瑞信美股医疗科技行业2019年Q1北美医疗科技行业预览季度内趋势分析201941630页

DISCLOSUREAPPENDIXATTHEBACKOFTHISREPORTCONTAINSIMPORTANTDISCLOSURES,ANALYSTCERTIFICATIONS,LEGALENTITYDISCLOSUREANDTHESTATUSOFNON-USANALYSTS.USDisclosure:CreditSuissedoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethattheFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.16April2019Americas/UnitedStatesEquityResearchHealthcareTechnology&DistributionDistributorUpdateS[e-mail],[e-mail]@[e-mail]1QPreview:Dissectingintra-quartertrends■Mountingrisksfordrugdistributors:Sharesfordrugdistributors,includingAmerisourceBergen(ABC,Outperform)andCardinalHealth(CAH,Outperform)arecurrentlytradingata7.1xFY+2EV/EBITDAonaverage,ameaningfuldiscounttotheir8.6xfive-yearhistoricalaverage,withongoingconcernsrelatedtoopioids,contractrenewals,Amazon,andseeminglyfast-trackeddrugpricing/rebatechanges,whichcouldimpactdrugdistributors’abilitytoreconfigurecontractsinadvanceoftransformationalchanges.Thatsaid,weacknowledgeoffsetswiththepotentialadoptionofawholesaler-facilitatedPOSdiscountchargebackconcepts.Wealsonotecompany-specificheadwindsrangingfromcontinuedintegrationheadwinds,Medicalsegmentwoes(CAH),andmanufacturingsuspensions(PharMEDium,ABC—albeitalreadystrippedfromguidance).Intermsof1Qreports,ourviewisthatsomestabilityinthegenericdrugpricingenvironmentaswellashealthierthanpreviouslyexpectedbrandedpriceinflationshoulddrivepotentiallylessvolatileC1Qreports,butinvestorswilllikelyfocusonhowdistributorsarepositionedaheadofpotentialrebatechanges.WearetemperingourouteryearFY20EPSestimatesforABCto$7.33(from$7.48)andCAHto$5.35(from$5.51),betterreflectingincrementalriskfactorsinregulatory,drugpricing,andopioiduncertaintiesaswellastheirabilitytoadapttonewrebateparadigmsamidstalacklusterutilizationenvironment.WearealsoloweringourtargetpriceforABC(to$87from$96)andCAH(to$53from$57)onthelowerouteryearestimates.Thatsaid,ourfocuscontinuestobeoncontributionsfrompotentiallyfastergrowing,moreprofitable,andoftentimesmorecapital-efficientancillarybusinesses.■MedicalDistribution—MaintaincautiousoutlookonOMI:Onthemedicaldistributionside,weremainnegativelydisposedtowardOwens&Minor(OMI,Underperform).WhileaturnaroundstoryisnotoffthetableforOMI,weviewitmaybemuchlongerterminnature,whereatumultuous2018experience,commoditypricingpressures,andmanagementfluxhasweighedonresultsandbroadersentiment.WeareloweringourFY19/20EPSto$0.66/$0.72(from$0.68/$0.74)onlikelycontinuinglacklusterdemandtrendsandpotentialsharelossamidstmajorintegration,coststructureinitiatives.Ourtargetpricemovesto$5(from$6)onthelowerview.Moreover,with5.7xnetleverage(onNTMEBITDA),OMIisinherentlylessnimble,drivingincrementalriskinarapidlyevolvinghealthcarecontinuum.■LacklusterRxvolume,butstabilizinggenericpricingdynamics:AccordingtoIQVIA,adj.prescriptionvolumedeclined1.4%inFebruary,animprovementfromthe-1.9%trendinJanuary(QTDaveragevolumegrowthof-1.7%).BasedonouranalysisofthetotalgenericdrugsalesasreportedbyIQVIAonanunweightedbasis,thesell-sideASPforgeneric16April2019DistributorUpdate2therapeuticsfell4.4%inFebruary,animprovementfromthe6.4%declineinJanuary.Onasales-weightedbasis,genericpricingdeclined2.2%inFebruary,animprovementfromJanuary(-3.3%).Moreover,accordingtoJanuaryNADACdata,asurveyperformedbytheCMStogaugetheaveragenationalacquisitioncostsforretailpharmaciesacrosstheUS,55.9%ofallreportedgenericsexperiencedpricedeclinesinexcessof5%,animprovementfromtheDecemberexperience(58.5%).Forcontext,ongoinggenericpricedeflationoverthepasttwoyearshasweighedondrugdistributors,aspricedeclineshaveledtolowergrossprofitdollars,andwhilewedonotexpectasignificantreversalNT,thesupplychaingrouphasnotedstabilizingtrendsQTD,alignedwithouranalysis.16April2019DistributorUpdate3SummaryAcontinuinglacklusterutilizationenvironment,asevidencedbyIQVIAdataandmetricsfrompharmacysupplychainconstituents,maycontinuetohamperquarterlyperformancefordrugdistributors.Thatsaid,amodestlystabilizinggenericpricinglandscapeissomewhatencouraging,aswellasanincrementallyhealthierbrandedpriceinflationenvironmentthanpreviouslyexpected(oratleastbettervisibilitythereon),potentialsourcesofneartermrelief.Thatsaid,weacknowledgenotablerisksinopioidlitigationanddrugpricing/rebatescrutiny.Allin,wecontinuetofavordistributorswithexposuretofaster-growing,higher-marginancillaryservices,whichshouldprovidediversificationfromdrugutilization/pricing,amongothersupplychaindynamics,whilealsoprovidinghighergrowth/profitpotentiallongerterm.Tothatend,wefavorAmerisourceBergen(ABC)aswecontinuetoviewcontributionsfromitsnon-traditionalbusinessesincludingMWI,WorldCourier,amongothersasencouraging(excludingPharMedium).Similarly,CardinalHealth(CAH)shouldbenefitfromafastergrowingspecialtypharmacybusinessaswe