Siemens Healthineers sees diagnostics drag on full-year profitability

Siemens Healthineers said measures to speed up installations of its new blood and urine testing machines were bearing fruit, but would also squeeze profit margins at its diagnostics division in the short term.

The German health technology firm is pinning its hopes on its Atellica machine to turn around its In-Vitro diagnostics business which lags market leader Roche, but lengthy installation times at large and complex laboratories have dragged down profit in the division.

Healthineers said on Thursday it had shipped over 410 Atellica Solution analyser in the three months to the end of March, and over 780 machines in the first six months of its fiscal year. It has also won approval for the device in China.

“The measures taken to ensure a successful market launch of our laboratory diagnostics platform Atellica Solution have shown an early impact in the second quarter,” said Chief Executive Bernd Montag.

Steps to reduce installation times mean the number of analysers that are operational and able to book sales of the highly profitable tests used in the machines had increased to 20-30 per week, he said.

But despite an expected acceleration in shipments in the second half, Montag told analysts the target to ship between 2,200-2,500 analysers this year remained “very challenging” and that it was likely Healthineers would fall slightly short of the range.

The company also said the ramp-up would squeeze profit margins at its diagnostics division to below last year’s levels, while comparable sales growth would lag its mid-term target range of 4-6 percent.

Berenberg analyst Scott Bardo said diagnostics was “still to stage a turnaround” and the placements of 410 for the quarter were below the implied run rate of 600 machines per quarter at the start of the year.

MARKET SHARE GAINS

Despite the costs associated with the Atellica launch, Healthineers reported a 24 percent rise in net profit for its fiscal second quarter to 381 million euros ($427 million), beating consensus forecasts for 374 million euros.

Currency-adjusted sales rose 5.8 percent to 3.5 billion euros, also ahead of analyst forecasts, helped by strong sales of molecular imaging, computed tomography and X-Ray gear as well as products in its Advanced Therapies division.

This outperformed Dutch rival Philips which on Monday reported comparable quarterly sales growth of 2.3 percent, held back by a decline in demand for hospital equipment in Europe and flat sales in the United States.

Montag said Healthineers had made market share gains in all its imaging businesses and noted healthy global demand, particularly from China.

The company confirmed its full-year guidance for a profit margin of 17.5 to 18.5 percent for its 2019 fiscal year, and comparable sales growth of 4 to 5 percent.

Chief Financial Officer Jochen Schmitz said he was more confident Healthineers would hit the upper end of its target range for revenue growth, but added it would be prudent to assume the profit margin would be at the lower end of its target.

https://www.marketscreener.com/SIEMENS-HEALTHINEERS-AG-42379342/news/Siemens-Healthineers-Healthineers-sees-diagnostics-drag-on-full-year-profitability-28519879/

Bayer: Roundup Ads Rise as Suits Mount

Roundup is getting an advertising boost after thousands of plaintiffs have alleged that the world’s most widely used weedkiller causes cancer.

Bayer AG, the manufacturer of Roundup, and Scotts Miracle-Gro Co., which markets it to home-and-garden retailers in the U.S., have spent millions of dollars this year on expanded marketing for the weedkiller, Scotts executives said.

“We were concerned, the retailers were concerned,” James Hagedorn, Scotts’ chief executive, said Wednesday on a call with investors. So far, he said, U.S. consumers haven’t abandoned the product.

Roundup is at the center of lawsuits brought by more than 13,000 farmers, gardeners and others who blame the herbicide for causing their cancer and seek to hold Bayer accountable. The German company acquired Monsanto, Roundup’s maker, for $63 billion in 2018.

Residential gardeners and landscapers appear to be buying more Roundup, according to Scotts. Over the first three months of the year, Scotts’s sales of Roundup increased 20% from the same quarter a year earlier, the company said. Many farmers, who make up the main market for Roundup, have stood by the weedkiller, considering it less harsh on the environment and people compared with other agricultural chemicals.

Two juries over the past year have ruled in favor of plaintiffs and awarded tens of millions of dollars in damages, sending shares of Bayer about 39% lower in that time. Bayer is challenging the verdicts, and another trial is under way in a California court.

Shares in Scotts climbed 5.4% in Wednesday’s late-afternoon trading, while Bayer settled slightly lower in European trading.

Regulators have stood by their assessments showing the herbicide to be safe. The Environmental Protection Agency this week reiterated its previous conclusions that glyphosate, Roundup’s main chemical ingredient, is safe when used as directed and doesn’t pose a cancer risk. The EPA said it is in the process of renewing glyphosate’s U.S. authorization.

Bayer on Tuesday welcomed the EPA’s assessment. “Today’s EPA announcement is just the latest instance of a global regulatory agency reaffirming that glyphosate is not carcinogenic,” the company said.

Some consumer groups criticized the EPA for overlooking research they said showed glyphosate’s risks. But regulators in the European Union and Canada have ruled similarly, in some cases after revisiting scientific research that plaintiffs’ lawyers have questioned.

Bayer recently paid $20 million to reimburse Scotts for higher costs related to Roundup, including increased ad spending, Scotts executives said. Plaintiffs’ lawyers have aired their own TV ads seeking new clients in the litigation against Bayer.

“Given the environment we thought we were in, I think we spent the money extremely well and I think you’re seeing the results,” Mr. Hagedorn said. “We’re two cases into this, and it’s the court of public opinion and consumers that matters here.”

