1、Equity Research 7 February 2019 CORE Barclays Capital Inc.and/or one of its affiliates does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Inv
2、estors should consider this report as only a single factor in making their investment decision.PLEASE SEE ANALYST CERTIFICATION(S)AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 18.U.S.Life Science Tools&Diagnostics Jacks Tool Kit Vol.5,Issue 6:Thoughts on EKRA for the Labs Jacks Tool Kit What are your
3、thoughts on the potential impact to labs from the Eliminating Kickbacks in Recovery Act(EKRA)?Trivia Question:How many QIAstat-Dx systems did QIAGEN place in 2018?Recent Notes&Reports:1)Myriad Genetics Inc.:GeneSight Pressure in Focus Amidst a Mixed FY2Q19 Report 2)QIAGEN N.V.:Growth Themes Look Dur
4、able into 2019-Despite Headline 4Q Rev Miss 3)Hologic Inc.:January 2019 Mammography Market Model Update 4)U.S.Life Science Tools&Diagnostics:Barclays Tools Industrial Tracker-January 2019:US a Bright Spot Amidst Broader PMI Moderation 5)Weekly Flu Clues:Influenza Activity Climb Continues.Barclays Li
5、fe Science Tools&Dx 6)PerkinElmer Inc.:Solid 4Q18 with Consistent 19 Guide Barclays Geographic End Market Tracker:Agilent FY1Q19 PMI Tracker of 53.1(down 1.1 q/q),Mettler Toledo 4Q18 PMI Tracker of 53.5(down 1.5 q/q),PerkinElmer 1Q19 PMI Tracker of 52.4(down 1.1 q/q),Thermo Fisher 1Q19 PMI Tracker o
6、f 53.3(down 0.9 q/q),Waters 1Q19 PMI Tracker of 52.6(down 0.9 q/q).Barclays FX Tracker(02/06/2019):Euro weakens-1.0%w/w,UK Pound weakens-1.4%w/w,Chinese Yuan weakens-0.4%w/w,Japanese Yen weakens-0.9%w/w,and Swiss Franc weakens-0.8%w/w.Hot Topics for the Week:1)LabCorps 4Q18 results were met with rel
7、ief,with initial guidance consistent with expectations and improved commentary around hospital referrals.2)QIAGEN closed out 2018 with modestly softer headline revenues in 4Q18,though with underlying momentum building into 2019.3)We have a busier week of earnings next week,with Bruker,Charles River,
8、IQVIA,Quest and Quidel all reporting 4Q18 results.Our coverage universe finished the week down-0.9%since last Thursday(tools up 0.6%,diagnostics down-3.0%,and labs&CROs up 0.2%).In comparison,the S&P 500 was up 0.1%for the week,the Russell 2000 was up 0.7%,and the NASDAQ Composite was up 2.7%.Stat o
9、f the Week:Hologics Medical Aesthetics division posted-$25.2mm of GAAP operating profit in FY1Q19.INDUSTRY UPDATE U.S.Life Science Tools&Diagnostics NEUTRAL Unchanged U.S.Life Science Tools&Diagnostics Jack Meehan,CFA+1 212 526 3909 BCI,US Mitchell Petersen+1 212 526 3367 BCI,US Andrew Wald+1 212 52
10、6 9436 BCI,US 每日免费获取报告1、每日微信群内分享7+最新重磅报告；2、每日分享当日华尔街日报、金融时报；3、每周分享经济学人4、行研报告均为公开版，权利归原作者所有，起点财经仅分发做内部学习。扫一扫二维码关注公号回复：研究报告加入“起点财经”微信群。Barclays|U.S.Life Science Tools&Diagnostics 7 February 2019 2 Barclays Life Science Tools&Diagnostics Trivia We are pleased to present the Barclays Life Science Tools&
11、Diagnostics trivia question of the week.Each week,we will ask a question about the Tools&Diagnostics industry.We would prefer you dont look up the answer,but we wont police it.Its that simple.Answer is in next weeks weekly.Trivia Question:How many QIAstat-Dx systems did QIAGEN place in 2018?Last Wee
12、ks Answer:Relative to the companys initial guidance,Thermo Fisher showed 4%upside to both revenue and EPS in 2018.I.Jacks Tool Kit on Life Science Tools&Diagnostics Each week we answer a question we have received from a client.We try to pick the most topical responses.If we dont pick your question,k
13、eep trying and we will get to it!Question What are your thoughts on the potential impact to labs from the Eliminating Kickbacks in Recovery Act(EKRA)?Recently,weve received some investor questions on the Eliminating Kickbacks in Recovery Act(EKRA),which potentially could change the payment structure
14、 for laboratory salespeople and also industry practices around sample collection with phlebotomists.EKRA was signed into law on October 24,2018,as part of the SUPPORT for Patients and Communities Act.The law was initially aimed at curbing patient brokering for treatment centers and recovery homes,a
15、practice that the national labs do not participate in.However,the laws final language extended the legislation to clinical laboratories and if enacted,could outlaw lab employees(or independent contractors)from receiving commission-based payments tied to patient referrals.The American Clinical Labora
16、tory Association(ACLA)and the national labs believe that the meaningful implications of EKRA on labs were not thoroughly considered by Congress,which foremost aimed to curb patient brokering.As a result,ACLA is actively working with Congress to make necessary changes to the legislation in order to r
17、educe the unintended impact on labs.While the law in its current form could have significant implications on the roles of lab sales reps,we believe there are ways to alter compensation that alleviate the impact of the legislation.The legislation is primarily intended to target patient brokering for
