Thursday, November 8, 2018
Care.com sees FY18 non-GAAP EPS approximately 69c, consensus 68c
Sees FY18 revenue $192.1M-$192.5M, consensus $192.34M.
https://thefly.com/landingPageNews.php?id=2820191
Perrigo cuts FY18 adj. EPS view to $4.45-$4.65 from $4.75-$4.95, consensus $4.74
Reduces FY18 revenue approximately $4.72B, consensus $4.85B. The reduction in FY18 adjusted EPSS is primarily due to revised expectation in the RX segment. In addition, reduced margin expectations in the CHC Americas segment are expected to be partially offset by improved margin expectations in the CHC International segment.
https://thefly.com/landingPageNews.php?id=2820201
BioTime, Asterias enter definitive merger agreement
BioTime (BTX), and Asterias Biotherapeutics (AST), announced that they have entered into a definitive merger agreement whereby BioTime will acquire all of the remaining outstanding common stock of Asterias that are not currently owned by BioTime. Asterias stockholders will receive 0.71 shares of BioTime common shares for every share of Asterias common stock and will own approximately 16.2% of the combined company. Subject to customary closing conditions, including approval by the respective shareholders of BioTime and Asterias, the transaction is expected to be completed in the first quarter of 2019. Under the terms of the merger agreement, Asterias stockholders will receive 0.71 common share of BioTime for each share of common stock of Asterias they own upon closing of the merger. The merger agreement, the merger and the other transactions contemplated in the merger agreement have been approved by the board of directors of Asterias (by unanimous vote of the disinterested members of the Asterias board of directors, acting upon the recommendation of a special committee comprised of only independent and disinterested members of the board of directors of Asterias). The merger agreement, the merger, the issuance of the BioTime shares in the merger and the other transactions contemplated in the merger agreement have been approved by the board of directors of BioTime (by unanimous vote of the disinterested members of the BioTime board of directors acting upon the unanimous recommendation of a special committee comprised of only disinterested and independent directors of BioTime). The merger is expected to close during the first quarter of 2019, subject to approval of the merger by the BioTime and Asterias stockholders, and other customary closing conditions. The combined company will be led by Brian M. Culley, President and Chief Executive Officer of BioTime. It is expected that, following closing of the transaction, BioTime’s Board of Directors will consist of nine members, with Don Bailey, Chairman of Asterias’ Board of Directors, joining the BioTime Board of Directors and Mr. Mulroy, Asterias’ Chief Executive Officer, remaining on the BioTime Board. Pursuant to the terms of a “go-shop” provision in the merger agreement, between the date of the merger agreement and December 3, 2018, Asterias and its representatives may solicit, discuss or negotiate alternative proposals from third parties for the acquisition of Asterias. Following the expiration of this go-shop period, Asterias will become subject to customary “no shop” restrictions on its and its representatives’ ability to solicit, discuss or negotiate alternative acquisition proposals from third parties, subject to exceptions for acquisition proposals that the Asterias board of directors and the Asterias special committee has determined constitutes or is reasonably expected to constitute a Superior Proposal, and further subject to compliance with certain conditions.
https://thefly.com/landingPageNews.php?id=2820249
Wednesday, November 7, 2018
DaVita, Fresenius beat back costly dialysis measure in Calif.
Dialysis giants DaVita and Fresenius Medical Care scored an expensive win as California voters shot down a proposition that would have caused a big hit on the companies’ profits.
Results were projected early Wednesday morning for Proposition 8 as the support for the ballot initiative lagged far behind in reported precincts.
The union-sponsored measure would have capped charges at 15% above the direct costs of dialysis treatment. Analysts estimated that DaVita could lose up to $400 million in annual business in the state that stands as the company’s largest and fastest-growing market. In the buildup to Tuesday night, analysts suggested that the company could even pull out of California entirely if the measure passed.
The measure was driven by the Service Employees International Union, which doled out more than $18 million to push a “yes” vote. That compares to a $110 million war chest by a massive coalition including the state’s major provider trade associations—the California Hospital Association and California Medical Association—on the other side.
DaVita put up about $66 million for the opposition coalition group, while Fresenius has contributed about $28.5 million, according to analysis from Height Capital Markets.
The two companies have nearly three-quarters of California’s dialysis market, which is the largest in the country with 588 licensed chronic dialysis clinics. About 140,000 Californians received dialysis in 2016, according to the Office of Statewide Health Planning and Development.
