This article is an overview of the financial results of Johnson & Johnson, Novartis, Roche, Biogen and selected other healthcare companies who have reported their earnings since July 16.
Many of the top healthcare companies reporting second-quarter earnings over the past week have seen COVID-19 continue to impact revenues. But some are cautiously optimistic for the second half of the year, as they learn to better navigate the pandemic.
The biggest drug- and device-maker by market cap, Johnson & Johnson reported a 35.3% decline in its year-over-year earnings, driven in part by a 33.9% fall in medical device sales. CFO Joseph Wolk said on a July 16 earnings call that the company had previously expected to wait until the fourth quarter for a rebound in these sales, but the turnaround began earlier than expected resulting in the company raising its full-year guidance. While CEO Alex Gorsky expressed concern about a second wave of COVID-19, he pointed out that better-prepared hospitals mean the global impact is unlikely to reach levels seen in the spring.
Novartis CEO Vas NarasimhanSource: Novartis
Swiss pharmaceutical company Novartis AG reported relatively unchanged earnings year over year for the quarter, with the pandemic's effect felt most keenly on its ophthalmology and dermatology businesses, as well as therapies requiring hospital stays. This was partially offset by sales of heart disease drug Entresto, gene therapy Zolgensma and blockbuster psoriasis medicine Cosentyx.
The Basel, Switzerland-based company will not join the race to find a coronavirus vaccine, CEO Vas Narasimhan said on a July 21 earnings call. Instead, the company is focused on pivotal studies in more than 20 medicines, as well as researching inhibitors against both the current and future coronaviruses. In addition, Narasimhan expects strong uptake in Europe for nuclear therapy Lutathera and the drug's expansion in the U.S.
Roche Holding AG, another Swiss pharmaceutical giant and one of the world's biggest cancer drug manufacturers, reported a 6% decline in first-half earnings compared to the same period in 2019, with the pandemic and generic competition of its former blockbuster cancer therapies Herceptin, Avastin and MabThera/Rituxan having a combined impact on sales. However, the company expects the outlook to improve later in the year, with Roche's diagnostics unit's CEO Thomas Schinecker noting that an influx of orders for its coronavirus diagnostic tests from governments worldwide means that even after quadrupling production capacity, the company is still struggling to keep up with demand.
Cambridge, Mass.-based Biogen Inc. reported a 12% increase in second-quarter earnings, with rare disease therapy Spinraza remaining a key seller. The company announced plans to conduct a two-year phase 4 clinical study of the drug combined with Novartis' competitor therapy Zolgensma to treat infants and children with spinal muscular atrophy. GlobalData analysts said Biogen could maintain dominance in the market by demonstrating that Spinraza benefits patients who also receive the Novartis gene therapy.
Impact of reduced elective care
The reduction in elective surgeries, a key strategy to limit the initial spread of the coronavirus, took a heavier toll on healthcare equipment suppliers notably Intuitive Surgical Inc., which reported a $1.01 billion drop in revenue compared to 2019's second quarter. The surgical-robot maker's CFO, Marshall Mohr, said in a July 21 earnings call that "the recovery tail of surgery will be a long one, likely to last many quarters."
Similarly, Abbott Laboratories saw its second-quarter EPS drop 30.5% year over year, but its diabetes line remained resilient. President and CEO Robert Ford said he was "very bullish" about the opportunity for the Libre 2 blood sugar monitoring system approved in the U.S. in June and the Abbott Park, Ill.-based healthcare equipment company reissued its 2020 guidance of mid-single-digits growth.
The pause in elective procedures to slow the pandemic has impacted surgical equipment suppliers.Source: Pixel
HCA Healthcare Inc. blamed a continued drop in admissions and surgery volumes for a 12% decline in its revenue for the second quarter, but the healthcare services provider was already able to point to a rebound in May and June. The company brought in about $1.1 billion in second-quarter income although more than half came from economic relief funds.
CEO Samuel Hazen was hesitant to project into the second half of the year but said the company has gained "muscle memory" to deal with current and future COVID-19 outbreaks. RBC Capital Markets analysts expect HCA to weather the "significant challenges" of the pandemic, noting that "underlying demand in its markets remains strong, despite the likelihood for continued ebb and flow in patient census as reopenings progress and adjust to flare-ups."
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After another tough quarter, healthcare companies pin hopes on brighter H2'20 - S&P Global
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