Good morning! If you can carve out time today, we’re on air twice. First, Tom is going to be on The Pitch at 11:00 AM ET with Keith to discuss one of our position monitor ideas (the hour goes by fast – 6 ideas in 60 minutes), and then at 2:00 PM ET we have our weekly House Call: CLICK HERE for event details (including video and materials links).
We keep returning to the idea of pent-up demand. Everyone we speak to has a version of the story that relates to their practice/health care service (oncology, diabetes, telehealth, pharmacies, etc.). COVID-19 took a chunk out of volume during 2020, but as people, especially those over 50-65, get vaccinated and gain comfort with the new normal, they will seek care. Americans that couldn't wait any longer [for whatever] service/checkup returned last year, which is why we hear, "We're back to 90-95% of pre-COVID" all the time. As of the latest CDC update, over 75MM doses have been distributed and ~63MM administered, and per the news below, it looks like $JNJ's vaccine could be approved for use by the end of this week. Things could get chaotic soon.
We've heard from oncologists that advanced cancer is becoming more common, and a contact at a busy diabetes clinic in the midwest told us that her diabetes patients are coming back with "way less" control of A1C (e.g., 8-9% vs. 7%). Also, the wait time for her to see a new patient has extended from a few weeks to three months, and she really doesn't have the bandwidth to see more than 50-60 patients per week. Telehealth has been helpful, but like others, getting back face-to-face with patients is the priority. They expect to be working through the "backlog" well into 2022 due to limited capacity/resources.
Long-story-short this AM, as we have a lot to get to, there's a wall of demand meeting a reasonably fixed capacity. While $GDRX, $AMN, and $ONEM are among the companies that should be on the positive side, let's remember that there’s a negative side too. We'll be looking to highlight some of those ideas near-term, but the physical impact is real: Nearly One Third of Covid-19 Survivors Have Symptoms, Some Up To 9 Months Later, New Study Finds: "...new data from a research letter published in JAMA indicates that up to a third of predominately outpatients continue to have symptoms, some lasting up to 9 months. While the study from researchers at the University of Washington was small, it adds to the ongoing body of literature detailing the chronicity of the disease in growing numbers of people..." and we can see the issue clearly in the data:
For those of you looking for more timely signals, our CEO and Chief Risk Manager, Keith McCullough, "hit the button" to open a long on GDRX in Hedgeye's real-time alerts service on February 18th at $52.70 (the stock hit the low-end of the risk range that day). If such "signals" would be of value to you, we will try to funnel them through going forward - just let us know. The signal remains open to start the week, and we continue to like the setup for GoodRx into earnings (3/11), with a return of in-person care providing a significant tailwind for the leading discount Rx coupon player.
HOUSE CALL PREVIEW
- TXG, AMN Earnings Recaps | Last week, two of our Best Idea Longs, 10x Genomics (TXG) and AMN Healthcare (AMN) announced positive results. For TXG, the beat was ahead of our estimates for 4Q20 and FY20 with a guide that looks conservative to us. AMN, on the other hand, covered each of the demand points we were looking for. The beat was good, but the guide was even better (and will likely return consensus to MicroQuad 2). Today, we will recap these results and what to focus on going forward. For example:
- The Return of In- Person Care | As highlighted above, this is a key theme that we never thought we would need to analyze. "Less telemedicine" is one thing we're hearing more often lately... more cancer testing is another. The release of pent-up demand is coming.
- Weekly MQ Update - #COVIDComp | As you’ve likely seen in many of our recent slides, the MicroQuad 4-panel chart is often presented - we'll highlight the latest update (see below for more). The MicroQuad 3 bin remains full of stocks, and as you can see in the Estimate Revision Trend chart, it looks like expectations for 2021, and possibly '22, are clearly hooking up here, a positive for our Long Ideas that trade on forward sales expectations.