But DaVita may not be out of the financial tangle for long. California’s outgoing Democratic Gov. Jerry Brown vetoed a measure passed this year by the state’s Legislature that would have capped commercial insurance payments for dialysis at Medicare rates if the insurance premiums were partially paid for by an industry-adjacent third party.
However, state Sen. Connie Leyva, a Democrat who introduced the measure, has signaled she wants to try again in the next legislative session; incoming Democratic Gov. Gavin Newsom may not take Brown’s position.
DaVita has taken additional hefty financial hits this year, with a $270 million settlement with the Justice Department over allegations of improper Medicare Advantage billing. A Denver jury also forced the company to pay out more than $380 million in wrongful death lawsuits over the summer.
Medicaid expansion scores election wins and losses
From the Rocky Mountains to the Great Plains to New England, Medicaid expansion got a big boost Tuesday from ballot initiatives that appeared headed for passage and from gubernatorial victories by Democrats in several states who made expansion a central issue.
Voters in Idaho, Nebraska and Utah approved mandatory ballot initiatives to extend Medicaid coverage under the Affordable Care Act to adults with incomes under 138% of the federal poverty level. Republican governors and lawmakers in those states had repeatedly refused to pass it.
But Montana voters rejected a ballot initiative to renew that state’s Medicaid expansion and fund it by sharply increasing the cigarette tax.
Democratic gubernatorial candidates who campaigned on expansion won the statehouses in Kansas and Maine, both states where Republican governors have rejected it. Those victories made expansion much more likely.
On the other hand, a Republican who opposes expansion took the governor’s mansion in Florida and neighboring Georgia is still too close to call, although Republican Brian Kemp holds the lead. Democratic opponents in both states made Medicaid expansion central to their campaigns.
In Michigan, a state that already expanded Medicaid, the Democratic gubernatorial candidate prevailed against a GOP opponent who favored work requirements. Gretchen Whitmer now will have to convince GOP lawmakers not to move forward with those eligibility limits, which likely would reduce enrollment. But in Ohio, former U.S. senator and current Attorney General Mike DeWine, who supported work requirements for the state’s expansion program, beat the Democrat who opposed a work mandate.
In Alaska, the fate of that state’s expansion is uncertain following the gubernatorial victory of a Republican who has criticized the program’s costs.
Overall, the outcome of Tuesday’s Medicaid ballot initiatives and some of the governors’ races pleased healthcare providers and patient advocacy groups, who predicted greater access to needed healthcare services and a significant decline in uncompensated care.
Advocates view these election successes as a springboard to expanding Medicaid in nearly all 50 states and providing coverage to millions more Americans. Up to now, the single-biggest factor in winning expansion in resistant states like Louisiana and Virginia has been the election of a governor who supports it. Polls consistently show majority public support for expansion, even in the most conservative states.
Beyond that, Affordable Care Act supporters were ecstatic that Tuesday’s Democratic pickup of enough U.S. House seats to control that chamber virtually guarantees there will be no legislative rollback of Medicaid or ACA coverage for at least the next two years. That could let them shift from playing defense to pushing new initiatives on coverage expansion, consumer protections and curbing prescription drug costs.
“Tonight’s election results are a resounding victory for everyone in our nation who cares about access to high quality, affordable health care,” the pro-ACA group Families USA said in a written statement.
Still, the ACA’s coverage gains and consumer protections remain threatened by a federal lawsuit in Texas filed by Republican attorneys general in which the judge may soon issue a ruling.
Expansion opponents, led by Americans for Prosperity, a libertarian, anti-tax group funded by the billionaire Koch brothers, argue that Democrats are hurting their states by pushing for Medicaid expansion, which they say neither the states nor the federal government can afford.
Among ballot initiatives, Idaho voters approved a measure to expand Medicaid to 60,000 people. As of early Wednesday morning, ballot initiatives were on track to pass in Nebraska and Utah, impacting 87,000 people and 62,000 people respectively. Top GOP elected officials in those states who mostly opposed the initiatives have said they would respect the will of the voters, though newly re-elected Nebraska Gov. Pete Ricketts has been tight-lipped about his intentions.
“I have talked to a number of my colleagues, and I think we will implement it and fund it properly,” said Nebraska Republican state Sen. John McCollister, an expansion supporter. “That will improve the financial health of our rural hospitals big time.”
In Montana, expansion foes, backed by an estimated $17 million in Big Tobacco money, defeated a ballot initiative that would have renewed that state’s Medicaid expansion covering 90,000 low-income adults and funded it with a $2 per pack tax on cigarettes and a new tax on vaping products.
