J.P. 摩根-美股-医疗保健行业-北美医疗行业2019年Q4预览-2020.2.21-24页.pdf

North America Equity Research21 February 2020Equity Ratings and Price TargetsMkt CapRatingPrice TargetCompanyTicker($mn)Price($)CurPrevCurEnd DatePrevEnd DateEvolent HealthEVH US793.3211.64Nn/c12.00Dec-209.00n/cHealth CatalystHCAT US1,148.1331.46OWn/c50.00Dec-20n/cn/cLivongoLVGO US2,678.5728.35OWn/c43.00Dec-20n/cn/cAllscriptsMDRX US1,604.578.73Nn/c10.00Dec-2012.00n/cProgynyPGNY US2,935.1733.67OWn/c35.00Dec-2030.00n/cPhreesiaPHR US144.0233.61OWn/c33.00Dec-20n/cn/cHealthEquityHQY US5,366.1486.88OWn/c90.00Dec-2075.00n/cSource:Company data,Bloomberg,J.P.Morgan estimates.n/c=no change.All prices as of 20 Feb 20.Healthcare IT4Q19 Preview:Focus Points for the Prints&Model PositioningHealth Care Services Distribution,Technology&PBMsAnne E.Samuel AC(1-212)622-Bloomberg JPMA SAMUEL Lisa C.Gill(1-212)622-Michael Minchak,CFA(1-212)622-J.P.Morgan Securities LLCSee page 22 for analyst certification and important disclosures.J.P.Morgan does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.Ahead of the remaining Healthcare IT earnings prints,we wanted to lay out our thoughts on the models and upcoming 2020 guides.Incoming call volume throughout the quarter has been highest on LVGO given the volatility in the stock,noting that we had updates from HQY,MDRX,and EVH at the J.P.Morgan Healthcare Conference in January that provided some visibility into the prints.Sentiment on the group has been largely favorable with the group up 12%since 3Q earnings in November vs the remaining Healthcare Technology&Distribution group up 14%and the SPX+8%.Herein,we provide a brief overview of our expectations and print focus points for each company.What do we know going into the quarterly reports?Weve gotten the following data points into 4Q prints and 2020 guidance:(1)PGNY announced 57 new clients from the recent selling season,which was in line with our model;(2)LVGO blessed Street numbers on its 3Q call for$276M equating to 63%YoY growth;(3)MDRX pre-announced 4Q guidance in January(we think its now mathematically difficult for them to hold onto the upper end of 3.5-6%LT organic growth guidance);(4)Evolent guided to 20%services growth in 2020 based on the Passport contract decision now a 2021 factor.How conservative have our companies historically been when guiding to the year ahead?We took a look back at the past 5 years to see how our companies have guided relative to the Street consensus estimates and whether or not they actually hit those targets.Interestingly,Allscripts initial guidance,while not always in line with the Street,has been a good indicator of actual performance,Evolents revenue guidance has always captured the Street right at the midpoint,and HealthEquitys guidance has proven very conservative,as they have exceeded the high end of the EPS range by 16%on average.MDRX:Over the past 5 years MDRXs year ahead EPS guidance bracketed the Street 3 out of 5 times(missed 2 times),but the midpoint was an average 5%below the Street consensus estimate.Full year actual results over that time have come in within the initial guidance range each of those years.EVH:Over the past 4 years,EVH has provided year ahead revenue guidance with the midpoint right in line the Street consensus estimate,and the full year actual results have come in an average 10%above the initial midpoint,noting some contribution from inorganic growth over that time.HQY:Over the past 5 years HQYs year ahead EPS guidance bracketed the Street 2 out of 5 times(missed 2 times,and was 2North America Equity Research21 February 2020Anne E.Samuel(1-212)622-above once),but the midpoint was an average 1%below the Street consensus estimate.HQYs guidance has proven conservative,as full year actual results over that time have come in well above the initial guidance range each of those years,averaging 16%above the high end of the EPS range.PGNY:While we dont have much history with PGNY,we took a look back at WebMDs historical earnings guidance to see if we could assess managementslevel of conservatism as both CEO Schlanger and CFO Anevski were previously with that company.From the years ending 2014-2016 while they were there,earnings guidance captured the Street estimate 2 out of 3 years(exceeded once),and actual annual earnings results exceeded the high end of initial guidance by 11%on average.Evolent Health(EVH/N,Tuesday Feb 25,AMC).At our conference in January,Evolent spoke to expectations for 2020 organic services revenue growth of 20%to a minimum of$820M.This was the result of Passports contract being extended through 2020,as they await a final decision on the Medicaid contract award(expected in April).The stock has appreciated 76%since trough levels of$6.49 when the Passport RFP initially fell through(vs SPX+9%);however,Street revenue estimates at$930M do not yet fully reflect the improved outlook.We are raising our 2020 estimates to align with the guide,now