Johnson and Johnson at Barclays Notes

Jorge Mesquita – EVP, Worldwide Chairman, Consumer

There’s a lot of disruption in our industry

“But the reality is that the pace of change in our industry is truly accelerating as Lauren said, in fact where I want to spend my time with you here today is to talk about that our industry is really being disruptive. If you look at our last few decades in this industry, there were a series of barriers for entry or sources of competitive advantage that were well established but those are becoming less and less unique. It used to be that companies like ours would acquire the best talent through our recruiting human resources mechanism, but it’s never been easier for you to source great talent across the world on demand.

Our ability to build and nurture brands, brand building competencies used to be again a source of competitive advantage but the reality is it’s very easy for you to start building a business, building a brand from scratch and you really don’t need a ton of money to get a community of active users that support you. Large scale manufacturing assets used also to be a source of competitive advantage. But the reality is if you want to compete in this industry, you can access high quality contract manufacturing work any place in the world.

Retailer relationships used to be also a source of advantage and a barrier for entry, but as you all know, new companies can now sell directly to consumers profitably in most markets. Innovation used to also be a big barrier for entry but again you have an ability now through a network of external partnerships to access innovation even crowd sourcing. And then financial firepower for companies like J&J is not as critical as it used to be because new startup entrants can access capital relatively easy through VCs.

So what you see is a result of these barriers coming down, you see new class of competitors emerging and now we have our classic multi-national, well established competitors and you have these new entrants to contend with. So this disruption that is happening is digitally enabled and is changing the face of our industry. You see these new players coming into our category and at the heart of this disruption, there is a new consumer centric paradigm and that’s challenging completely the cost of goods scale and the value scale as we know it and its forcing a change in both the retail and the media landscape.

New playbook ks asset light infrastructure and control of the consumer relationship via data

“And what we’re seeing now is there is a new playbook emerging, a new how-to-win playbook that is really characterized by an asset light infrastructure. And the control of the consumer relationship,via the acquisition of the sports party data that allows for you to have a highly personalized iterative on demand consumer experience. And the ownership of this relationship with consumers and associated ecosystem that comes with it is now the new playbook. It is now the greatest new source of competitive advantage.”

Small players are succeeding because they are committed to breakthrough innovation, stay close to customers, build digital brands first and are hyper efficient

“What is it that is allowing them to succeed, because by and large if you look at our categories, these small players are the ones that are gaining shares and majority of large companies are losing market share. So we’ve found five things that we think these players are doing uniquely well.

First, they are really committed to breakthrough innovation by staying really close to consumers and customers and staying on top of consumer trend. They see where the product is going and they are designing to what that emerging consumer need is. They are focused on building digital first brands that have a clear purpose and a reason for being that resonates with millennial consumers.

They capitalize on the rise of emerging channels. They don’t just play in the legacy channels but they figure out what are the new shopping behaviors, new emerging channel trends and they disproportionate drive growth in those channels. They are hyper efficient. Normally have very lean cost structures, flat organizations, no bureaucracy and as a result they move very fast. Speed is a great currency for them.

HCA 2Q17 Earnings Call Notes

R. Milton Johnson – HCA Healthcare, Inc.

Results slightly off from internal plan

“Although, we are on plan for the second quarter, it’s slightly off from our internal plan for adjusted EBITDA at midyear. Our results in the first half have been challenged by, one, softer managed and exchange volumes, and, two, our London market results have been negatively impacted by currency conversion rates and lower admissions from Middle East embassies and private insurance. ”

Seeing more opportunities for small tuck in acquisitions

“We’re seeing more opportunities in the marketplace now. I think as many health systems, again, went through the positive environment from 2015 and early 2016, and now we’re seeing some volume pressures. We’re looking, I think, to be part of the bigger system. And so we are encouraged by that. We think we have a lot to offer as far as opportunity for many of these systems. So it is opportunistic, but it is also consistent with our strategy. So, we’re pleased to see the pipeline more robust than it has been in recent years”

Bill Rutherford

Bad debts running a bit elevated

“So we know our bad debts are reading in terms of year-over-year a little elevated. And obviously, we talked about before, we think if you look at our total uncompensated care, which includes our bad debts, charity and uninsured, in any given quarter you are subject to some classification trends among these categories, but generally speaking, over time, our uncompensated care trends track with our uninsured volume trends. And as we mentioned, we’re seeing roughly a 4% to 5% growth in uninsured admissions, 4.9% in the second quarter.”