18、treatment centers and recovery homes,though in its current form also extends to commission-based payments at labs.The legislation outlaws payments by labs to employees or contractors“directly or indirectly”related to patient referrals.Specifically,EKRA bans payments tied to the number of individuals
19、 referred to a particular lab,the number of tests performed,or the amount billed from the referred patient.These changes could potentially disrupt how some lab sales representatives are compensated;industry practice is to benchmark against these volume metrics.Additionally,EKRA forbids the lab indus
20、try from placing phlebotomists in physician offices to administer specimen collection.This has historically been a standard industry practice,which the industry has warned could deter patients from receiving necessary medical care.Potential changes to this standard industry practice could pose a ris
21、k to collection of volumes,though patients could also benefit from seeking care at a patient service center for one of the national labs.ACLA and the national labs believe that the legislation has a much broader impact on labs than Congress initially intended.As a result,the labs are working closely
22、 with the ACLA to clarify and amend parts of the law,and believe it is possible that the legislation will be altered to reduce the impact on lab operations.If necessary,we believe there a number Please see ACLAs 11/30/18 memo,“ACLA Memo Regarding Anti-Kickback provisions of the SUPPORT for Patients
23、and Communities Act”Barclays|U.S.Life Science Tools&Diagnostics 7 February 2019 3 of ways that labs could alter the compensation structure for sales reps to comply with EKRA.Examples of workarounds include substituting commission with higher base pay or tying compensation to call volume or hours wor
24、ked.Violation of the EKRA legislation is punishable by a fine of up to$200,000 and/or up to 10 years of jail time.FIGURE 1 Excerpt from Subtitle J-Eliminating Kickbacks in Recovery,SUPPORT for Patients and Communities Act“(a)OffenseExcept as provided in subsection(b),whoever,with respect to services
25、 covered by a health care benefit program,in or affecting interstate or foreign commerce,knowingly and willfully(1)solicits or receives any remuneration(including any kickback,bribe,or rebate)directly or indirectly,overtly or covertly,in cash or in kind,in return for referring a patient or patronage
26、 to a recovery home,clinical treatment facility,or laboratory;or(2)pays or offers any remuneration(including any kickback,bribe,or rebate)directly or indirectly,overtly or covertly,in cash or in kind(A)to induce a referral of an individual to a recovery home,clinical treatment facility,or laboratory
27、;or(B)in exchange for an individual using the services of that recovery home,clinical treatment facility,or laboratory,shall be fined not more than$200,000,imprisoned not more than 10 years,or both,for each occurrence.”Source:Company Documents,Barclays Research II.Barclays Life Science Tools&Diagnos
28、tics Summaries In this section we summarize our recent research publications.Please contact us at(212)526-3909 for copies.“Myriad Genetics Inc.:GeneSight Pressure in Focus Amidst a Mixed FY2Q19 Report”(February 6,2019)Myriads FY2Q19 results were again mixed,with GeneSight in focus after revenues too
29、k another unexpected sequential step-down in the quarter.Overall,revenues of$216.8mm were modestly below the midpoint of guidance of$216-$218mm,which we believe will be perceived as a miss given historical conservatism embedded in the outlook.GeneSight was a notable area of weakness,posting$24mm of
30、revenues,down 24%y/y and coming in$4.6mm(16%)below our forecast.Myriad attributed$4.2mm of the miss to new issues with lab benefit manager programs,in addition to persistent pressure from the Medicare documentation requests.Hereditary cancer testing(HCT)beat our forecast and offset the GeneSight mis
31、s,though organic growth remains modest.Notably,HCT grew 4%y/y(+$4.5mm).This includes a contribution from Counsyls HCT revenue(acquisition closed on 7/31/2018).While Myriads headline FY2019 revenue guidance is unchanged at$855-$865mm,the implied molecular trajectory is lower given the German clinic s
32、ale has been postponed.Myriad originally expected to sell the clinic by the end of CY18(now by June 2019),which adds roughly$5mm per quarter of revenue.Given the implied lower molecular trajectory,we lower our out-year revenue and EPS forecasts.“QIAGEN N.V.:Growth Themes Look Durable into 2019-Despi
33、te Headline 4Q Rev Miss”(February 5,2019)While QIAGENs 4Q18 headline revenue looks softer than expected,we think underlying growth drivers look solid and durable into 2019.Altogether,QIAGEN delivered 5%CER growth in 4Q18,and organic growth of 5.5%.CER growth came in approximately 1%light of our fore
