JP摩根美股医疗保健行业美国医疗信息服务第18次医院年度调查要点201952325页

NorthAmericaEquityResearch23May2019HealthcareITSurveyPointstoCERNShareCapture;TakingaMoreConstructiveStancebutValuationKeepsUsNeutralHealthCareServices–Distribution,Technology&PBMsLisaC.GillAC(1-212)[e-mail](1-212)[e-mail]MichaelMinchak,CFA(1-212)[e-mail]ge19foranalystcertificationandimportantdisclosures.J.P.Morgandoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.’s18thannualhospitalsurvey(publishedtodaybyHealthcareFacilitiesanalystGaryTaylor–linkhere)pointsto+7%growthinITspendin2018(+4%onabed-weightedbasis),consistentwiththepubliclytradedEMRvendoraveragerevenueguidanceformid-single-digitgrowth.Lookingbackatthepast7years,thesurveyhasshowna~60%correlationwiththeaveragetop-linegrowthofthegroup,notingthesurveypointstoaverage11%growthoverthattimeversusaveragecompanyrevenuegrowthof12%(onaninorganicbasis).WhiletotalCapExgrowthisexpectedtoremainsteadyin2019(+4%inboth2019and2018),wenotethattheproportionofspendingonITisexpectedtodeclineslightlyin2019withupgradingclinicalinformationsystems(thethird-highestpriority)movingto30%ofresponses,downfrom38%lastyear.HereinweoutlinedetailedresultsfromthesurveyrelevanttotheHealthcareITspace.Conferencecallat11amETtoday.WewillparticipatewithManagedCare&HealthcareFacilitiesAnalystGaryTaylorandothermembersoftheJ.P.MorganHealthcareteamtodiscussthekeytakeawaysofthehospitalsurvey.Fordial-ininfopleasecontactyourJPMsalesperson.TakingamoreconstructivestanceonCerner.WeareencouragedbyCerner’smoveto#1inthesurveythisyear,whichwasdrivenlargelybygreatermarketshareatthesmallerhospitals.Withtherecentcost-cuttinginitiativesandinitiationofadividend,wetakeamorefavorablestanceonthenameasEBITDAgrowthshouldacceleratefromflatgrowthin2018,tomid-singledigitsin2019,tolow-tomid-teensin2020.Specificallycatalyzedbyinvestoractivism,CERNplanstoexpandmarginsto20%in4Q19movingto22.5%in4Q20withcostsavingstocomefromassessingtopmanagementspanandlayers,continuingtheportfoliomanagementworktheybeganin2018,rationalizingcompanyfacilities,reviewingnon-personnelexpenses,anddrivingadditionalprocessimprovements.Whilewearemorepositiveonthenameascostsavesrepresentastepintherightdirection,weremainNeutralasmanagementisstillformulatingitssavingsplanwithanoutsideconsultingfirm,andwebelievethevaluationlargelyreflectsexpectationsforimprovedfundamentalstradingat12xStreet2020EBITDAvstheestimatefor12.5%EBITDAgrowth.Wewouldhoweverlooktobeopportunisticonanypullbacks,asCernerremainsbestinclasswithintheHCITspace.WedigfurtherintoourthoughtsonCernerherein.GrowthinITspendup+7%YoYonaverage,indicatingamodestslowdown.TheaverageforecastedITspendincreasefor2019is7%,below2018levelsof10%,notingaveragecompanyrevenueguidanceforpubliclytradedEMRcompaniescallsforMSD%growth,downfromHSDgrowthin2018.Thebed-weighted(dollarproxy)meangrewto4%in2019,upfrom2%in2018;however,excludingalargehospitalsystem,thetrenddeclinedto+7%from+8%LY.Lookingatitbysize,thelargestincreasesareplannedatthesmallerhospitals,ashospitalswith1,000bedsplana6%YoYincrease(+2.8%onabed-weightedbasis),thosewithbetween500and1,000bedsplana6%YoYincrease(+5.2%onabed-weightedbasis),thosebetween150and500bedsplana6%YoYincrease(+7%onabed-weightedbasis)andthosebelow150bedsplanan8%YoYincrease(+9%onabed-weightedbasis).ITspendingisexpectedtoincreaseat68%ofrespondents,downfrom77%inlastyear’ssurveyandfrom69%intheyearprior,with24%expectingflatspending,and8%planningforadecrease.ForthefullHospitalCIOSurvey,pleaseseeGaryTaylor’s“18thAnnualHospitalSurvey:Operations,CapEx,HCIT&Equipment”publishedonMay23,2019.2NorthAmericaEquityResearch23May2019LisaC.Gill(1-212)[e-mail]HospitalCapExspendingholdingsteadyin2019,butproportionofITspendisexpectedtodeclineslightly.Annualhospitalcapexspendinggrowthisexpectedtoholdsteadyatroughly+4%YoYin2019,andorderprioritiesforcapitalspendinghavebeenlargelyunchangedoverthepastseveralyears.Upgradingclinicalinformationsystemsremainedthethird-highestprioritybehindnormalmaintenanceanddiagnosticequipment;however,theproportiontickeddownslightlyto30%ofrespondentsvs.38%in2018.Upgradingfinancialinformationsystemsremainedatthe#6slotwith18%ofresponses,upfrom17%lastyear.ITBudgetpriorities:whatarehospitalsspendingon?Thetop5responsesforITbudgetprioritieswererelativelyconsistentin2019andrankedas:(1)ImprovingorreplacinganexistingElectronicHealthRecordwith43%share(downfrom49%LY),(2)Telemedicineat40%(upfrom35%LY),(3)SecurityofPatientinformationat32%(vs.29%LY),(4)Performanceanalytics/informaticsat32%(upfrom26%LY),and(5)Populationhealthmanagementat23%(upfrom21%LY,andmovingupaspot).EHRReplacementshareandplannedadditionalspending.Cernerheldthe#1marketsharepositionin2019at28%follo