1、North America Equity Research04 January 2019Equity Ratings and Price TargetsMkt CapRatingPrice TargetCompanyTicker($mn)Price($)CurPrevCurEnd DatePrevEnd DateAmerisourceBergenABC US15,957.3973.37Nn/c89.00Dec-19n/cn/cCardinal HealthCAH US13,512.9644.16Nn/c59.00Dec-19n/cn/cMcKesson CorporationMCK US22,
2、429.88112.94OWn/c160.00Dec-19n/cn/cOwens&Minor,Inc.OMI US387.316.47UWn/c10.00Dec-19n/cn/cCVS HealthCVS US66,665.0665.23OWn/c106.00Dec-19n/cn/cWalgreens Boots Alliance IncWBA US64,057.7667.33OWn/c91.00Dec-19n/cn/cRite AidRAD US792.050.75Nn/cn/cn/cDiplomat Pharmacy,Inc.DPLO US998.5513.36OWn/c21.00Dec-
3、19n/cn/cLabCorpLH US12,827.69123.70OWn/c185.00Dec-19n/cn/cQuest DiagnosticsDGX US11,295.2080.68Nn/c100.00Dec-19n/cn/cHenry Schein IncHSIC US11,332.1073.77Nn/c85.00Dec-19n/cn/cPatterson CompaniesPDCO US1,857.3819.91UWn/c22.00Dec-19n/cn/cCernerCERN US17,176.1550.70Nn/c60.00Dec-19n/cn/cPremier,Inc.PINC
4、 US5,154.9336.65Nn/c45.00Dec-19n/cn/cTeladoc Health IncTDOC US3,155.0946.23OWn/c80.00Dec-19n/cn/cAllscriptsMDRX US1,760.809.58Nn/c12.00Dec-19n/cn/cEvolent HealthEVH US1,315.3919.30Nn/c25.00Dec-19n/cn/cHealthEquityHQY US3,390.9054.90OWn/c102.00Dec-19n/cn/cNextGen Healthcare,Inc.NXGN US944.5715.15UWn/
5、c17.00Dec-19n/cn/cSource:Company data,Bloomberg,J.P.Morgan estimates.n/c=no change.All prices as of 03 Jan 19.Healthcare Technology&DistributionGills Guide to the 2019 J.P.Morgan Healthcare ConferenceHealthcare Technology&DistributionLisa C.Gill AC(1-212)622-Bloomberg JPMA GILL Anne E.Samuel AC(1-21
6、2)622-Michael Minchak,CFA AC(1-212)622-J.P.Morgan Securities LLCSee page 60 for analyst certification and important disclosures.J.P.Morgan 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
7、that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.Happy New Year!Ahead of the 2019 J.P.Morgan Healthcare Conference next week,we thought it might be helpful to highlight key themes across the various sub
8、-sectors as well as key company-specific topics we expect to be discussed at the conference.This report is broken down by sector:Pharmaceutical and Medical/Surgical Distribution,Retail Pharmacy,PBM/Specialty Pharmacy,Clinical Labs,Dental Distribution and HCIT.We also include a financial snapshot for
9、 each company.All of our covered companies are attending the conference.And we once again have 100%CEO participation among the presenting companies.2017 and 2018 were both somewhat quieter years after a very busy 2016 conference with respect to news flow in our space,and at this point,we are not ant
10、icipating major announcements from companies in our space.Within our coverage universe,all of the Rx channel names have provided FY19 guidance with the exception of CVS(which plans to provide initial 2019 guidance with 4Q earnings on February 20),and DPLO(which has made announcements regarding guida
11、nce around the conference in each of the past two years and has previously indicated plans to provide guidance in early in 2019).For the clinical labs,we expect LH and DGX to wait to issue formal 2019guidance on their Q4 earnings calls,noting 2018 guidance for both companies was recently reduced.Whi
12、le TDOC has previously discussed providing initial 2019 guidance with 4Q18 earnings,as in previous years,we believe the company could provide preliminary 2018 results and preliminary 2019 metrics at the conference.We expect consumerism to be a key theme at the conference,as we believe the consumer w
13、ill be the biggest disruptor in healthcare.With healthcare rising as a percentage of household expenditures,patients are becoming more involved in making decisions on how to allocate their healthcare dollars,and are becoming increasingly selective in the services they use with cost,quality,and conve
14、nience being key deciding factors.Engaging the patient at their preferred point of service in a low cost way will likely differentiate those with a strong reputation and a trusted brand.2North America Equity Research04 January 2019Lisa C.Gill(1-212)622- We look for color on broader strategic views i
15、n an evolving marketplace.Given ongoing news flow,we look for insights across a range of topics,including:vertically integrated models,the retailization of healthcare,opportunities to better engage consumers and thoughts on the potential threat from disruptive entrants.We expect Specialty to remain