Samuel Hazen

Obstetrics volume down 2.5-3%

” I think one thing that’s really relevant here is obstetrics on the commercial side is roughly, I don’t know, 20% of overall commercial demand, give or take a few points. And with commercial obstetrics volume being down 2.5% to 3%, it weighs out to be 0.6%, so it explains half of our decline”

Abbott 2Q17 Earnings Call Notes

Miles White – Chairman and CEO

China is actually much more stable

“China for example is actually much more stable than the last 12 to 18 months. I like what I’m seeing in China right now. We still have the government regulation continue and it’s impacted competitors, there is a lot of reaction to the shrinkage of the number of SKUs in the market and so forth. And we’ve talked about that. But as far as what we’re seeing in 2017 here, we’re performing according to our expectations. I think the comps obviously get better here in the second half; we will see.”

Johnson and Johnson 2Q17 Earnings Call Notes

Alex Gorsky

We’re pleased that the admin is listening to business leaders

“First in terms of our interactions with the US Administration, we’re pleased that senior officials are continuing to listen to business leaders, when considering the impacts of legislation and we’ll continue to participate in these conversations as well as those with other world leaders to make sure our voices are heard on these vital issues. In fact, I’m here in Washington DC today meeting with U.S. and global leaders driving forward discussions on the important issues impacting healthcare today. On the topic of Healthcare Reform, we continue to support initiatives that expand access to affordable healthcare and improve long-term sustainability of the U.S. healthcare system.”

Monitoring AHCA

“We’ve been monitoring the ongoing development of the AHCA with great interest and think that as our political leaders bring the new healthcare bills through Congress, it is important that they consider how these efforts will ensure stability within the system, while enhancing the competitive market and fostering continued innovation for new treatments and cures.”

Pharma pricing thoughts

“In terms of the potential Executive Order on pharmaceutical pricing, we understand the concern about the cost of healthcare and believe we have a responsibility to ensure our products are both assessable and representative of the outcomes and value they deliver. We recognize the important role pharmaceutical drugs play in improving healthcare outcomes. We know these medicines represent only about 15% of overall healthcare spending as they also represent a critical component of effectiveness and efficiency in the healthcare system. As we note in our 2017 Janssen US Transparency Report, we’ve maintained a responsible approach to pharmaceutical pricing, generally limiting our aggregate annual price increase to single-digit percentages below those of our competitive set. We’ll continue working with all our stakeholders to ensure sustainable future for America’s healthcare ecosystem.”

Tax code disadvantages US companies

“Finally, while we remain optimistic that there are opportunities from modernization of the corporate tax code in the near future, we’ll continue to monitor any developments or progress as Congress prioritizes this among other pressing needs. As we said before, we believe fundamental elements of our current tax system are outdated and disadvantaged U.S. companies against our international competitors who have reduced tax rates, domestic-only taxation and have incentives for innovation and investments.”

Johnson and Johnson at Jefferies Conference Notes

Alex Gorsky

Healthcare makes up 20% of the US economy

“healthcare now makes up almost 20% of the economy in the U.S.; about 10% in a lot of the other major economies around the; world given demographics, 65 plus population, I think latest figures in the U.S.; we got about 40 million people who are at the age of 65 that number is going to go to 80 million over the next 20 or 30 years; and if you look at every age category, from 70 to 80, 80 to 90, you see very similar statistics, I think the number from 90 plus is going from like 2 million to 10 million. And of course, the corresponding increase in medical and healthcare consumption with that aging, it’s pretty remarkable. And by the way, it’s not only in the United States, it’s in Japan right now 25% of the population of 55 plus that number is going to 40%.”

