Welcome back to the Weekly Muse – the latest trending healthcare stories from the last 7 days. Today’s edition covers the week of December 21, 2018.
Happen to miss last week’s stories? Get caught up here
5 Big Things
Johnson & Johnson’s Baby Rash
It’s not a good look for one of the biggest companies known to man, as Reuters reported this week that Johnson & Johnson reportedly left trace amounts of asbestos in its baby powder (along with the regular ingredient, talc.) and continued to sell the product. The report details internal memos and other evidence of seemingly gross negligence by JNJ insiders, including failing to report to the FDA the level of asbestos in some tests. The stock tanked a healthy (get it) 12% this week, but honestly, what didn’t? RIP 401k.
Of course, JNJ released a statement asserting that their baby powder 1) does not cause cancer, 2) repeatedly has been tested for asbestos for decades with no asbestos found, and 3) has always fully cooperated with the FDA. It remains to be seen whether JNJ will be on the hook for any of this, but if so, it would probably result in a pretty hefty fine.
Did we take a Time Machine?
Remember when the ACA was in court back in…2012? Well, major news came out of Texas this week, as a judge ruled that the ACA was unconstitutional. Essentially, his rationale was centered around the individual mandate, which required all Americans to maintain a minimum level of health insurance coverage, with a penalty attached if they failed to do so. The individual mandate had recently been repealed by the current administration with the passage of the Tax Cut in late 2017. As a result of the repeal, state attorney generals from about 19 states sued, arguing that because the individual mandate was repealed, the rest of the ACA did not apply anymore. In essence, under the judge’s rule, every part of the law was dependent on every other part to be legal.
The whole thing is a bit…confusing, and the ruling has gotten more than a little bit of backlash from both sides of the political aisle. Now, Democrats particularly are in a state of uproar, especially after hearing seeing the judge’s historical track record with cases, and promised prompt legal action to settle the ACA. California is having none of it and plans to appeal along with several other states. But first, they’re making sure that the ACA is still a thing as the decision makes its way through court.
There are plenty of skeptics who really don’t think the ACA is going anywhere, including major health insurers like Centene and WellCare. They’re reassuring customers that nothing is going to change anytime soon, even going as far as saying there is a “99.99999% certainty” the ruling is overturned.
Altria Gets Be-Juuled
Maybe we really are in a time machine. Teen vaping has been a huge hit (pun intended), so much so, that Altria is shelling out almost $13 BILLION for a little over a third of the trendy company.
Juul has a massive market share in the vaping space (a whopping estimated 75%), and Altria is looking to cash in on that by placing Juul products in premier locations on the infamous tobacco wall. Despite all odds, tobacco lives on…
Mega Merger Central
As if $12.8 billion weren’t enough to rustle up some jimmies, several mergers are scheduled to close by year end, including Cigna and Express Scripts, which was approved and finalized this week. The deal took conspicuously less time than CVS-Aetna, which is still stuck in legal purgatory (but looking to close soon), as some judge got offended when he felt like the companies were treating him like a “rubber stamp.” Seriously, lesson learned – don’t mess with judges.
Around the public sector corner, Civitas Solutions (think home care type stuff) is getting bought out for $17.75 by private equity firm Centerbridge..a whopping 27% premium to its average 30 day share price and $1.4 billion transaction. Cha-CHING.
Lots of activity from the nonprofit sector before year end, too. First off, CHI and Dignity are finally looking to close their merger by year end. A reminder that the new entity will be called CommonSpirit Health (how could you forget), which will create an absolutely massive health system with a smooth 140 hospitals, 150k employees, and 700 care sites in 21 states.
In other news, DaVita is dropping its sales price for its medical group, DaVita Medical Group. If you recall, the initial transaction between DaVita and UnitedHealth was priced at $4.9 billion. Since the Medical Group isn’t doing that great, and since the deal is under a lot of regulatory scrutiny, DaVita offered to lower the price to about $4.3 billion.
Other notable deals from the private sector include PeaceHealth acquiring multi-site urgent care platform ZOOM+CARE, US Radiology partnering with Touchstone Medical Imaging, and Dignity Health/Go Health purchasing 6 urgent care centers in the Bay Area.
Managed Care is Doing Pretty Well
A multitude of managed care companies provided guidance, or estimates of future growth, for 2019 and beyond recently, and let me tell ya, managed care is doing just fine. Centene ($CNC) is predicting 17% revenue growth for 2019, WellCare is feeling great about their operations, Humana announced an accelerated stock buy-back program, and, not to be out-done, UnitedHealth expects double digit earnings per share growth for the next decade.
Fitch, a bond rating company, is pretty comfortable with managed care for 2019, citing strong expected operational performance (see above) a robust economy, and favorable Medicare advantage reimbursement.
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Honorable Mentions
Our other favorite stories from the week
A pretty great opinion / commentary read out of the Wall Street Journal this week. The way healthcare statistics are reported, as well as the demographic differences between nations, skew the results and outcomes of different health governance.
Beckers posted a great article this week containing a sweeping overview of healthcare, its intricate systems, and the factors at play in the industry. The post is very well thought out and an awesome read.
Drug Spotlight
- Two dozen drugs could go generic this year and next, but the biggest change could happen in Congress
Other Healthcare Reads
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