16、a key focus for investors.Specialty drugs continue to represent the fastest-growing component of pharmaceutical spend,helping to drive top-line growth across the channel.PBMs are the leading players in specialty pharmacy dispensing and we believe they also benefit from utilization management tools,s
17、uch as narrow networks,step therapy and exclusionary formularies.We also look for color on how companies are positioned for the shift to value-based care over the next few years.Payors are gradually shifting away from the traditional fee-for-service system to new value-based reimbursement models whe
18、re providers assume risk and are incentivized to control costs.We believe companies that are part of the cost solution stand to benefit most from this transition.Finally,we look for incremental commentary on various other factors that could impact earnings growth across the sector.These include util
19、ization trends on both the pharma and medical sides,branded price inflation/generic deflation,the outlook for new generic launches/generic sourcing,the pharmacy reimbursement environment,and insight into capital deployment,given strong cash flow generationand financial flexibility across nearly all
20、of the companies in our coverage universe.3North America Equity Research04 January 2019Lisa C.Gill(1-212)622-Table of ContentsIntroduction.4Potential Newsflow at the JPM Healthcare Conference.4Historical JPM Healthcare Conference Stock Performance.5Conference Schedule.6Valuation and Price Targets.7P
21、harmaceutical and Med/Surg Distribution.9AmerisourceBergen.11Cardinal Health.13McKesson Corporation.15Owens&Minor,Inc.17Retail Pharmacy.19CVS Health.21Walgreens Boots Alliance Inc.23Rite Aid.25Pharmacy Benefit Management and Specialty Pharmacy.27Diplomat Pharmacy,Inc.29Clinical Labs.31LabCorp.33Ques
22、t Diagnostics.35Dental Distributors.37Henry Schein Inc.39Patterson Companies.41HCIT.43Cerner.45Premier,Inc.47Teladoc Health Inc.49Allscripts.51Evolent Health.53HealthEquity.55NextGen Healthcare,Inc.574North America Equity Research04 January 2019Lisa C.Gill(1-212)622-IntroductionIn the note below we
23、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 th
24、e JPM Healthcare ConferenceWhile we appreciate the access to management and the color we get on broader market conditions and company specific initiatives,we typically dont get a significant amount of material incremental news flow(i.e.,guidance updates,M&A,etc.)within our space at the J.P.Morgan He
25、althcare 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 confe
26、rence 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
27、February,we believe the company could provide preliminary 2018 results and some preliminary metricsfor 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
28、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
29、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
30、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 new
31、s 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
32、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 H
33、SA accounts,and from EVH,which provided preliminary 2018 top line growth,with MDRX and NXGN affirming existing guidance.5North America Equity Research04 January 2019Lisa C.Gill(1-212)622-Historical JPM Healthcare Conference Stock PerformanceWe looked at the performance during the conference for our
34、covered companies that presented at the conference in each of the past five years.Overall,as shown in Table 1 and Figure 1 below,the companies within our coverage universe that presented at the conference,on average,outperformed the S&P 500 in three of the past five years,including solid outperforma
35、nce in each of the past two years after underperforming in 2016.Table 1:Average Stock Price Performance for Healthcare Technology&Distribution Covered Companies during the Conference vs.the S&P 500 and the S&P 500 Health Care IndexHealthcare Technology&DistributionCoverage UniverseS&P 500RelativePer
36、formance(bps)S&P 500 Health Care Index RelativePerformance(bps)20140.2%0.2%60.6%-312015-2.6%-2.5%0-1.7%-842016-3.9%0.0%-387-0.3%-35320173.7%-0.3%403-0.2%39420183.4%0.9%2501.0%241Source:Bloomberg,J.P.Morgan.Figure 1:Average Stock Price Performance of Healthcare Technology&Distribution Covered Compani
