瑞信-美股-医疗科技行业-医疗科技与渠道：管理团队问题-2019.1.6-73页.pdf

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS.US Disclosure:Credit Suisse 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.6 January 2019Americas/United StatesEquity ResearchHealthcare Technology&Distribution Healthcare Technology&Distribution SECTOR REVIEWResearch AnalystsErin Wilson Wright212 538 4080erin.wrightcredit-Charles Lederer,CPA212 538 1822charles.lederercredit-Katie Tryhane212 325 2713katie.tryhanecredit-George Engroff212 325 2289george.engroffcredit-Questions for management teamsWith several investor and industry conferences approaching,we have compiled a list of relevant questions and topics of discussion for respective management teams across our diverse coverage universe of Healthcare Technology&Distribution companies,with an emphasis on the following sub-sectors:PBMs/Pharmacies,Distributors,Contract Services Organizations,Clinical Laboratories,Animal Health,Dental,HCIT,Life Sciences,among others.Please reach out to our team for copies of our latest models or other requests in preparation for your meetings.Figure 1:HC Technology&Distribution Coverage UniversePBMs/PharmaciesDentalCVS HealthCVSDentsply SironaXRAYWalgreens Boots AllianceWBAAlign TechnologyALGNDiplomat PharmacyDPLODanaherDHRHenry ScheinHSICDistributorsPatterson CompaniesPDCOAmerisourceBergenABCCardinal HealthCAHAnimal HealthMcKessonMCKZoetisZTSOwens&MinorOMIIDEXX LaboratoriesIDXXElanco Animal HealthELANPhibro Animal HealthPAHCIQVIA HoldingsIQVAratana TherapeuticsPETXICON PLCICLRPetmed ExpressPETSPRA Health SciencesPRAHSyneos HealthSYNHMedpaceMEDPHMS HoldingsHMSCharles River LaboratoriesCRLPremierPINCLabCorpLHQuest Diagnostics*DGXFulgent GeneticsFLGTLantheus HoldingsLNTHCROs/LaboratoriesInformation Technology&ServicesLife Sciences/OtherSource:Credit Suisse*Covered by AJ RiceLinks to recent industry research:Healthcare Technology&Distribution:Year Ahead Outlook 2019Drug Distributor Update:November Deflation Trend EncouragingDrugstore Trend Tracker:Intra-Quarter Visibility for Retail PharmaciesState of the Clear Aligner MarketAnimal Tracks:November pet adoptions flatCS Dental Summit:Turning Frowns Upside Down?6 January 2019Healthcare Technology&Distribution2Table of contentsPBMs&Pharmacies6CVS Health(CVS).6Walgreens Boots Alliance(WBA).10Diplomat Pharmacy(DPLO).12Distributors14AmerisourceBergen(ABC).14Cardinal Health(CAH).17McKesson(MCK).19Owens&Minor(OMI).21Clinical Laboratories22LabCorp of America(LH).22Quest Diagnostics(DGX).24CROs27Charles River Laboratories.27ICON PLC(ICLR).28Syneos Health(SYNH).29Medpace(MEDP).31PRA Health Sciences(PRAH).34IQVIA Holdings(IQV).36Dental38Align Technology(ALGN).38Danaher(DHR).41DENTSPLY Sirona(XRAY).44Henry Schein(HSIC).46Patterson Companies(PDCO).49Animal Health51Aratana Therapeutics(PETX).51Elanco Animal Health.52IDEXX Laboratories(IDXX).55Phibro Animal Health(PAHC).58Petmed Express(PETS).60Zoetis(ZTS).61Information Technology Services64HMS Holdings(HMSY).646 January 2019Healthcare Technology&Distribution3Premier(PINC).66Life Science Tools&Diagnostics/Other68Fulgent Genetics(FLGT).68Lantheus(LNTH).696 January 2019Healthcare Technology&Distribution4Figure 2:Healthcare Technology&Distribution Coverage UniversePriceUpside/1/4/19Market52 WeekAvg DailyRevenue(CY)Avg(5yr)EPS(CY)Avg(5yr)P/E(CY)EV/EBITDA(CY)DividendTickerRatingTargetDownsidePriceCap High LowVol(000s)20192020Rev Gr.20192020EPS Gr.2019202020192020YieldxPBMs&PharmaciesxCVS HealthCVSOutperform$8629%$66.82$86,412$84$6010,669$261,560$277,16510%$7.41$8.7811%9.0 x7.6x9.8x8.8x0.7%Walgreens Boots AllianceWBAOutperform$8522%$69.57$65,635$86$597,426$139,556$143,7904%$6.95$7.4820%10.0 