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Source: Wall Street Journal
Author: Charley Grant
Date: October 21, 2022
Healthcare has been a relative bright spot in a dismal year for stocks. The S&P Health Care Index has shed about 12% this year, roughly half the decline in the full index.
One area to watch: the outlook for Covid-19. Abbott Laboratories said Wednesday it is expecting the disease to become “endemic” through the end of this year into 2023. A year ago, the Omicron variant spread rapidly, causing disruptions across society.
A relatively mild winter wave would pressure companies that have made hay from the pandemic, like vaccine developers, while boosting others that have languished, like makers of medical devices. The third-quarter earnings season has offered some clues on what that scenario looks like:
- HCA Healthcare: The largest publicly traded hospital chain said it performed nearly 385,000 surgeries in the third quarter, up 2.4% from a year ago. Meanwhile, Covid-19 patients accounted for just 5.2% of admissions to the system, down from 12.7% a year earlier. An increase in non-emergency surgeries will boost profits at hospitals and at medical device manufacturers, with patients still catching up on treatments they put off when the pandemic hit. “There is patient demand that is still yet to be met,” Johnson & Johnson executive Ashley McEvoy said on Tuesday.
- Quest Diagnostics said Thursday that third-quarter revenue from its molecular, or PCR, Covid tests was down 55% from a year ago. Executives said the company has performed a daily average of 17,000 tests for the virus in October, and expects further declines across the fourth quarter.
- Abbott Labs, which manufactures at-home tests, reported third-quarter Covid test sales of $1.64 billion. CEO Robert Ford said Wednesday that demand is “stickier” than most analysts have expected. Still, the company expects just $500 million in fourth-quarter testing revenue.
- Covid vaccine manufacturers Pfizer and Moderna are slated to report earnings in early November. Analysts expect both companies to report sales declines caused by sharp falls in vaccine revenue.
- Analysts expect $7.8 billion in third-quarter sales of Pfizer’s antiviral treatment Paxlovid, down slightly from the second quarter. Analysts expect the fourth-quarter tally to drop even further, according to FactSet.