4
Lisa C. Gill
(1-212) 622-6466
lisa.c.gill@jpmorgan.com
Introduction
In the note below we highlight key topics for each subsector and company within our
coverage universe as we head into the 2019 J.P. Morgan Healthcare Conference. The
topics highlighted represent the top issues for each company as we think about both
the year ahead and longer-term growth prospects.
Potential News flow at the JPM Healthcare Conference
While we appreciate the access to management and the color we get on broader
market conditions and company specific initiatives, we typically don't get a
significant amount of material incremental news flow (i.e., guidance updates, M&A,
etc.) within our space at the J.P. Morgan Healthcare Conference. We note that within
our coverage universe, 11 companies have not yet provided initial FY19 guidance:
CVS, LH, DGX, CERN, TDOC, DPLO, OMI, HSIC, HQY, EVH, and MDRX.
Among those 11 companies, we believe TDOC and DPLO could potentially provide
guidance or preliminary metrics for 2019 at the conference this year.
Teladoc (TDOC/OW). In prior years, Teladoc has provided preliminary results
for 4Q and the current fiscal year, as well as forward guidance at the conference.
While the company had indicated at its Analyst Day that it plans to provide full
initial FY19 guidance on the 4Q earnings call in February, we believe the
company could provide preliminary 2018 results and some preliminary metrics
for 2019, such as lives and/or visits, at the conference this year.
Diplomat Pharmacy (DPLO/OW). In prior years, Diplomat has made
announcements at or around the J.P. Morgan Healthcare Conference. In 2017,
the company lowered the outlook for the current and upcoming year at the
conference, and in 2018, the company provided preliminary guidance for the year
ahead on the Friday prior to the week of the conference. We note that on the
3Q18 earnings call in November, DPLO had indicated that it expects to provide
2019 guidance “early next year.”
CVS and LH have both indicated they plan to provide FY19 guidance with 4Q18
earnings. DGX and CERN both also historically provide guidance for the upcoming
year with the 4Q earnings release. OMI noted in the 3Q18 earnings release that it
anticipates issuing guidance for 2019 “in the first quarter of next year.” Finally,
HSIC noted on its 3Q18 earnings call that “due to the complexities and timing of the
planned Animal Health spin-off,” the company plans to provide 2019 guidance “at a
later date as some of those uncertainties become clearer.”
In terms of other material news flow, while we note that McKesson (MCK/OW) had
lowered guidance and provided a preliminary outlook for the year ahead at the J.P.
Morgan Healthcare Conference in January 2016, we view that as a one-off, and are
not anticipating a guidance update this year. Similarly, AmerisourceBergen
(ABC/N) had announced the acquisition of MWI Veterinary Supply at the
conference in January 2015, although the company has historically has not
announced other large M&A transactions at the conference. In Healthcare IT, last
year we saw initial guideposts from HQY, which provided preliminary guidance on
year end assets and HSA accounts, and from EVH, which provided preliminary 2018
top line growth, with MDRX and NXGN affirming existing guidance.