x9.3x7.7x7.4x0.6%Diplomat PharmacyDPLONeutral$1721%$14.10$1,050$29$13811$5,953$6,57533%$0.90$1.038%15.7x13.7x9.5x8.8x-Average9%13%-10.5x9.0 x8.5xxxDistributorsxAmerisourceBergenABCOutperform$10035%$74.22$15,730$106$691,406$181,130$190,82813%$7.05$7.6711%10.5x9.7x7.3x6.9x0.5%Cardinal HealthCAHOutperform$5727%$44.92$13,384$76$423,908$142,609$146,9856%$5.15$6.0912%8.7x7.4x7.2x6.6x1.1%McKessonMCKUnderperform$103-10%$114.33$22,337$179$1061,990$219,654$226,96913%$14.03$14.8712%8.1x7.7x7.2x6.5x0.3%Owens&MinorOMIUnderperform$6-8%$6.50$405$23$61,654$9,802$9,9821%$1.00$1.07-3%6.5x6.1x6.8x6.7x1.2%Average8%8%8.5x7.7x7.1x6.7xxAnimal HealthxZoetis ZTSOutperform$9816%$84.76$40,723$97$702,326$6,347$6,7144%$3.50$3.8814%24.2x21.8x18.2x16.7x0.1%IDEXX Laboratories IDXXOutperform$25938%$187.43$16,163$256$163599$2,426$2,6789%$4.72$5.3018%39.7x35.4x26.5x24.1x-Elanco Animal HealthELANNeutral$334%$31.83$11,638$38$291,225$3,056$3,1500%$1.07$1.3017%29.7x24.6x19.7x18.1x-Phibro Animal Health PAHCNeutral$332%$32.22$651$55$31129$858$9004%$1.79$2.0334%18.0 x15.8x6.8x6.0 x0.4%Aratana Therapeutics PETXOutperform$823%$6.50$316$7$4338$45$69-$0.10$0.37-17.6x-10.3x-Petmed ExpressPETSUnderperform$21-10%$23.25$481$58$22666$305$3154%$2.24$2.3719%10.4x9.8x6.6x6.2x1.2%Average4%21%24.4x20.8x15.5x14.2xxxDentalxDentsply SironaXRAYOutperform$5028%$39.01$8,682$68$342,596$4,097$4,2469%$2.37$2.833%16.5x13.8x12.4x11.5x0.2%DanaherDHROutperform$11413%$100.45$70,406$111$922,997$20,267$21,39710%$4.83$5.1615%20.8x19.5x16.2x15.3x0.2%Align TechnologyALGNOutperform$27748%$186.71$14,934$399$1781,312$2,450$2,94123%$6.03$7.5529%31.0 x24.7x20.1x16.1x-Patterson CompaniesPDCOOutperform$2522%$20.55$1,951$39$191,796$5,752$5,9839%$1.60$1.841%12.9x11.2x10.1x9.2x1.3%Henry ScheinHSICNeutral$762%$74.50$11,357$91$631,535$14,070$14,7217%$4.45$4.8210%16.8x15.4x11.1x10.5x-Average12%11%19.3x16.3x13.4x11.8xxxContract Research Organizations/Clinical LaboratoriesxIQVIA HoldingsIQVOutperform$14123%$115.07$22,789$135$921,549$10,876$11,4725%$6.19$6.8210%18.6x16.9x13.7x12.8x-ICON PLCICLROutperform$15929%$123.64$6,730$155$101339$2,817$3,0197%$6.76$7.5033%18.3x16.5x13.4x12.4x-PRA Health SciencesPRAHOutperform$11531%$88.09$5,724$122$79622$3,213$3,53725%$4.83$5.4458%18.2x16.2x13.4x12.1x-Syneos HealthSYNHOutperform$4922%$40.03$4,132$54$31655$4,780$5,20573%#N/A$3.6471%#N/A11.0 x10.4x9.4x-MedpaceMEDPOutperform$6218%$52.50$1,869$65$32838$789$84612%$2.82$3.07-4%18.6x17.1x13.6x12.7x-Charles River LaboratoriesCRLNeutral$1100%$109.75$5,279$140$97409$2,518$2,69613%$6.46$7.2316%17.0 x15.2x11.7x10.8x-LabCorp of AmericaLHOutperform$16025%$127.96$12,911$190$1191,166$11,606$12,15316%$11.10$12.148%11.5x10.5x9.4x8.8x0.2%Quest Diagnostics*DGXOutperform$10325%$82.71$11,255$116$791,498$7,754$7,9391%$6.59$6.896%12.5x12.0 x9.5x9.3x0.6%Average19%22%#N/A14.4x11.9x11.0 xxInformation Technology ServicesxHMS HoldingsHMSYOutperform$3420%$28.33$2,377$38$15752$646$6982%$1.16$1.315%24.4x21.6x14.8x13.5x-PremierPINCOutperform$4314%$37.64$2,399$47$29852$1,743$1,88115%$2.71$2.9011%13.9x13.0 x9.3x8.7x-Average-8%19.2x17.3x12.1x11.1xxxLife Science/OtherxFulgent GeneticsFLGTOutperform$525%$4.01$72$6$320$30$4147%$0.10$0.29-40.1x13.8x8.6x4.3x-Lantheus Holdings LNTHNeutral$2134%$15.70$604$24$13230$360$3804%$0.90$1.00-17.4x15.7x8.2x8.1x-xIndicesxS&P 500 IndexSP502,5322,9412,347$172.5414.7x($in millions except/share)*Covered by AJ RiceSource:Company data,Credit Suisse estimates,FactSet.$in Millions,except per share data.6 January 2019Healthcare Technology&Distribution5Figure 3:HCT&D January Investor Conference Pre-Announcements,2016-2018Ticker201820172016DPLOPR:CEO Phil Hagerman announced his retirement in conjunction with a guidance update in a press release(Provided preliminary 2018 Outlook,reaffirmed 2017 guidance).