A Bayer spokeswoman said the company routinely reimburses Scotts for expenses, including ads.

https://www.marketscreener.com/BAYER-AG-436063/news/Bayer-Roundup-Ads-Rise-as-Suits-Mount-28520430/

Teva shares reflect much of bad news, says Wells Fargo

Wells Fargo analyst David Morris kept his Market Perform rating and $18 price target on Teva (TEVA) ahead of its Q1 earnings tomorrow, saying investors have “low expectations” for the quarter after “weak-ish” Sandoz results from Novartis (NVS). The analyst also points to IQVIA (IQV) sales and prescriptions data indicating that Teva generic sales were down 12% in March, 10% in February, and 13% in January, though the decline are “much smaller” than seen in U.S. generics during 2018. Morris further expects Teva to address the risk of opioid litigation that became a concern during the quarter in its earnings call.

https://thefly.com/landingPageNews.php?id=2901619

DexCom price target raised to $173 from $165 at Piper Jaffray

Piper Jaffray analyst JP Kim raised his price target on DexCom to $173 and kept his Overweight rating after its “solid” Q1 results. The analyst notes that while the company’s Q1 gross margin of 60% was below his expected 64.5% amid capacity expansion investments, he sees DexCom well positioned for the “inflection” in the Continuous Glucose Monitoring market as it converts away from Blood Glucose Meters. Kim also cites the management’s discussion of pharmacy contracts having a 2-3 year time span and expects the company’s G7 system tracking to launch next year to be competitive “at any price point.”

https://thefly.com/landingPageNews.php?id=2901626

Acadia price target raised to $35 from $30 at Piper Jaffray

Piper Jaffray analyst Danielle Brill raised her price target on Acadia to $35 and kept her Overweight rating after its better than expected Q1 sales of Nuplazid that was driven by “accelerated growth in new patient starts.” The analyst further cites the management’s increased FY19 Nuplazid midpoint sales guidance and also sees “significant unrealized value” for the company’s dementia related psychosis programs.

https://thefly.com/landingPageNews.php?id=2901629

Organ transport device maker TransMedics prices upsized IPO at $16

TransMedics Group, a medical device company that provides a system for donor organ transport, raised $91 million by offering 5.7 million shares at $16, the midpoint of the $15 to $17 range. The company had originally filed to offer 4.7 million shares at the same range of $15-$17.

TransMedics Group plans to list on the Nasdaq under the symbol TMDX. Morgan Stanley and J.P. Morgan acted as lead managers on the deal.

Relevant Profile: TMDX

https://www.renaissancecapital.com/IPO-Center/News/62971/Organ-transport-device-maker-TransMedics-prices-upsized-IPO-at-$16-midpoint

Almost Half of Physicians Say EHRs Have Hurt Quality of Care

In a Medscape poll of more than 250 clinicians, more physicians said that electronic health record (EHR) systems have decreased quality of care (44%) in their primary workplace than increased it (40%).

Nurses and advanced practice registered nurses (APRNs) saw more benefit than detriment in EHRs: 42% said they had increased quality of care vs 35% who said they had decreased care quality.

The recent poll included 273 respondents — 207 physicians and 66 nurses/APRNs.

Few Involved In Choosing EHR System

The poll also indicated that few physicians or nurses were involved in the decision of which EHR to use in their primary workplace.

Among physicians, 66% had no input, 28% had input, and 7% did not use an EHR system (rounding means totals may pass 100%). Far fewer nurses were part of the decision making: 80% had no input, 18% had input, and 2% did not use an EHR.

Only 2% of physicians, nurses, and APRNs said they had input into the decision and the system they wanted was chosen.

Those who answered that they had input were either the only decision-makers or were part of a group that decided. Those who did not have input answered that the practice, clinic, or hospital chose the system or a group or committee leader chose it.

Views on How EHRs Increase/Decrease Quality

When asked what aspects of EHRs increased quality of care, the top answer among physicians was the ability to locate and review patient information more easily (59%), followed by the ability to electronically subscribe (49%), and portability/access to patient records by all members of the care team (44%).

Portability and access by all on the team was the top reason given by nurses/APRNs for increases of care quality (62%), followed by ability to locate and review patient information more easily (60%), and ability to electronically prescribe (46%).

When physicians and nurses/APRNs were asked what aspects of EHRs decrease quality of care, they gave similar weight to these four reasons: added paperwork/charting; entering data during the patient encounter; lack of interoperability with other systems; and system failures or problems.

A neurosurgeon commented on the poll, “I’m surprised that the tendency to rely on default, boilerplate text and copy-paste were not noted as major problems.”

Most Requested Improvements

Top answers differed among physicians and nurses/APRNs on what they would most like to see change with EHRs.

Physicians’ top answer was to make the systems more intuitive/user-friendly (44%), followed by allowing greater interoperability and record sharing (30%). Nurses/APRNs would most like to see more interoperability and better record sharing (33%), followed by making the systems more user-friendly (30%).

This past February marked 10 years since the American Recovery and Reinvestment Act devoted $35 billion to encourage physicians to use EHR systems.

“Boring, Repetitious Templates”

A family medicine physician summarized what many doctors have said the field of medicine has lost in a decade with such a system — the nuances in narratives about the patient.

They reduce “fascinating human stories to utterly boring, repetitious templates,” he wrote.

Medscape reported earlier this month that the drift from face-to-face care is continuing with the next generation of physicians.

Results from the iCOMPARE trial show that first-year residents spend almost five times more hours on indirect patient care than on face-to-face patient care, and most of that time was spent working with EHRs.

https://www.medscape.com/viewarticle/912340