If it had passed, those Montanans would have been able to keep their coverage as is. Now it will be up to the Republican-controlled Legislature to decide the program’s fate when it expires in June.
GOP lawmakers may seek a Medicaid waiver to roll back the expansion to a smaller number of people and impose a work requirement, which would leave many Montanans uninsured and drive up uncompensated care costs, said Jean Branscum, CEO of the Montana Medical Association, which supports the current expansion program.
Here is how the election played out in key states around the country.
Alaska
Republican Mike Dunleavy defeated Democrat Mark Begich for the governorship of this state, where current independent Gov. Bill Walker had pushed through a Medicaid expansion covering 40,000 people.
Dunleavy was critical of the expansion program’s costs and had called for reviewing it, a position in line with some members of the state’s Republican-controlled Legislature. It remains to be seen what he will do with the program.
Florida
Former Republican congressman Ron DeSantis defeated Tallahassee Democratic Mayor Andrew Gillum in the governor’s race. Gillum had placed Medicaid expansion, along with “Medicaid for all,” at the heart of his campaign, while DeSantis strongly opposed it.
Georgia
Republican Secretary of State Brian Kemp held a lead over Stacey Abrams, a Democratic former Statehouse minority leader, who also made Medicaid expansion the marquee issue of her campaign. She argued it would reduce high maternal and infant mortality rates, drive down uncompensated care, and save rural hospitals in a state where seven have closed since 2013.
The Georgia Hospital Association and business groups are likely to continue to push for a more limited form of expansion, through a Medicaid waiver.
“We continue to emphasize that Georgia tax dollars go to support expansion in other states, and we’re losing out on billions of federal healthcare dollars, with an impact on our economy, our workforce and ensuring access to care,” said Ethan James, the hospital association’s executive vice president of external affairs.
Kansas
Democrat Laura Kelly, a state lawmaker who beat Republican Secretary of State Kris Kobach for the governorship, promised to cover 150,000 Kansans by passing Medicaid expansion in her first year in office. She said it’s critical for keeping rural hospitals and clinics open.
Analysts say passing expansion is plausible in this deep-red state where the GOP-controlled Legislature passed expansion last year but narrowly failed to override former Republican Gov. Sam Brownback’s veto.
Republican state Rep. Susan Concannon, an expansion supporter, expressed cautious optimism in September that if Kelly won, she could get a new expansion bill through the Legislature.
“If we have a governor who would sign the bill, I would find a way to get it to the floor,” she said. “It would be a difficult vote for some conservatives in rural areas because their communities want it, but politically they don’t want to vote for it.”
She thought it would help if voters in neighboring Nebraska approved the ballot initiative to expand Medicaid, which they did Tuesday. “If it’s right next door, it’s right in front of our face, and that would make a difference,” Concannon said.
Maine
Democratic state Attorney General Janet Mills, who favors expansion, beat Republican Shawn Moody, who opposed it.
Maine voters overwhelmingly approved expansion in a ballot initiative last year, but current Republican Gov. Paul LePage has defied court orders to implement it.
Governor-elect Mills is expected to quickly push through the expansion, with the help of Democratic election gains in the Legislature made on Tuesday.
Michigan
Democrat Gretchen Whitmer, who favors keeping the state’s Medicaid expansion without a work requirement, won the governor’s race over Republican Bill Schuette, who wanted to establish a work requirement. The Healthy Michigan program covers about 650,000 people.
Whitmer, who helped pass Michigan’s expansion, warned that the real goal of the work requirement is to take coverage away from people, and that could be “devastating.”
Chris Mitchell, senior vice president of advocacy for the Michigan Health and Hospital Association, which strongly supports the expansion, said in September that it’s unlikely that Whitmer’s victory would derail the work requirement waiver, which was mandated by the GOP-controlled Legislature and backed by Republican Gov. Rick Snyder.
The state hospital association expects the work requirement to be approved soon by the CMS. It would take a major effort by the next Legislature and governor to significantly change that, Mitchell said. He noted, however, that lawsuits challenging the CMS’ approval of the work requirement waivers in Kentucky and Arkansas are a wild card.
Legislative analysts predict the work requirement would cause 5% to 10% of beneficiaries to drop out of coverage.
Ohio
The same disagreement over a work requirement played out in the Ohio governor’s race, which was won by Republican Mike DeWine over Democrat Richard Cordray.
The Ohio expansion pushed through by Republican Gov. John Kasich covers nearly 700,000 people.