When people move up the economic ladder they want healthcare

“And as I travel around whether it’s a Mumbai, whether it’s a Memphis or Moscow, this tissue of aging demographics and increasing middle class and I think it’s pretty — it’s been shown that once people have food, once people have shelter the next thing they consume more of is they move up the economic ladders, healthcare that it puts a lot of pressures on governments and systems. ”

Incredible explosion of innovation thanks to technology

“The flip side of that is the incredible explosion of innovation that we’re seeing right now. And I think a lot of that is enabled frankly by technology, it’s enabled by Big Data, it’s enabled by new innovation approaches in some cases that we couldn’t even have imagined 10 years, 15 years ago or if we did it was side by. And I think that makes it quite exciting. I think if you look — just look back in my carrier, we’ve seen HIV go from a death sentence where if you were diagnosed in the early 80s with HIV you perhaps had about two years of life left. Today, I believe the numbers with support of the Epidemiologist poor thing it take two years of the average life span. And if you think of going forward areas like oncology and the potential that we’re seeing vis-à-vis a better understanding of genomics and applying those insights into new therapeutic options is very exciting.”

*Consumers have been switching back to brands from private label

“I think there was a lot of skepticism not only can you fix the quality issue but number two is once you do reintroduce once patients made the switch to private label, particularly at the depth of the recession, will you ever get them switch back to brands like Tylenol. Today, if you look at our core share with Neutrogena, with Tylenol, with other brands, they are definitely on the upswing, not quite back yet to where they were, but well underway.”

General Electric’s (GE) at Bernstein Strategic Decision Conference

John Flannery – President and Chief Executive Officer, GE Healthcare

The US  in a soft spot

“U.S,…we are looking at roughly 1% to 2% market growth as we look at ‘16, ‘17, ‘18 that kind of timeframe….t’s been soft in the first few months of the year….I am looking at sort of a flattish market in the U.S. There is definitely some uncertainty and wait and watch about the legislative process and proposals and how that might affect us…So the U.S. is I think there is a temporary soft spot, I think that will sort itself over time going forward.”

Emerging markets growing nicely

“we have got about roughly 25% of our business today is emerging markets that’s growing nicely. But the story for us there really is margin rate, market share gain, take advantage of the emerging markets.”

Life science is a crown jewel

“And then Life Science I would say is, in many ways, a crown jewel inside the overall portfolio. There is strong macro growth in this industry in terms of biological drug adoption, biosimilar drug production. And we have a very strong franchise here. So this has been a double digit growth business, very high margin, very strong cash generation and we are eager to invest more and more money in this business.”

The strategy in screening projects

“So as the mindset, I would say when we look at organic investment, we are harsh around screening projects, what are the business cases, let’s try them quickly. If they are working, we will double down. If they are not working, we will pull back. ”

On the affordable care act

“…there is going to be some marginal impact around who is insured, who is uninsured. And I think that’s what our customers are waiting to see. But at the end of the day, I am not expecting some quantum change in the amount of people that are active in healthcare. I do expect quantum change at how they are reimbursed and what”

CVS 1Q17 Earnings Call Notes

Larry J. Merlo – CVS Health Corp.

Generics are 87% of scripts

“We effectively purchase generics through Red Oak Sourcing using our size, scale and expertise. And we encourage generic utilization to drive down costs, with generics now comprising about 87% of scripts filled across the enterprise. To more effectively manage the cost of the remaining scripts, we employ sophisticated formulary management tools to ensure that the right patient receives the right drug at the lowest possible cost.”

Jonathan C. Roberts – CVS Health Corp.

Using AI to crawl through claims

The other thing I would add is that there’s been a lot written about the disruption that happens when you move business, and the industry has evolved a lot over the last four or five years. We now have automation, so a lot of these new clients are implemented in an automated way. And then, our testing platform now employs artificial intelligence, where we crawl through the claims and look for anything that’s unusual. And so that has resulted in what I think have been very successful welcome seasons over the last several years. So we’re very confident in our ability to implement new business, large and small.

