Bayer Cuts 1,500 Jobs and Lowers 2024 Earnings Guidance as Q1 Sales Dip

 Bayer released its first-quarter 2024 earnings on Tuesday announcing that it has reduced its headcount by approximately 1,500 jobs—mostly management positions—amid a slight decline in sales, while lowering its full-year earnings outlook.

“Approximately two-thirds of these were management jobs,” CEO Bill Anderson said in a Tuesday morning media call, referring to the workforce reductions which impacted its pharmaceuticals, crop science and consumer health divisions.

“Our senior leadership circle is already considerably smaller than it was a year ago,” Anderson noted, adding that the layoffs will help the company hit its target of €500 million ($540 million) of sustainable cost savings in 2024 and €2 billion ($2.16 billion) in 2026.

The reduction in workforce comes as Bayer logged more than $14.86 billion in sales, representing a 4.3% reported decline from the same period during the prior year. When adjusting for currency and portfolio effects, Bayer’s year-over-year decline slowed to 0.6%. Of its three divisions, only pharmaceuticals saw a boost in its Q1 sales.

Bayer’s pharma division performed well in the quarter, increasing nearly 4% to bring in more than $4 billion in sales on a currency- and portfolio-adjusted basis. The company attributed the growth to “significant gains” for its new products Nubeqa (darolutamide), indicated for specific types of prostate cancer, and Kerendia (finerenone), approved for chronic kidney disease in type 2 diabetes.

In Q1, Nubeqa sales grew 59%, reaching nearly $306 million, while Kerendia surged 63.5% bringing in $56 million.

Despite sustaining a slight dip in revenue, the anticoagulant Xarelto (rivaroxaban) and the eye treatment Eylea (aflibercept) remained Bayer’s best-selling assets in the quarter, generating approximately $1 billion and $844 million, respectively.

Looking ahead to the rest of the year, Bayer lowered its 2024 earnings-per-share guidance to a range of $5.19 to $5.62, down from the previously announced $5.35 to $5.78 EPS. The adjustment is due to the “negative impact from anticipated currency effects,” according to the company.

Since taking the helm at Bayer in June 2023, Anderson has tried to turn the company around from its disastrous $66 billion acquisition of agricultural giant Monsanto in 2016.

In January 2024, Anderson rolled out his new operating model designed to maximize operational efficiency and reduce bureaucracy and hierarchies in the company. The new model, dubbed Dynamic Shared Ownership, is a sweeping restructuring initiative that includes job cuts through 2025.

In March 2024, Bayer axed its executive roster which now only counts eight members, down from 14 previous positions.

Other drugmakers are also struggling. Last month, Bristol Myers Squibb announced that it plans to cut $1.5 billion in expenses by the end of 2025, including laying off approximately 2,200 employees.

https://www.biospace.com/article/bayer-cuts-1-500-jobs-lowers-2024-earnings-guidance-as-q1-sales-dip-/

Clover Health authorizes $20 million share buyback program, slightly raises full-year guidance

 Clover Health is raising its full-year adjusted EBITDA guidance and announced a share repurchase program of up to $20 million over the next two years, the insurtech said ahead of its first quarter earnings call.

The company’s net loss from continuing operations improved to $23.2 million, compared to a nearly $80 million loss in the first quarter of 2023. However, adjusted EBITDA profit for the quarter was $6.8 million and insurance revenue grew 8% year-over-year to $341 million.

Its medical cost ratio (MCR) improved to 77.9%, and the company boasted step change improvements to adjusted selling, general and administrative expenses.

“We have intentionally built Clover’s foundation to flourish in the future of the Medicare Advantage program,” said CEO Andrew Toy in a statement. “We expect to build upon this momentum in our full-year 2024 financial results, which is reflected in our updated guidance, as we continue to invest in our care management platform to deliver increasing value to members.”

Clover raised its full-year adjusted EBITDA range from $10 million to $30 million on Tuesday. Last quarter, the low end of the range was a loss of $20 million.

Toy echoed last quarter’s remarks in several respects, reiterating the company has a strong liquidity position and sufficient capital. He also said Clover is continuing to not see an increased utilization trend, unlike other major payers experienced toward the end of last year.

The company also expects its insurance revenue to now fall between $1.30 billion and $1.35 billion but lowered its max MCR range from 83% to 81%. The insurtech recorded a net loss per share of 0.05 cents, slightly better than analysts predicted.

“Given our software-centric approach, we strongly believe that we are well-positioned to move with agility against the backdrop of industry headwinds, including a lower MA rate environment and the phase-in of the new V28 coding rules in the years to come,” said Toy.

He said this is primarily because Clover Assistant, a proprietary platform that integrates into electronic health records for doctors, has always focused on chronic disease management and is constantly adding new features.