Wisconsin
Early Wednesday morning, State Education Superintendent Tony Evers was declared the winner in a tight race against incumbent Republican Gov. Scott Walker, who has resisted a full expansion of Medicaid to people up to 138% of the federal poverty level.
Evers has vowed to accept federal Medicaid expansion dollars “on Day 1” of his governorship. But that will be a hard promise to keep. The state House Republican leader, Robin Vos, has said a reconsideration of Walker’s decision against expansion is “not gonna happen. No. Never”—even though Republicans lost legislative seats in Tuesday’s election.
Sanofi: NEJM publishes positive results from Praluent cardio trial
New England Journal of Medicine publishes positive detailed results from Praluent® (alirocumab) cardiovascular outcomes trial
- Praluent significantly reduced major adverse cardiovascular events by 15% (p<0.001)
- Praluent was associated with a 15% lower risk of death from any cause (hazard ratio [HR] 0.85; 95% confidence interval [CI], 0.73 to 0.98)1
- Additional analyses, including mortality, to be presented at upcoming American Heart Association Scientific Sessions, November 10-12
Michigan vote to legalize pot fires up investor momentum behind cannabis
Michigan’s vote Tuesday to become the 10th U.S. state where the recreational use of cannabis is legal is adding more momentum to a trend that some investors now say is inevitable: that marijuana will become legal nationwide within the next 5 years.
As a result, companies, portfolio managers, and high-ranking executives are racing to position themselves to profit from what is expected to become a multi-billion dollar market.
Executives at companies including Amazon.com Inc, Molson Coors Brewing Co, and Nike Inc have jumped to roles at Canadian cannabis companies such as Tilray Inc and Canopy Growth Corp over the last 18 months in order to gain experience in the industry.
At the same time companies ranging from Coca-Cola Co to Corona beer-maker Constellation Brands Inc have taken the first steps into building cannabis-infused products.
“We fully expect a successful regulated market to eventually develop around cannabis, and when it does, we expect it will disproportionately benefit the strongest innovators with well-branded products & robust supply chains,” said Bonnie Herzog, an analyst at Wells Fargo who is bullish on the shares of Constellation Brands.
Investors say that they are watching Canada, where the legal recreational use of marijuana went into effect in October, as a testing ground for retailers and companies before U.S. legalization.
“The Canadian legalization has been a major catalyst for growth for a lot of companies in this space, and big consumer companies in the U.S. are paying attention,” said Barbara Miller, a portfolio manager for the Federated Kaufmann line of funds.
“We’re seeing consumer product companies test the waters and try to figure out how cannabis will factor into existing products or into new lines of products,” she said, ranging from personal wellness products like CBD-infused lotion to consumable products like cannabis-infused beer.
Recreational marijuana sales in Canada are expected to generate $4.3 billion in revenue in 2019, or slightly more than 60 percent of the country’s total $7.1 billion marijuana market, which includes medical and illegal sales, consulting firm Deloitte noted.
In the U.S., cannabis remains illegal under federal law.
Senator Elizabeth Warren, who is widely expected to run for the Democratic presidential nomination in 2020, introduced a bipartisan bill in August that would amend the Controlled Substances Act to allow cannabis companies in states where marijuana is legal to open accounts at federally regulated financial institutions and remain exempt from federal persecution.
The Wine and Spirits Wholesalers of America, a trade group that represents more than 80 percent of all wines and spirits sold in the U.S., voiced support for legal cannabis in July.
American executives who have joined the Canadian cannabis industry say that they were motivated in part by the expectation that marijuana will become federally legal in the U.S. within the next few years, a decision that helped them balance out the danger of reputational risk associated with a substance that has long been associated with the black market.
“I had a negative perception of the industry initially and my first inclination was that cannabis companies were penny stocks and not that credible,” said Mark Castaneda, the chief financial officer at Tilray. It was only after a headhunter sold him on the industry that Castaneda felt comfortable enough to make the switch.
“I started to see that this was a lifetime chance because this is a massive shift where you know there are consumers who use this product and now that it was legal the market could be even larger,” he said, adding that he expects that Canadian cannabis companies such as his own will eventually expand into the U.S. once marijuana becomes legal.
The potential growth of the cannabis industry in the U.S. is evident in the work histories of new hires by Canadian cannabis companies that have their sights set on expansion, said David King, a senior portfolio manager at Columbia Threadneedle Investments who has invested in convertible bonds issued by Canopy Growth Corp.
“You go to roadshows to some of these cannabis companies and their new executives are coming from impressive places,” he said. “You have real adults running the company.”
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