37、es during the Conference vs.the S&P 500 and the S&P 500 Health Care IndexSource:Bloomberg,J.P.Morgan.In Figure 2 below,we show the 5 best and worst performers among the companies in our coverage universe that presented at the conference in each of the past five conferences.Figure 2:Performance of He
38、althcare Technology&Distribution Covered Companies vs.S&P 500 and S&P 500 Health Care IndexSource:Bloomberg,J.P.Morgan.-5.0%-2.5%0.0%2.5%5.0%20142015201620172018Healthcare Technology&DistributionCoverage UniverseS&P 500S&P 500 Health Care Index20142015201620172018BestWorstBestWorstBestWorstBestWorst
39、BestWorstMDRX7.9%NXGN-7.3%IMPR6.0%DPLO-13.2%MDRX4.6%CNXR-26.4%HQY18.5%PDCO-5.0%RAD15.3%TDOC-11.5%MDAS7.6%MCK-3.9%HQY3.9%VCRA-8.8%CVS2.1%MCK-9.7%ABCO15.5%MCK-1.5%EVH12.7%PDCO-2.7%VCRA4.7%CAH-2.0%ESRX-0.7%CNXR-6.7%ABCO1.0%ESRX-9.6%EVH10.7%CAH-1.5%CAH9.3%ATHN-1.0%ATHN2.1%CVS-2.0%CVS-0.8%RAD-6.3%WBA1.0%
40、TDOC-7.5%MDRX9.1%ABC-1.1%DPLO8.9%HSIC0.0%DGX1.4%ABC-1.2%LH-0.9%MDAS-5.7%HQY1.0%EVH-6.0%TDOC8.2%OMI-0.6%ESRX5.4%CVS0.7%6North America Equity Research04 January 2019Lisa C.Gill(1-212)622-Conference ScheduleBelow,we include a list of the key events within the Healthcare Technology&Distribution space,in
41、cluding times for company presentation/breakout sessions,as well as relevant panel discussions.Table 2:Healthcare Technology&Distribution-Conference ScheduleMonday January 7Room(Presentation/Breakout)8:00AM Diplomat PharmacyCalifornia West/Olympic9:00AMCardinal HealthColonial/Georgian10:00AMAmerisou
42、rceBergenColonial/Georgian11:00AMTeladocColonial/Georgian11:00AMHMS HoldingsElizabethan A/B/Sussex3:00PMWalgreens Boots AllianceGrand Ballroom/Borgia4:00PMAllscripts Healthcare SolutionsColonial/Georgian5:00PMDigital Health Panel*Colonial5:30PMInovalonCalifornia East/YorkshireTuesday January 87:00AM
43、Future of Specialty Biopharmaceuticals*St Francis Suite East Room8:00AM Patterson CompaniesCalifornia East/Yorkshire9:00AMMcKesson CorporationColonial/Georgian10:30AMCerner Corp California West/Olympic11:00AMCVS HealthColonial/Georgian1:30PMLabCorpCalifornia West/Olympic2:30PMHenry ScheinCalifornia
44、East/Yorkshire4:30PMQuest DiagnosticsGrand Ballroom/Borgia5:00PMDrug Pricing and Access in a Rapidly Evolving Healthcare System*Grand Ballroom5:30PMNextGen HealthcareCalifornia West/OlympicWednesday January 97:30AMRite AidCalifornia West/Olympic10:00AMEvolent HealthColonial/Georgian11:00AMHealth Equ
45、ity Colonial/Georgian1:30PMPremier IncColonial/Georgian3:30PMR1 RCMElizabethan B/Elizabethan C5:00PMOmnicellElizabethan B/Elizabethan CThursday January 108:00AMVoceraCalifornia East/Yorkshire9:00AMNuanceElizabethan B/Kent9:30AMOwens&MinorColonial/GeorgianSource:J.P.Morgan.*denotes panel discussion.7
46、North America Equity Research04 January 2019Lisa C.Gill(1-212)622-Valuation and Price TargetsIn Table 3 below we provide a summary valuation table of our coverage universe and on the following page in Table 4 we provide a summary of our December 2019 target prices for each company.Table 3:J.P.Morgan
47、 Healthcare Technology&Distribution Coverage Universe Summary Valuation TableTickerJPMPriceMkt CapEPSP/EEV/EBITDA2018 Stock Price PerfRating 1/3/19($B)CY19ECY20ECY19ECY20ECY19ECY20EAbsoluteRel to S&PDrug DistributorsAmerisourceBergenABC N$73.37$16.0$6.90$7.39 10.6 9.9 7.67.2-19.0%-12.7%Cardinal Heal
48、thCAH N$44.16$13.5$5.09$5.53 8.7 8.0 7.06.9-27.2%-21.0%McKessonMCK OW$112.94$22.4$13.85$14.93 8.2 7.6 7.47.2-29.2%-22.9%Average9.28.57.37.1-25.1%-18.9%Retail PharmaciesCVS HealthCVS OW$65.23$85.3$7.55$8.31 8.6 7.9 9.48.9-9.6%-3.4%Rite AidRADN$0.75$0.8$0.00 N/AN/AN/A6.86.7-64.0%-57.8%Walgreens Boots
49、AllianceWBAOW$67.33$65.8$6.61$7.27 10.2 9.3 8.68.3-5.9%0.3%Average9.4 8.6 8.37.9-26.5%-20.3%PBM/Spec PharmacyDiplomatDPLOOW$13.36$1.0$0.95$1.24 14.1 10.8 9.08.2-32.9%-26.7%Clinical LabsLabCorpLHOW$123.70$12.8$11.10$11.65 11.1 10.6 8.88.6-20.8%-14.5%Quest DiagnosticsDGXN$80.68$11.2$6.50$6.83 12.4 11.
50、8 9.79.3-15.5%-9.2%Average11.811.29.39.0-18.1%-11.9%Dental DistributorsHenry ScheinHSICN$73.77$11.3$4.47$4.86 16.5 15.2 12.011.512.4%18.6%Patterson CosPDCOUW$19.91$1.8$1.52$1.66 13.1 12.0 9.38.7-45.6%-39.3%Average14.813.610.610.1-16.6%-10.4%Med/Surg DistributionOwens&MinorOMIUW$6.47$0.4$1.26 N/A5.1