Orange County’s larger public healthcare companies lived up to their reputations as being recession resistant or at least stable during tough times with first-quarter results last week.
Investors cheered or shook off results from Irvine heart valve maker Edwards Lifesciences Corp., Fullerton-based medical testing gear maker Beckman Coulter Inc. and nursing home operator Sun Healthcare Group Inc. of Irvine.
Some of the companies showed signs of wear amid concerns about hospital and government spending.
Beckman Coulter, which makes machines and supplies for laboratories running tests for doctors, reported mixed quarterly results, beating expectations on profits but falling short on sales.
Analyst Quintin Lai of Robert W. Baird & Co. in Milwaukee described Beck-man’s first quarter as being a mix of “better-than-expec-ted cost controls offset by weaker-than-expected revenues.”
Beckman is weathering a slowdown in sales to labs at hospitals, which are feeling the strain of lost investment income from Wall Street’s fall meltdown and tougher financing for big purchases.
The company’s machines can sell for around $200,000,a big chunk of money at a time when hospitals and other customers have gone into cash-conservation mode.
But Beckman stuck to its 2009 outlook, which drove its shares up about 5% last week on a market value of $3.4 billion.
The company said it expects to make $237.9 million to $250.7 million this year. Analysts on average had been expecting Beckman to earn $250.1 million.
And the company reaffirmed its previous sales guidance of $3.2 billion, slightly above Wall Street’s average expectation of $3.1 billion.
There was little nuance in results from Edwards Lifesciences,the heart valve maker easily beat expectations with first-quarter results.
Profits excluding special items were up 23% from a year earlier to $41 million, surpassing the $38.6 million analysts expected on average.
Sales rose 5.6% to $313.5 million, topping the $309.3 million Wall Street had expected.
Edwards also upped its outlook for the rest of the year.
The company is the most recession resistant of local medical device makers, as its products are considering life-saving essentials that can’t be put off.
Edwards also is riding high on a new type of valve that doesn’t require major surgery. The company’s Sapien valve, which is inserted via a catheter, is being sold in Europe and is undergoing a major U.S. clinical trial.
“Sapien performance remains impressive in our view and above expectations, continuing to drive (Edwards’) strong quarterly performance,” said Greg Simpson, a medical device analyst with St. Louis-based investment bank Stifel, Nicolaus & Co., in a report.
During Edwards’ conference call, Chief Executive Michael Mussallem said the company now expects to achieve more than $100 million in Sapien valve sales in 2009, up from a prior forecast of $75 million to $95 million.
Investors sent Edwards’ shares up 10% last week on a market value of $3.5 billion.
Sun Healthcare, which runs nursing homes and other healthcare facilities, reported mixed results that didn’t rattle Wall Street.
First-quarter profit from continuing operations was $11.6 million, up 43% from a year earlier and just above analysts’ expectations of $11.3 million.
Sun’s first-quarter revenue was up 4% to $468.3 million, shy of Wall Street’s projection of $471.4 million.
The company said its revenue was driven by several factors, including an 8% hike in payments from Medicare, the government health program for the elderly.
Sun is focusing on upping its percentage of Medicare payments as its payments from Medicaid,the government health program for the poor,hit a new low.
Sun’s shares tend to fluctuate on concerns about government funding for nursing homes. The stock was flat last week on a market value of $400 million.
“Overall, we feel this was a good quarter for Sun,” said Rob Mains, a healthcare services analyst with Morgan Keegan & Co., a Memphis-based brokerage.
Allergan Meets Expectations, Affirms Outlook
Allergan Inc., the Irvine-based maker of Botox and other drugs, late last week reported a first-quarter profit that surpassed Wall Street’s expectations and reaffirmed its outlook, despite slowing sales.
Investors sent Allergan shares down about 4% on the news Friday on a market value of $13.7 billion. The drop could be related to concerns about a Botox rival being approved by the Food and Drug Administration and a report on potential dangers of Botox, both announced last week.
Allergan said that it earned $167.6 million in the quarter before charges, above analysts’ expectations of a $161.5 million quarterly profit.
After restructuring and legal charges, Allergan made $44.7 million in the quarter, down 59% from $107.7 million in 2008’s first quarter.
Allergan’s sales fell 6% to $1.01 billion, in line with expectations.
Botox sales were down 6% to $297.3 million, while breast implant sales fell 16% to $66.2 million. Revenue from eye drugs, Allergan’s historical core category, dropped 4% to $473.6 million.
As for its second-quarter outlook, Allergan said it expects to post a profit of $201.2 million to $207.3 million, which at the high end would meet Wall Street’s expectations of $207.3 million.
Sales are seen coming in at $1.05 billion to $1.1 billion, compared to Wall Street’s expectations of $1.08 billion.
For 2009, Allergan reaffirmed its outlook for $819.9 million to $838.2 million in profit, versus the $826 million Wall Street is looking for.
Sales are projected at $4.1 billion to $4.3 billion. Analysts are looking for sales of $4.26 billion in 2009.
Separately, Allergan said it was going to work with the FDA on potential Botox label updates, after regulators said that Botox and rival products must contain strong warnings about potential complications if the drugs spread in the body.
FDA Approves Botox Rival
The Food and Drug Administration has approved a rival to Botox, the blockbuster wrinkle-reducing drug from Irvine-based Allergan Inc.
Medicis Pharmaceutical Corp. of Scottsdale and its partner, France’s Ipsen SA, said late last week that regulators approved their Dysport drug as an anti-wrinkle treatment and for treating spasms of the neck muscles.
The FDA originally was set to decide on the marketing application for Dysport in mid-April. But that was delayed as Medicis and Ipsen still were in talks with regulators about labeling and detailing of side effects, which led to worries about a potential approval delay.
Medicis said it expects to launch the cosmetic form of the drug, which will use the Dysport name instead of the previously proposed Reloxin, within the next 30 to 60 days.
Ipsen is expected to launch the medical form of Dysport during the second half of the year.
Analysts expect Medicis to launch cosmetic Dysport at a lower price than Botox and eventually expect it will grab 20% to 30% of Botox’s market share.
,Vita Reed