Although utilization has not ticked up drastically, the company is holding a “significant amount” of incurred but not reported (IBNR) claims. This is because claims inventory has increased while payments have decreased as claims processing systems are transitioned. Additionally, the company used Change Healthcare as Clover’s primary clearinghouse.

“We quickly pivoted to allow our providers to submit claims through alternative pathways, but claims receipt volume and processing volume remained very low during the second half of quarter one,” said Toy.

Claims submissions have since normalized after implementing a conservative buffer in the company’s reserves, he added. Clover is also shifting around its operating structure.

“Starting last month, Clover established an affiliate entity for the purpose of unifying Clover Health’s non-clinical quality improvement services offering,” said Toy.

The affiliate will service the company’s New Jersey plan, as well as third parties in the future. Although sparse on details, execs hope the affiliate will lead to more partnerships with physicians by bringing together health IT and care coordination services.

Nasdaq previously threatened Clover with delisting the company from its market exchange after its stock price fell below $1 for 30 consecutive days. It’s the second time Clover has been warned. The first time Clover’s stock fell similarly, the company scheduled a meeting to vote on a reverse stock split, but the vote was canceled once Clover regained compliance.

Next quarter, the company intends on unveiling BER, or benefits expense ratio, as another metric to compare company performance to others in the industry.

Clover expects to pay Centers for Medicare & Medicaid Services (CMS) $39 million in the second half of the year for its ACO REACH participation, a program the company exited at the year’s beginning. It will be the final payment toward the program.

https://www.fiercehealthcare.com/payers/clover-health-authorizes-20-million-share-buyback-program

Why Is Augmedix (AUGX) Stock Down

 Augmedix (NASDAQ:AUGX) stock is sliding lower on Tuesday after the medical documentation solutions company released its first quarter of 2024 earnings report.

The bad news for AUGX investors comes from its outlook update. This has the company expecting its 2024 revenue to range from $52 to $55 million. This would see it missing Wall Street’s revenue estimate of $61.15 million for the year.

Augmedix CEO Manny Krakaris explains the reason for this low revenue outlook below:

“We have observed a slow-down in purchasing commitments by some providers as they evaluate the many AI offerings currently available. Based on current expectations, we now believe it is prudent to adjust our full year revenue outlook to reflect these developments that have arisen since the last earnings call.”

 https://investorplace.com/2024/05/why-is-augmedix-augx-stock-down-41-today/

AVITA Medical Inc (Q1 2024) Earnings Call Transcript Highlights

 

• Commercial Revenue: $11.1 million for Q1 2024, a 5.8% increase year-over-year but below expectations.

• Gross Profit Margin: Increased to 86.4% from 84.2% in Q1 2023.

• Operating Expenses: Rose to $26.8 million from $19.4 million in Q1 2023.

• Net Loss: $18.7 million, or $0.73 per share, compared to $9.2 million, or $0.37 per share in Q1 2023.

• Cash and Equivalents: $68.1 million as of March 31, 2024, down from $89.1 million as of December 31, 2023.

• Q2 2024 Revenue Guidance: Expected to be between $14.3 million and $15.3 million.

• Full Year 2024 Revenue Guidance: Reaffirmed at $78.5 million to $84.5 million, indicating a growth of approximately 57% at the lower end.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• AVITA Medical Inc  has expanded its product portfolio with the launch of PermeaDerm in the US on March 23, aiming to address a broader range of clinical needs in wound care.

• The company is nearing FDA approval for RECELL GO, expected by May 30, 2024, which could significantly enhance operational efficiency and adoption rates.

• AVITA Medical Inc (AVHHL) has successfully passed major MDR conformity assessment audits, advancing towards obtaining a CE Mark for RECELL GO in the European Union.

• The company is actively pursuing international expansion, with plans to execute distributor agreements in major EU countries and Australia within the year.

• AVITA Medical Inc  has a robust gross profit margin of 86.4% for the quarter, indicating strong profitability in its core operations.

Negative Points

• AVITA Medical Inc  reported disappointing first-quarter commercial revenue of $11.1 million, falling short of expectations and marking the first time without sequential quarterly growth since the CEO's tenure began.

• The company experienced a slower-than-expected conversion rate of new accounts for its expanded level of full thickness skin defects, adding only 73 new accounts instead of the expected 135 by the end of the first quarter.

• A data breach at a major US clearing house disrupted the data feed to AVITA Medical Inc 's claims data provider, impacting the company's ability to analyze burn wound admissions and device utilization.

• The company's net loss for the first quarter was $18.7 million, significantly higher than the previous year's loss of $9.2 million.

• AVITA Medical Inc  experienced a significant use of cash during the quarter, with cash, cash equivalents, and marketable securities decreasing from $89.1 million as of December 31, 2023, to $68.1 million as of March 31, 2024.

