Health-care earnings begin in earnest this week, starting with government insurance giant Centene Corp. reporting on Tuesday, followed by Anthem Inc., Biogen Inc., Boston Scientific Corp. and Swiss drugmaker Novartis AG reporting Wednesday.
The past week has been a difficult one for health companies. Health-care stocks are lagging the broader market by their largest margin since 2006, sparked by murmurs of a single-payer health system and proposals to tighten regulations around drug pricing. Shares of UnitedHealth Group Inc. tumbled last week despite the company reporting first-quarter earnings and revenue that beat expectations — a sign of investors’ growing anxiety over the health-care regulatory climate.
With that in mind, here’s what to watch out for during the next couple of days as health-care companies announce earnings.
Centene CNC, -0.25% is set to announce first-quarter earnings on Tuesday before the market opens. Analysts polled by FactSet expect the Medicaid-focused health insurer to report first-quarter earnings of $1.35 per share, up from $1.09 a year ago. Revenue is expected to come in at $17.462 billion, compared with $13.194 billion in the year-earlier quarter.
Last month, Centene agreed to buy competitor WellCare Health Plans Inc. WCG, -0.11% for $15.3 billion, creating a managed-care giant in the business of government health programs and boosting Centene’s Medicare market share. The deal, which dropped as health-policy threats came from both the left and the right, was seen by some as a bet on the future of the Affordable Care Act (ACA), also known as Obamacare. Whether the bet pays off will depend on what changes, if any, are made to the ACA.
Centene executives will likely get questions on Tuesday’s earnings call with analysts about the future of the ACA. The company, whose stock has fallen 16% so far this year, is the largest provider of plans through both the Medicaid program and the ACA marketplaces.
Health insurer Anthem ANTM, +1.28% will report first-quarter earnings on Wednesday before the opening bell. The company is expected to report earnings of $5.89 per share, up from $5.41 in the year-earlier quarter, according to analysts polled by FactSet. Revenue is expected to come in at $24.426 billion, higher than $22.342 billion a year ago.
Shares of Anthem are down 8.4% so far this year, reflecting the recent sell-off in health insurance stocks.
In 2017, Anthem announced it would launch its own pharmacy-benefit manager, which the insurer said should generate around $4 billion in savings each year. The PBM, called IngenioRx, was initially slated to launch in 2020, but then Anthem said in January the rollout would be pushed up to March, resulting in a boost in projected earnings for the year. Management will likely give an update on the rollout on Wednesday during its earnings call with analysts, so investors should keep their ears open.
Biogen BIIB, +1.57% is set to report first-quarter earnings on Wednesday before the market opens. The drugmaker, whose shares are down 24% in the year to date, was dealt a severe blow this past quarter when it was forced to discontinue Phase 3 trials of aducanumab, an investigational Alzheimer’s drug whose mechanism of action was based on the so-called amyloid hypothesis. Shares plunged 28% at the time, and Biogen said it would take a closer look at the data.
Investors will want answers from management on Wednesday about what went wrong with aducanumab, which analysts once thought would be the company’s next big blockbuster drug. They will also want to hear an update on the drugmaker’s collaboration with Eisai Co. Ltd. ESALY, +0.66% on another amyloid-based treatment for Alzheimer’s.
Biogen is expected to report earnings of $6.83 per share, up from $6.05 a year ago, according to analysts surveyed by FactSet. Revenue is expected to come to $3.385 billion, up from $3.131 billion in the year-earlier quarter.
Medical device maker Boston Scientific Corp. BSX, -0.60% which will also announce earnings on Wednesday morning, should report earnings of 36 cents per share, according to FactSet, higher than 33 cents in the year-earlier quarter. Revenue should be $2.535 billion, up from $2.379 billion a year ago.
Last week, the Food and Drug Administration ordered Boston Scientific and Coloplast Corp. CLPBY, -0.05% to remove their transvaginal mesh products, used to treat pelvic organ prolapse, from the market. Shares of Boston Scientific fell more than 7% at the time, though shares are only down 1.8% for the year. Investors will want to hear from management how the removal of the vaginal mesh products, a part of Boston Scientific’s urology and pelvic health business and the subject of years of litigation against the company, will affect the bottom line.
Finally, Swiss drugmaker Novartis AG NVS, -1.39% will be reporting earnings on Wednesday, as well. Analysts polled by FactSet expect earnings of $1.10 per share, down from $1.13 a year ago. Revenue is expected to be $11.356 billion, down from $12.694 billion in the year-earlier quarter.
In March, the Food and Drug Administration approved the company's new multiple sclerosis drug, Mayzent. Novartis priced the treatment at $88,000 annually, something that probably won’t invite objections from investors but could draw scrutiny from payers and lawmakers. Management will likely give an update on the drug launch during the company's Wednesday earnings call with analysts.
Management will also likely address its Friday disclosure of an investigation looking into the death of a second baby involved in a clinical trial of experimental multiple sclerosis treatment Zolgensma. A six-month-old patient with type 1 spinal muscular atrophy had recently died in Europe after undergoing the treatment, but an investigator and independent monitor deemed that death unrelated to the therapy. Zolgensma, whose FDA submission was based on data from a trial of 15 babies, is expected to be approved by the FDA within weeks.
Shares of the drugmaker, which spun off eye-care business Alcon Inc. ALC, -0.92% earlier this month, are down 0.8% so far this year.