UnitedHealth 1Q17 Earnings Call Notes

Stephen Hemsley – CEO

Aren’t planning for any changes to insurance

“We have engaged with elected officials from both parties, and at the federal and state levels, to address improving quality, access, affordability, cost and satisfaction for all stakeholders. Affordability can be improved most in the immediate term through lower tax, and we hope Congress act soon to permanently repeal the health insurance tax, look forward further worsens consumers’ premiums, state budgets and senior benefits. We have though insight as to whether that will or will not occur, and accordingly, our plans continue to assume the taxable return in 2018, which will raise premiums and/or reduce benefits for commercial businesses, state and our nation’s senior population.”

We’d like to repeal the health insurance tax

“In our prepared remarks, we obviously focused on the health insurance tax. Because that, as Dan said, is going into the marketplace now for 2018. And that has an impact on affordability and the uptake of the participation in those markets. So we are strong advocate of repealing that and to taking that action as quickly as possible. Beyond that, we have engaged. We think pretty constructively around the notion of, and I think you can see this in our published materials on our Web site, that we see actually a marketplace that could be pretty constructive. But based upon more orientation to state based markets, more flexibility in the marketplace, really seeing Medicaid as the programs that have grown in effectiveness and to become broadly recognized as actually very efficient healthcare coverage for the populations to which they apply.”

Dan Schumacher

We support taxing us less

Sure. Good morning Dave. Obviously, from our perspective, we have been long supporters of the permanent repeal of the health insurers’ tax. At the end of the day, obviously, it just increases the cost of healthcare, makes it less affordable and compromises people’s ability to gain coverage. So we are certainly advocating along those lines. As we think about the tax itself, obviously, we’ve got to deal with it as it sits currently in loss, and so that’s what we’re doing. We’re planning accordingly. We’re incorporating and then pricing and also incorporating in our thinking as we plan our benefits in Medicare.

Abbott Labs at Barclays Conference Notes

Brian Yoor – Senior Vice President, Finance and Chief Financial Officer

First priority is to pay down our debt

“I think right now in the short-term, our big focus is debt repayment. I think the audience absolutely got it right. We come out of the gates this year, and doing the St. Jude acquisition with about $28 billion; so it’s going to be in our best interest to pay down as much as we can as quickly as possible. As part of our deleveraging plans, we feel very comfortable about what we’re doing. We’ve enacted several cash flow initiatives that span, what you’d call, the cash conversion cycle of days on hand, day sales outstanding and even days payable, where there’s opportunities for us to unlock a little bit of otherwise the cash that’s not productive to us today. We’ve sharpened what was already very disciplined capital expenditure process as well. And so, bringing down debt has many advantages. It brings back the flexibility that we want longer-term to do the capital allocation that you’ve been accustom to; we’ll continue to growing the dividend; looking at the tuck-in acquisitions, as you mentioned. But the first priority is to pay down the debt and bring back our strategic flexibility, lower our interest expense and bring more of the enterprise value back to our shareholders.”

Pfizer at Barclays Conference Notes

Frank D’Amelio – Executive Vice President of Business Operations and Chief Financial Officer

If a deal works today it will probably work even more in the next tax regime

“And the way I think about this just philosophically is if deals work in the current tax environment, if there were a tax reform then based on everything I just currently understand today and I could spend a few minutes on this if you like, but I think they would work even more. But if you look wait is a bad for little work. My reaction is if there is an opportunity to do something today, works in the current environment with the current tax regime, like we’ve done before we will go ahead and do it.”

Valuations will change

“So there is one thing I know with certainty about valuations, they will change right. They will go up, they will go down and they will float but the only thing I know with certainty about valuations and when you look at biotech deals and once again, one of the issues with I go with the acquisition math on biotech deals and I’ll get to the reset question on that.”

A capital market event would be interesting

” I think one of the thing that’s always kind of an interesting event is the capital market event, because obviously capital market events can very much all of a sudden reset, with the valuation of the company. So that will happen over time.”