*Note announcement on Jan.5,and DPLO presented on Jan.10PR:Updated 2016 revenue&EBITDA guidance,expecting revenue&EBITDA to be at or near the low end of the guidance range provided in Nov.2016.Provided broad commentary on 2017 guidance,noting it expected 2017 to be a slower growth year.NoneDHRPR:Preannounced core organic rev growth(+5%)above guidance range,and EPS to come in above the$1.12-1.16 guidance range.EPS came in at$1.19.Provided updated full year free cash flow and net earnings guidance.CEO communicated that DHRs 4Q15 EPS would be at the midpoint of guidance.ICLRPR:Reaffirmed 2017 guidance.Issued a PR the morning of its presentation,noting 2018 guidance:revenue($1,870-$1,930,ASC 605),EPS guidance($5.89-$6.09),top customer concentration(12-14%),effective tax rate(12%),and broad share buyback/Capex guidance.PR:Reaffirmed 2016 guidance.Issued a press release the morning of its presentation,noting 2017 guidance:topline growth($1,700-$1,750),EPS guidance($5.00-$5.20),top customer concentration(15-17%),effective tax rate(14%),and share buyback/Capex guidance.NoneHMSYBroad strategic themes for 2018:accelerate organic revenue growth with a particular focus on Payment Integrity and care management and consumer engagement services.Continues invest in and expand the use of Big Data and implement advanced technologies to further drive efficiencies.Provided updated customer profile data(including revenue growth by customer segment)N/ALHBroad 2018 guidance(reasonable free cash flow expectations,capital deployment priorities).Announced acquisition of Mount Sinai Clinical Outreach Laboratories.2017 strategic priorities:focus on delivery of solutions,fully-integrate organization(both financially and operationally),return capital to shareholders(reinitiated share repurchases)N/ACAHAnnounced 2018 effective tax rate pursuant to tax reform,Medical Device Tax commentaryNoneCAH announced it has reaffirmed FY16 EPS guidance.HSICAcquisition of ABASE,a Brazilian veterinary product distributor.NoneAnnounced acquisitions of Vetstreet(communications platform for veterinarians)and RxWorks(veterinary practice management software)CVSNoneGross wins for 2017 selling seasonGross wins for 2016 selling seasonPINCImpact of tax reform on its effective tax rate,and updated guidance related to share buybacks.NonePartnership expansions with FirstHealth of the Carolinas and Mathematica Policy Research.ZTSImpact of tax reform on its effective tax rate.NoneNoneOMIUpdates on Halyard S&IP acquisition progress in advance of the presentation.NoneNoneABCNoneNoneNoneMCKNoneNonePR:Updated its FY16 EPS guidance,with weaker operating profits partially offset by a lower effective tax rate.MCK also provided an initial FY17 EPS guidance range.WBAN/A-reported F2Q shortly before conferenceN/A-reported F2Q shortly before conferenceN/A-reported F2Q shortly before conferenceIDXXImpact of tax reform on its effective tax rate five days before its presentation.NoneNoneSYNHNoneNoneNonePDCONoneNoneNoneCRLNoneNoneNoneXRAYNoneNoneNoneELANN/AN/AN/AALGNNoneNoneNoneIQVNoneNoneNoneMEDPNoneNoneNonePAHCNoneNoneNonePETSNoneNoneNonePRAHNoneNoneNoneLNTHNoneNoneNoneFLGTNoneNoneNoneSource:Company data,Credit Suisse estimates6 January 2019Healthcare Technology&Distribution6PBMs&PharmaciesCVS Health(CVS)Aetna AcquisitionWith your merger with Aetna,what has been the reaction from existing as well as new customers during the RFP process?Can you speak to how the potential opportunities(and conflicts)are resonating with new and existing clients?Can you speak to RFP flow and what you have seen in