modeling 20%organic services growth,with flattish premiums revenue resulting in 16%total 2020 revenue growth to$975M.We are also raising our 2020 EBITDA estimate to$42M,assuming the companys prior target for a$40-50M annual 2H19 run rate remains a forward-looking target despite 4Q investments,as we expect the strong revenue growth should provide leverage in the model.Based on our revised estimates,we are also raising our price target to$12.Breaking down our 4Q estimates,we model revenue of$232M(vs.the Street at$234M),in line with guidance of$227.5-$239.5M,and representing growth of 20%y/y,and embedding services growth of 16%.Our EBITDA estimate for the quarter is$10M,representing an increase of 45.3%y/y(vs.the Street at$9.5),in line with guidance of$8-$11M.Looking back at prior quarterly performance,EVH has exceeded consensus revenue in 11 of the past 12 quarters.Of the past 12 earnings releases,EVH shares have traded up on the day of the earnings release 9 times and down on 3.We will look for commentary on the call around margin expansion opportunities,particularly now that revenue growth is accelerating to a 20%rate,any updates on the Passport process as we get closer to an April decision,and any commentary on the demand environment or impact from the elections.Conference call Tuesday February 25,5:00 PM ET;dial in(855)940-9467,passcode Evolent Health call.Health Catalyst(HCAT/OW,Thursday Feb 27,AMC).For the HCAT print,our focus will be on the number of new DOS subscription customers added in the year(and any Medicity conversions)as well as dollar-based retention.Specifically,at our conference in January,the company spoke to the Medicity conversion opportunity inflecting in 2020 as cross-sell conversations began in summer 2019,with the sales cycle for the core business generally 12 months.Digging into our model,we are modeling 14 net new customers for 2019 equating to 28%YoY customer growth.Looking ahead to 2020,we model 18 net new DOS subscription customers and 7%same-store growth equating to 25%DOS subscription revenue growth,and 22%total revenue growth due to the Medicity drag.This puts our 2020 revenue estimate at$186M,which is in 3North America Equity Research21 February 2020Anne E.Samuel(1-212)622-line with the Street estimate.Breaking down our 4Q estimates,we model revenue of$41.5M(vs the Street at$41.74M),in line with the guidance of$40M to$43M and representing growth of 15%y/y.Our EBITDA estimate for the quarter is-$8.2M(vs the Street at-$7.8M)and in line with guidance of-$9.2M to-$7.2M.Recall that on the 3Q call,HCAT called out a$2.5M revenue headwind in 4Q,as performance-based revenue arrangements will become a smaller portion of the revenue base.On the expense side,they spoke to a$200K expense shift out of 3Q into 4Q from non-headcount related expenses.For 2020,we estimate total revenue growth of 22%to$186M.We see gross profit margins of 52.2%and we estimate F2020 EBITDA of-$22M.On the earnings call,we will be listening for incremental commentary around the AbleHealth acquisition,pipeline for new customer adds,and Medicity conversion opportunity.Conference call Thursday February 27,5:00 PM ET;dial in(877)295-1104,passcode 7774569.Livongo(LVGO/OW,Monday March 2,AMC).We expect the focus of the print to be on 2020 guidance and the sustainability of rapid growth.Incoming questions we have received have been around the level of conservatism in the Street models,as well as the competitive environment.Recall on the 3Q call CFO Shapiro blessed Street revenue estimates of$276M calling for 63%YoY growth,which they reiterated in January at our conference.Looking at the EVA that they reported in 3Q,a 40%conversion rate on$208M YTD EVA would equate to a 70%revenue growth run rate on our math.Wed also highlight that on the 3Q call,mgmt.spoke to 2020 representing an“investment year”.Breaking down our 4Q estimates,we model revenue of$49.4M,vs the Street at$49.3M representing a 132.9%y/y increase,in line with guidance of$49M to$49.5M.We model EBITDA of$(5.5M)vs.the Street at$(5.2M),and in line with the guidance of-$5.5M to-$5M.Looking ahead to 2020,we estimate total revenue growth of 66%to$281M.We see gross profit margins of 72%and we estimate F2020 EBITDA of-$25M.On the call we will be listening for commentary around enrollment,pipeline for new growth,and any changes in the competitive environment.Conference call March 2,4:30 PM ET;dial in(270)215-9499,passcode Livongo.AllScripts(MDRX/N,Monday March 2,AMC).At our conference in January,Allscripts provided preliminary 2019 results,lowering revenue to a range of$450-455M,and holding full year EPS guidance of$0.67-0.70.Our biggest take from this guidance,is that while 4Q revenue growth of 2-3%,exceeds the roughly flat growth seen in the first 3 quarters of 2019,it would imply 2.5%-5.5%organic growth in the next 2 years to achieve the companys targeted long-term organic growth CAGR of 3.5-6%.In our