Barclays on Medical Supplies & Devices: 1Q Hospital Takeaways for MedTech Investors
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Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
6 Buy, 15 Hold, 7 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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Barclays on Medical Supplies & Devices: 1Q Hospital Takeaways for MedTech Investors
BARCLAYS CAPITAL KEY POINTS: 1) While volume results were mixed among the group, the overall trend showed an improvement in volumes. 2) We note that MLR was down roughly 50bps y/y. While part of this decline was the result of continued declines in utilization, we note that some of this is likely also due to the increased burden from cost-sharing commercial plans. 3) Surgical volumes remain weak, however, we note that the trends in 1Q11 were stronger than they were in 2010 (partly due to the comparisons getting easier) and outpatient surgeries continue to�do better than inpatient surgeries. 4) Growth in supply expense continues to be low, contributing to the improvement in same-store margins. 5) At its recent analyst day, HMA suggested that the increased level of physician employment/alignment with the hospital is allowing the company to receive better pricing on several of its supplies."
Analyst, Adam Feinstein's Anecdote: With the goal of leveraging our combined coverage of the Health Care Facilities and Medical Devices & Supplies sectors, we provide some observations on 1Q11 hospital trends and the outlook for the remainder of 2011. In this note, we review commentary from Community Health (NYSE: CYH), Tenet (NYSE: THC), HCA Holdings (NYSE: HCA), HMA (NYSE: HMA), LifePoint (Nasdaq: LPNT), and Iasis. While volume results were mixed among the group, the overall trend showed an improvement in volumes as it seems like trends have stabilized (we also highlight easier comps in 2H11). Growth in supply expense continues to be low, contributing to an improvement in same-store hospital margins. Hospitals continue to be aggressive with suppliers - renegotiating contracts and, on occasion, eliminating suppliers. Hospitals continue to focus on the 'larger buckets' of ortho and cardio, with spine in focus. Further, we highlight that hospitals are also looking to global sourcing initiatives through GPOs to reduce costs on more commoditized items. Net-net, we think hospital trends in the 1Q showed some positive signs for medtech through volume stabilization, balanced by unrelenting pressure by hospitals on supply costs."
BARCLAYS CAPITAL KEY POINTS: 1) While volume results were mixed among the group, the overall trend showed an improvement in volumes. 2) We note that MLR was down roughly 50bps y/y. While part of this decline was the result of continued declines in utilization, we note that some of this is likely also due to the increased burden from cost-sharing commercial plans. 3) Surgical volumes remain weak, however, we note that the trends in 1Q11 were stronger than they were in 2010 (partly due to the comparisons getting easier) and outpatient surgeries continue to�do better than inpatient surgeries. 4) Growth in supply expense continues to be low, contributing to the improvement in same-store margins. 5) At its recent analyst day, HMA suggested that the increased level of physician employment/alignment with the hospital is allowing the company to receive better pricing on several of its supplies."
Analyst, Adam Feinstein's Anecdote: With the goal of leveraging our combined coverage of the Health Care Facilities and Medical Devices & Supplies sectors, we provide some observations on 1Q11 hospital trends and the outlook for the remainder of 2011. In this note, we review commentary from Community Health (NYSE: CYH), Tenet (NYSE: THC), HCA Holdings (NYSE: HCA), HMA (NYSE: HMA), LifePoint (Nasdaq: LPNT), and Iasis. While volume results were mixed among the group, the overall trend showed an improvement in volumes as it seems like trends have stabilized (we also highlight easier comps in 2H11). Growth in supply expense continues to be low, contributing to an improvement in same-store hospital margins. Hospitals continue to be aggressive with suppliers - renegotiating contracts and, on occasion, eliminating suppliers. Hospitals continue to focus on the 'larger buckets' of ortho and cardio, with spine in focus. Further, we highlight that hospitals are also looking to global sourcing initiatives through GPOs to reduce costs on more commoditized items. Net-net, we think hospital trends in the 1Q showed some positive signs for medtech through volume stabilization, balanced by unrelenting pressure by hospitals on supply costs."
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