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Healthcare Stock Q2 Earnings Roster for Aug 5: HUM, CRL & More

The healthcare sector has been one of the beneficiaries of the COVID-19 pandemic. The sector is likely to see an overall revenue gain in second-quarter 2020 results on the back of increased demand for its products and services, given the rising incidence of coronavirus cases as well as an ageing U.S. populace. However, escalating costs incurred by companies for investment in technology, development of new products and services and adapting to the ‘new normal’ post the coronavirus outbreak might have dented earnings to a degree.

The healthcare sector encompasses diverse industries varying from health insurance, hospitals, nursing homes, medical devices to pharmaceuticals and others with strikingly different operations. This space is expected to experience a mixed impact from the COVID-19 condition in the impending quarterly release. While some business lines like telehealth providers and pharmaceuticals are expected to have got a boost amid such global health emergency, others, such as hospitals are at the receiving end.

Below we discuss how some of the industries are placed ahead of their respective second-quarter earnings announcements:

Health insurers have so far had a minimal impact from the COVID-19 outbreak. While insurers are likely to have benefited from premiums covered under government-sponsored plans, namely Medicare Advantage and Medicaid, Commercial health insurance plans are likely to have been under pressure due to stiff competition and because more number of employers shifted to Administrative services only (ASO) products, which have soft profit margins.

The COVID-19 outbreak provided some relief to insurers’ Medical Loss Ratio (MLR), which is the ratio of premium spent on claims. Since hospitals at large postponed their elective procedures and surgeries, this development is likely to have positively impacted the MLR of health insurers in the form of lower claim outgo. A decline in MLR is expected to have aided insurers’ margins.

Hospitals are likely to have faced the double whammy of revenue loss on one hand (due to suspension of elective procedures to attend COVID-19 infected patients) and escalating costs for staffing, supplies and preparation for the anticipated spike in Covid-19 cases on the other. Thus revenues are expected to have been stressed and costs flared up for the second quarter.

Telehealth Providers have been clear winners as demand for telemedicine and telehealth services shot up, largely owing to homebound Americans who are on a pandemic-triggered lockdown. The efficiency and contactless nature of the video medical consultation made the said services extremely conducive right now.

Sector Projections

The latest Earnings Trends indicate that the Medical  sector’s second-quarter bottom line is expected to remain unchanged year over year while the top line is likely to inch up 1.7%

Here we discuss four healthcare companies, lined up for respective second-quarter earnings releases on Aug 5.

Our quantitative model suggests that the combination of the following two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — increases the odds of a positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Humana Inc.’s HUM earnings report is likely to reflect better revenues. Notably, the consensus mark for revenues of $18.6 billion hints at a 14.6% rise from the prior-year reported number.

The company’s top line is likely to have witnessed an upside in the second quarter owing to higher premiums and strong Medicaid and Medicare lines of businesses. The consensus mark for the company's total medical membership and total premiums suggests a hike of 2.1% and 15% each from the respective year-ago reported figures. The company is likely to have witnessed an uptick in its telehealth services as well.

Humana has an Earnings ESP of -2.62% and a Zacks Rank of 3, currently. (Read more: Humana  to Report Q2 Earnings: What's in the Cards?)
The company’s earnings surpassed estimates in all the trailing four quarters, the average being 10.1%.

Humana Inc. Price and EPS Surprise

Humana Inc. Price and EPS Surprise

Humana Inc. price-eps-surprise | Humana Inc. Quote

Charles River Laboratories CRL is a medical research equipment and services provider. The Zacks Consensus Estimate for quarterly earnings is pegged at $1.27 per share, indicating a  22.1% fall from the year-ago quarter’s reported figure.

The consensus mark for revenues stands at $635.48 million, suggesting a 3.4% dip from the year-earlier quarter’s reported number.Charles River has an Earnings ESP of +2.01% and is presently Zacks #3 Ranked. The company’s bottom line outpaced estimates in all the trailing four quarters, the average being 10.59%.

Charles River Laboratories International, Inc. Price and EPS Surprise

Charles River Laboratories International, Inc. Price and EPS Surprise

Charles River Laboratories International, Inc. price-eps-surprise | Charles River Laboratories International, Inc. Quote

LHC Group, Inc. LHCG serves as a post-acute care partner for hospitals, physicians and families in the United States.  The Zacks Consensus Estimate for second-quarter earnings stands at 75 cents per share, implying a –decrease of 29.91% from the prior-year reported figure.
The same for revenues is pegged at $492.53 million, hinting at a 4.89% decline from the year-ago quarter’s reported number.

LHC Group has an Earnings ESP of +6.06% and is currently a #3 Ranked player.

The company’s earnings beat estimates in three of the trailing four quarters (and met the same in one), the average surprise being 8.09%.

LHC Group, Inc. Price and EPS Surprise

LHC Group, Inc. Price and EPS Surprise

LHC Group, Inc. price-eps-surprise | LHC Group, Inc. Quote

Natera, Inc. NTRA offers genetic testing and diagnostics with proprietary bioinformatics and molecular technology. The Zacks Consensus Estimate for second-quarter bottom line is pegged at 57 cents per share, indicating an 18.75% downside from the year-ago reported figure.

The consensus estimate for the top line is pinned at $73.42 million, suggesting a 1.26% slip from the year-ago quarter’s reported figure.

Natera has an Earnings ESP of 0.00% and a Zacks Rank #2 (Buy) at present.

Earnings of this company topped estimates in three of the trailing four quarters (and matched the same in one), the average surprise being 15.04%.

Natera, Inc. Price and EPS Surprise

Natera, Inc. Price and EPS Surprise

Natera, Inc. price-eps-surprise | Natera, Inc. Quote

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