Q & A Highlights

Q: David, do you expect that $6 million of Stedical revenue to occur in the second half of 2024? Or is it more likely that that would extend into 2025? A: David O'Toole, CFO of AVITA Medical, responded that the company has not provided specific guidance on the timing of the Stedical revenue. He mentioned that the sales team is gaining traction with PermeaDerm, but it is too early to predict the uptake rate. More detailed guidance will be provided in August.

Q: Are accounts waiting for the approval for RECELL GO before ordering product, or was that not much of a factor in Q1 results? A: James Corbett, CEO of AVITA Medical, clarified that there is no indication of accounts delaying orders in anticipation of RECELL GO approval. However, there is strong anticipation for RECELL GO among many larger accounts.

Q: How quickly do accounts ramp up RECELL utilization once VAC committees grant approval for the expanded label? A: James Corbett explained that after VAC approval, there is a process of training and gradual uptake. The company's medical science liaisons play a crucial role in educating physicians on patient treatment with RECELL, which supports broader adoption over time.

Q: Can you elaborate on the contributions from RECELL GO and full-thickness skin defects in the back half of the year? A: James Corbett indicated that RECELL GO is expected to significantly transform the business by simplifying the treatment process, which should enhance adoption rates. He also noted that while burns will remain a major part of the business for the year, full-thickness treatments will experience faster growth.

Q: Regarding the international expansion, particularly the CMAC and plans for launching products into Europe, can you provide more details? A: James Corbett discussed the company's strategy for entering European markets, mentioning that some distributors prefer to start with RECELL GO. The launch timing aligns with the anticipated approval of RECELL GO under the new MDR, expected around September or October.

Q: What was the reason for the lower burn rate in January, and has that normalized? A: James Corbett addressed the lower burn rate in January, noting it as an anomaly with no continuing effects observed. The company expects burn rates to return to historical norms.

https://finance.yahoo.com/news/avita-medical-inc-avhhl-q1-070430381.html

Novo to test Wegovy and other obesity drugs against alcohol-related liver disease

 Novo Nordisk will test whether its GLP-1 drugs can help people with alcohol-associated liver disease, and, as part of that, will study if the treatments will change the amount of alcohol people drink.

This appears to be the first time the company is getting involved in research to see if the booming class of GLP-1 diabetes and obesity drugs can affect substance consumption, a question that academic researchers have been probing but the pharmaceutical industry has so far avoided.

https://www.statnews.com/2024/05/14/wegovy-alcohol-related-liver-disease-novo-nordisk/

Rapt cut by 3 sell siders

 

Today Downgrade Wolfe Research Outperform → Peer Perform

May-10-24 Downgrade Guggenheim Buy → Neutral

May-10-24 Downgrade Barclays Overweight → Equal Weight $13 → $4

https://finviz.com/quote.ashx?t=RAPT&ty=c&ta=1&p=d

FDA extends review of Ascendis Pharma's hormone disorder therapy

 The U.S. Food & Drug Administration has extended its review of Ascendis Pharma's therapy to treat adult patients with a hormone disorder by three months, the company said on Tuesday.

U.S.-listed shares of the company were down 6.6% in late afternoon trading.

The health regulator notified that data submitted for the ongoing review of the therapy, called TransCon PTH, constituted "a major amendment" to the company's application seeking market approval.

Last year, the FDA declined to approve the Danish drugmaker's once-daily therapy, TransCon PTH, citing concerns linked to manufacturing controls of the drug and device combination.

The FDA, however, did not express any concerns about the clinical data submitted at that time and did not seek fresh pre-clinical or late-stage trials in its so-called complete response letter.

The FDA is now set to make its decision known by Aug. 14.

Ascendis CEO Jan Mikkelsen said the company has responded to all requests received to date from the FDA and will work with the agency as it continues its review.

The disorder known as hypoparathyroidism is caused by the absence of the parathyroid hormone that regulates calcium and phosphorus levels in the body.

The disorder causes low calcium levels and high phosphorus levels in the blood, in which patients suffer from muscle cramps, seizures and long-term symptoms such as high risk of kidney disease and depression.

The current standard-of-care treatment for the condition is the daily intake of vitamin D and calcium supplements.

Tokyo-listed drugmaker Takeda's Natpara was the only approved treatment for this condition, but unresolved supply issues have resulted in discontinuation of the treatment.

Ascendis' therapy, marketed under the name Yorvipath, gained approval in UK in April. It is already available in Germany and Austria and had first-quarter sales of 1.5 million euros ($1.62 million) for the first two months since its launch.

https://finance.yahoo.com/news/1-fda-extends-review-ascendis-184752492.html