terms of the pace of decision-making?How have the broader disruption/pending vertical mergers impacted RFP volume,retention rate?Can you share any ideas or strategies you have discussed that will be aimed at earning customer buy-in to better leverage in-store clinics and other HC offerings post acquisition?How is integration planning with Aetna progressing?Can you provide more color relating to synergy components and discuss the runway to your$750+million synergy goal?Can you also speak to some of the actions have you taken thus far to ensure an efficient and effective integration?Have there been any notable speed bumps?How much is the Aetna transaction a response to Amazon,if at all?General thoughts on Amazon?Can you speak to reports that US District Judge Leon has ordered a review of the merger?What are the implications as it relates to the integration of Aetna?Can you help us think about the potential outcomes of the review?On the newly announced combined company CFO,can you speak to why you may have chosen someone internally from CVS rather than someone more experienced in the managed care side the business?FundamentalsWhat are your thoughts on U.S.District Court Judge Reed OConnors ruling that the Affordable Care Act(ACA)is unconstitutional?How likely is this ruling to stand?Can you help us think about the implications of a potential roll-back of the ACA?Initial thoughts on Trumps drug pricing proposal?Youve noted that this will not impact profitability,but are any of the longer term initiatives,such as changes to rebates(e.g.POS rebates)a concern at all?What level of EPS growth would you argue is achievable over the long term(incl.the pending Aetna merger)?Can you walk us through your algorithm to get there?You have spoken to targeting approximately$475 million in gross benefits this year from enterprise streamlining efforts.Can you talk about some of the initiatives on this front,and how we should think about the cadence of the margin benefit?You have noted the generic dispensing rate has increased 10 percentage points over the past six years.How much more of an increase in generic penetration do you expect given the number of generics currently pending approval,and what would be the benefit to profit margins in the PBM segment?Retail implications?Biosimilars?Generic pricing?What sort of expectations do you have baked in for brand inflation in 4Q?How are you thinking about brand inflation going into 2019?6 January 2019Healthcare Technology&Distribution7PBMCan you give us your view on the relationship between the PBM and payors as it stands today and where we may be headed over the next 3-5 year time horizon,particularly in the context of the movement to value-based contracting in both the medical and pharmacy setting?Can you give us some detail on what you view are the most important profit drivers for your PBM business and how you see this evolving over the course of 2018 and beyond?Can you share your thoughts on the recent HHS proposal including an international price index?Assuming it does become implemented,how do you see that playing out in the market,and what are the implications for CVS?What are your views on HHSs recent proposal to remove safe harbor protections,and how could this impact the commercial market longer-term?Can you speak to your overall exposure to rebates in terms of the topline and margins?You recently announced a new net cost pricing model which guarantees average net spend per prescription,after discounts and rebates.Can you walk us through this newly proposed model and key points of differentiation from more traditional models?What are some of the associated opportunities