34、cast,which the company attributed to equal parts divested revenues and CDx co-development revenues(which can be volatile on a quarterly basis).Beyond that,the underlying growth drivers for QIAGEN looked solid-and we continue to believe the company is well positioned to accelerate growth into 2019 an
35、d beyond.Specifically,QuantiFERON delivered 20%ex-FX growth in quarter,and 21%CER growth for the full-year.Additionally,QIAGEN noted that total NGS sales exceeded the companys$140mm Barclays|U.S.Life Science Tools&Diagnostics 7 February 2019 4 target,and are expected to expand to$190mm in 2019.Next,
36、the company placed 300 QIAstat-Dx multi-plex MDx systems in 2018,with US expansion expected in 2019.Finally,QIAGEN has additional MDx platforms in development across mid-to-high throughput testing with NeuMoDx and ddPCR with Formulatrix.Beyond MDx,Academic and Pharma end markets contributed MSD CER
37、growth in the quarter,while underlying trends in Applied markets(+1%CER)appear consistent when adjusting for recent divestitures.“Hologic Inc.:January 2019 Mammography Market Model Update”(February 1,2019)On Friday,the FDA published its January update on industry mammography trends.3D placements of
38、118 are 34%of the way toward our FY2Q19 industry forecast of 350,and in line with y/y trends(vs 117 in Jan 2018).Placements accelerated meaningfully from December 2018(66),which was impacted by the RSNA conference.Healthy trends appear consistent with Hologics results from FY1Q19 earnings,where the
39、Breast Health segment posted 9%organic growth.We believe the data helps to show the sustainability of the tomo tail with Hologic approaching 70%conversion of its installed base.We continue to believe low-to-mid single digit long-term breast health segment growth will be driven by service/software,in
40、ternational markets and new products.The data are published monthly under the Mammography Quality Standards Act(MQSA)program,and provides a way of externally validating Hologics momentum in 3D mammography placements.We caveat that the data is obviously not perfect,as the FDA surveys hospitals and im
41、aging centers only on an annual basis(the data can be lumpy).The durability of Breast Health results(39%of Revs)is critical to Hologics overall growth trajectory,and we reiterate our Equal Weight rating.“U.S.Life Science Tools&Diagnostics:Barclays Tools Industrial Tracker-January 2019:US a Bright Sp
42、ot Amidst Broader PMI Moderation”(February 1,2019)Geographic PMIs in January showed continued moderation,with the US as a lone bright spot.After weakening meaningfully in December,the U.S.ISM manufacturing PMI rebounded to 56.6(up 2.3 m/m).China moderated further into contractionary territory(48.3,d
43、own 1.4 m/m)-though we continue to believe national initiatives favor investment in life science research and Tools technologies.Similarly,European manufacturing(50.5,down 0.9 m/m),UK(52.8,down 1.4 m/m),and Japan(50.3,down-2.3 m/m)each posted declines in PMI,though they remain in expansionary territ
44、ory.We believe future PMI trends will be important to watch for a read into trends further into 2019,serving as a 1-2 quarter leading indicator.The industrial end market has been an important alpha driver for growth for our Life Science Tools coverage amidst the global recovery,making up anywhere fr
45、om 10-25%of revenues for the diversified companies.We continue to favor Agilent and Thermo Fisher in our Life Science Tools coverage with Overweight ratings.As a reminder,revenue generation for the Life Science Tools companies is highly correlated with end market growth in the companies individual g
46、eographies.“Weekly Flu Clues:Influenza Activity Climb Continues.Barclays Life Science Tools&Dx”(February 1,2019)Life Science Tools&Diagnostics Weekly Flu Clues:Influenza Activity Climb Continues Key Data Points:2018/2019 Flu Season Week 17(ended January 26,2019)1)Flu activity rose again in Week 17 a
47、nd remains at heightened levels.As you can see in the Outpatient Flu-Like Illness chart below,it is not uncommon for flu activity to increase during this week of reporting.This years flu trends continue to mirror trends during the 2016/2017 season.Barclays|U.S.Life Science Tools&Diagnostics 7 Februa
48、ry 2019 5“PerkinElmer Inc.:Solid 4Q18 with Consistent 19 Guide”(February 1,2019)We believe PerkinElmer delivered a solid close to 2018-with strong results across the companys business segments.Core organic growth of 7%beat our expectations by 200bps,and continues strength weve seen across peers so f
49、ar in 4Q18.Strength was led by the Dx segment(40%of Revs),which posted 13%core growth(+500bps vs our model).The sizable outperformance appears broad-based across all testing segments.We continue to believe that the combination of a more attractive portfolio and new products will allow PerkinElmer to
50、 maintain segment momentum for the next several years.Additionally,the Discovery&Analytical Solutions(DAS)segment(60%of revenue)posted 5%organic growth(+100bps vs our model).Driven by new products,favorable end markets and solid execution,PerkinElmer has been able to accelerate growth in a segment t