ESTIMATE REVISION TREND
MICROQUADS*
As a reminder, if you have questions about the MicroQuad process, please try to find ~20 minutes to watch our Dec 30, 2020 call replay: Process & Utility of the Hedgeye Health Care #MicroQuads - CLICK HERE for event details (includes video link and materials link).
PRICE INDEX
POSITION MONITOR SIGMA CHART & PERFORMANCE
MICROQUAD-BASED WATCH LIST
Top & Bottom 20
Other NEWS/QUICK LINKS
Johnson & Johnson's ($JNJ) Vaccine to be Reviewed by the FDA Thursday - "The FDA is also expected to release its report on J&J's COVID-19 vaccine on Tuesday, in advance of the "adcom" meeting that will be held all-day Thursday. In the cases of the BioNTech and Pfizer and Moderna COVID-19 vaccines, the FDA granted emergency-use authorizations one day after the advisory committee meetings for those vaccines - this could mean that the J&J's COVID-19 vaccine candidate will be authorized as soon as Friday."
NanoString Technologies ($NSTG) - The company announced the commercial availability of the Whole Transcriptome Atlas (WTA). As we heard from our lab contacts, this is another step in the right direction for the GeoMx Digital Spatial Profiler (DSP), but the company must get its Spatial Molecular Imager to the market ASAP. That said, they have an impressive lineup here and a growing user base - "The commercial launch of the Whole Transcriptome Atlas will be highlighted at NanoString’s 3rd Annual Spatial Genomics Summit, to be held virtually on February 23. Data demonstrating the high sensitivity and robust performance of the WTA for human and mouse will be highlighted in several presentations from leading research institutions. The Spatial Genomics Summit has been held each February beginning in 2019 to showcase the rapidly evolving field of Spatial Genomics. This year’s event will include a panel of experts for the plenary roundtable discussion of “Research in the Spatial Genomics Era.” Panelists include Drs. Esperanza Anguiano from Bristol Myers Squibb, Omer Bayraktar of the Wellcome Sanger Institute, Evan Newell from the Fred Hutchinson Cancer Research Center and Peter Sorger of Harvard Medical School. The moderator of the panel is Stephane Budel, Ph.D., from DeciBio Consulting."
Amwell ($AMWL) will report 4Q & FY20 results and host its conference call on Wednesday, March 24, 2021, after the close.
Quidel ($QDEL) – This one looks like it's COVID-comp(+) - i.e., it has the disease (very, very hard comps this year). Why Investors Didn't Leap for Joy After Quidel's Strong Q4 Performance – “It seems likely that Quidel could extend its downtrend. The diagnostics company announced its fourth-quarter results after the market close on Thursday, and the healthcare stock fell as much as 7% in after-hours trading.Here are highlights from Quidel's fourth quarter. By the numbers.”
Calendar(S)
RECENT CONTENT/EVENTS
Hedgeye House Call | The Doctor is In | February 16th, 2021 @ 12:30 PM ET | DRIO AMN TXG #MicroQuads
Genetic Testing Lab Chart Book | February 11, 2021 | Key Data Updates, Claims Analyses, and Forecasts
Digital Health Q&A w/ DRIO Management | Health Care Call Replay | February 11, 2021 @ 10 AM ET
Hedgeye House Call | The Doctor is In | February 8th, 2021 @ 2 PM ET | Live Q&A Call
Field Notes | Single Cell & Spatial Sequencing | Still Room for TXG to Run
All data available upon request. Please reach out to HealthCareTeam@Hedgeye.com with any feedback or inquiries.
Have a great day out there!
Thomas Tobin
Managing Director
203-562-6500 x145
ttobin@hedgeye.com
Twitter
LinkedIn
Justin Venneri
Director, Primary Research
203-562-6500 x127
jvenneri@hedgeye.com
Twitter
LinkedIn
William McMahon
Analyst
203-562-6500 x145
wmcmahon@hedgeye.com
Twitter
LinkedIn
*Please note, not all Position Monitor names make it into the MicroQuad output - most likely due to a lack of sufficient historical trading and estimate data.