view,it will be difficult mathematically for MDRX to achieve the high end of that range over the next 2 years,and while faster-growing businesses are growing in excess of 10%,they remain only 20%of revenue with the EHR market mature.To that end,LT guidance also calls for 2-3%inorganic growth;however,at our conference,the company spoke to expectations for lighter M&A in 2020 vs prior years,while continuing to focus on areas of growth.With that backdrop,we are lowering our 2019 estimates to align with the guidance,and we now model 2020 revenue growth of 4%,in line with 3.5-6%LT organic growth guidance.Breaking down our 4Q estimates,we lowered our 4Q revenue estimate to$454M(in line with$450-455M guidance),and we lowered our EPS estimate to$0.17 putting full year EPS at$0.67,in line with$0.67-70 guidance.4North America Equity Research21 February 2020Anne E.Samuel(1-212)622-We estimate 2019 adjusted EBITDA of$301M which is flat YoY.Based on our reduced estimates,we are lowering our MDRX price target to$10.Looking back at historical performance,MDRX has reported adjusted EPS above Bloomberg consensus in 5 of the past 12 quarters.The stock has traded down on the day following earnings in 7 of the past 12 quarters.Conference call March 2,4:30 PM ET;dial in(877)269-7745,passcode 13699139.Progyny(PGNY/OW,Thursday March 5,AMC).While Progyny provided us with an update on the recent selling on the 3Q call,adding 57 new clients(and importantly retaining all existing clients),initial utilization will be the item that determines how the company sets its 2020 guidance.At our recent meetings with the company,mgmt spoke to being able to determine the estimated rate after 6 weeks,with utilization varying from client to client based on mix of demographics.That said,we are modeling 2020 revenue growth of 71%to$394M,which assumes$1.5M medical value per new client,and a 75%pharmacy attach rate based on managements commentary around the selling season.Breaking down our 4Q estimates,we model revenue of$66M,in line with guidance for$65-66.5M,and the Street at$66M.Our EBITDA estimate for the quarter is$4M,in line with the Street and guidance of$3.8M to$4.1M.Looking ahead to 2020,we estimate total revenue growth of 71%to$394M,and we estimate F2020 EBITDA of$41M,equating to a 10.5%margin.While PGNY is up 160%since the IPO(SPX+13%),we continue to believe that they are differentiated in the marketplace,and with visibility now fairly good into year-end with 57 new clients added in the selling season,we feel comfortable raising our price target to$35.Conference call March 5,4:45 PM ET;dial in(877)883-0383,passcode 2146745.Phreesia(PHR/OW,Date TBD).We continue to favor Phreesia given its compounding model and we expect the company to provide F2021 guidance in line with its long-term plan for 20%revenue growth,which our revenue estimate of$146M reflects(Street at$145M).Our model embeds mid-single-digit revenue growth in provider clients,and mid-teens growth in average revenue per provider client,with life sciences revenue growth of 5%.Near-term,we see flu as a potential small 4Q benefit as the payments business is tied to utilization(noting PHR is spread across many specialties).Breaking down our 4Q estimates,we model revenue growth of 14%to$30M(in line with the Street),putting our full year revenue estimate of$122M in line with guidance of$122-122.5M.We estimate adjusted EBITDA of$0.0 putting full year EBTIDA at$3.4M(Street at$3.8M),in line with the guidance for“positive Adjusted EBITDA”.Looking out to next year,we model revenue of$146M reflecting 20%YoY growth,and EBITDA of$6M equating to a 4.2%margin.HealthEquity(HQY/OW Date TBD).We are raising our HQY estimates following the companys 4Q sales metrics report,in which they raised their revenue guidance for the year by 2%and EPS by 15%.Preliminary guidance for 2021 was also established,calling for revenue of$812-820M,and EBITDA margins of 31-33%.We remain encouraged by the companys consistent outperformance despite the difficulty of integrating a large acquisition,with expense synergies coming on sooner than anticipated.We now model 4Q20 revenue of$200M,putting our full year estimate at$531M,in line with guidance of$530-532M.We model 4Q EPS of$0.39,putting full year EPS at$1.71,in line with guidance of$1.71-1.73.Looking to 2021,we model revenue of$818M,in line with guidance of$812-820M,and EPS of$1.74,with EBITDA margins of 32%in line with guidance of 31-33%.Due to the increase 5North America Equity Research21 February 2020Anne E.Samuel(1-212)622-in our estimates,we also raise our price target to$90.Looking back at past earnings performance,HQYhas exceeded consensus adjusted EPS in 12 of the past 12 quarters.Of the past 12 earnings releases,HQY shares have traded up on the day of the earnings release 10 times and down on 2.We will look for commentary on the call around any change in HSA market trends and competitive dynamics,