy is to increase annual revenue per patient by offering multiple services to the same patient, consolidating the patient’s services, and making life easier for the patient.
Qiagen - >>> Strong core growth offsets dwindling COVID-19 demand for Qiagen
February 7, 2023
BERLIN, Feb 7 (Reuters) - Medical diagnostics company Qiagen offset a sharp fall in demand for COVID-19 products at the end of the year with a strong performance in its core businesses, the company said, announcing its full-year and fourth quarter results on Tuesday.
Fourth quarter revenues came in at $498 million, a 14% fall compared with the same period last year. Revenues from COVID products fell 64% to $66 million, but this was offset by strong growth in non-COVID products, where revenues rose 8% to $432 million.
For 2023, the molecular diagnostics test maker expects revenues of $2.05 billion, compared with $2.14 billion for 2022, and an adjusted profit per share of $2.10.
"We have positioned Qiagen well to successfully navigate 2023's volatile macroeconomic environment," said Chief Executive Thierry Bernard.
InMode - >>> How IBD Stock Of The Day InMode Is Smoothing Out The Wrinkles
Investor's Business Daily
by ALLISON GATLIN
IBD Stock Analysis
Shares currently in a consolidation with a buy point of 40.39
Stock surged above its 50-day moving average this week
Composite Rating is 91 out of possible 99; EPS Rating is 97
InMode (INMD) is Friday's IBD Stock Of The Day. The medical aesthetics company says it's shrugging off recessionary concerns and INMD stock is smoothing out the wrinkles.
The company recently pre-announced $133.2 million to $133.4 million in fourth-quarter sales, up 21% year over year. Shares dropped on the pre-announcement as it suggested a slowdown in growth from 29% in the three months ended Sept. 30.
Chief Executive Moshe Mizrahy says InMode is still growing. He noted the guidance for this year indicates sales will grow by roughly $75 million. Notably, that also suggests a slowdown.
"But the market knows that we are very conservative in guidance," he said during the Needham Growth Conference last month.
INMD stock is currently consolidating with a buy point at 40.39, according to MarketSmith.com. Shares surged above their 50-day moving average this week. The stock dropped 2.8% to close at 37.24 on the stock market today.
INMD Stock: Guidance Conservative
InMode's devices use radio frequency technology to tighten skin and kill fat cells. The procedures are minimally invasive, meaning they can be performed in a doctor's office.
During the fourth quarter, InMode's sales came in between $133.2 million to $133.4 million, the company said in its pre-announcement.
That leads to full-year sales of $453.9 million to $454.1 million. At the midpoint, sales would grow 27%. For 2023, InMode guided to $525 million to $530 million in sales, up 16%. That means sales growth over the last two years paled in comparison to a nearly 74% jump in 2021.
But Mizrahy says the guidance is conservative and InMode often outdoes itself. Needham analyst Mike Matson also noted the same. He sees the potential for new products launching this year could boost sales.
He has a buy rating and 60 price target on INMD stock. The company will officially report its fourth-quarter earnings on Feb. 14.
Medical Aesthetics Strong
Medical aesthetic sales don't seem to be slowing. The IBD 50 is headed up by Revance Therapeutics (RVNC), a maker of skin-tightening and facial-filling shots.
But InMode also sees an opportunity to carve a new market in women's health. It's testing a system called EmpowerRF in 15 clinical studies. Today, the system treats weak pelvic floor muscles, works to improve blood circulation, remodels tissue and strengthens abdominal muscles.
But Chief Medical Officer Spero Theodorou notes the same system is capable of running aesthetic procedures. Gynecologists treating weak pelvic floor muscles or overactive bladder could also sell their patients on aesthetic procedures. The latter is where the "big money is," he said.
Next, InMode hopes to do the same with its EnvisionRF system for dry eye treatment.
Promisingly, INMD stock has a strong Composite Rating of 91. This puts shares in the top 9% of all stocks when it comes to fundamental and technical measures, according to IBD Digital. Shares have an even stronger EPS Rating of 97 out of 99, a measure of profitability. It's also on the IBD Tech Leaders list.