Its earnings season again and here are brief summaries of analyst calls by a few health care companies. Thanks to Seeking Alpha for the great service it provides in making transcripts of these calls widely available.
UnitedHealth Group was first out of the box with health plan company earnings, which were above expectations. The company discussed its many initiatives to improve health care administration and clinical outcomes, including its continuing forays into provider revenue cycle and electronic health record software and its development of “premium” provider networks. The company expects to continue to lose commercial members and gain public payer ones. Utilization has been flat to slightly down. (UHG Transcript)
Wellpoint was up next. The Company also was ahead of expectations. It also is losing commercial members and sees continued losses in that segment. It perceives pricing as being somewhat competitive, but increases sufficient to cover medical cost increases. Wellpoint highlighted some efforts in regard to bundled payments to providers. The company is more revealing than UHG on medical cost trends, saying that overall trend is 8.9%, with inpatient in the low double digits, almost all due to unit price increases; outpatient at low double digits, again largely unit price; and physician at mid single digit increases. (Wellpoint Transcript)
Quest is one of the two large lab companies. These companies went through a rough patch years ago but have become very stable, particularly with the growth of genetic-related testing. That continues to be the area of growth. Quest has begun to expand internationally and also has used its existing electronic connection with a number of physicians to expand into e-prescribing and even EMRs. The basic lab business of routine tests has very slow growth, especially in unit prices, so these new areas are needed. (Quest Transcript)
Cardinal is one of the large pharmaceutical wholesalers and a distributor, and in some cases manufacturer, of medical supply items. Last year Cardinal spun off its larger equipment business as CareFusion. Much of the discussion was around efforts to improve pricing on generics, which have become the great majority of prescriptions. There was also some discussion around Cardinal’s retail pharmacy franchise model–the Medicine Shoppes. Not much dramatic going on. (Cardinal Transcript)
McKesson is another large pharmaceutical distributor, also has a medical supply business, but the most interesting part of its business right now may be the information systems division, which provides a variety of clinical and administrative systems, primarily to hospitals but also to other providers. The stimulus bill has created significant opportunities for this division. McKesson believes it has very comprehensive solutions to help providers and says it is continuing to invest in improving these products. McKesson also owns Relay Health, which is very involved in health information exchange. (McKesson Transcript)
Finally, Abbott is a large pharmaceutical, device and medical supply business. (Abbott Transcript) Abbott has seen better revenue than most pharma companies, in part because it is very diversified. Like many drug businesses, it has been acquiring drugs or biotech companies to fill its pipeline, but it does have some in-house research successes. The drug division does not appear to face pricing pressure, but the device business, in particular stents, does.
Most interesting about this sample of health care company earnings reports is that there was very little discussion about reform and no one seems to be hurting from a profit perspective.