Daily Brief Health Care: Classys, Fresenius Medical Care Ag & Co, Basilea Pharmaceutica Ag, Cardinal Health, Gilead Sciences and more

• Classys (214150 KS) reported strong performance in 2022, with highest ever revenue and profit, driven by increased sales of equipment and consumables due to increased global awareness of major products.
• Revenue from export recorded a CAGR of 30% during 2017–2022, mainly driven by strong growth in Brazil. Classys launched Shrink Universe in Korea and Ultraformer MPT in global market.
• For 2023, Classys has guided for revenue of KRW170B (+20% YoY), driven by Shrink Universe’s expansion into the global market, full-fledged domestic sales of Volumemers, and increasing volume of consumables.

• Fresenius Medical Care Ag & Co (FME GR) is reporting decelerating organic revenue growth and earnings decline. The company has revised 2022 revenue and earnings guidance twice in last year.  
• Earnings are heavily impacted by the unprecedented US labor market situation constraining capacity and accelerating wage inflation, and worsening macroeconomic environment driving cost inflation and supply chain disruptions.
• For 2022, the company expects low single-digit percentage revenue growth and high teens to mid-twenties percentage decline in net income. CEO has stepped down within two months of taking charge.

Basilea reported strong FY22 results following the successful execution of its strategic realignment to focus on anti-infectives. The top-line beat (c 21% ahead of the top end of guidance) was driven by accelerating global uptake of its marketed assets, primarily Cresemba, which recorded 22% year-on-year growth in royalties (to CHF65m). In combination with the receipt of milestone payments, lower-than-expected operating expenses and the sale of oncology assets, management was able to achieve profitability (FY22 net profit of CHF12.1m) a year earlier than anticipated. As Cresemba peaks, we expect additional support to come from the successful US launch of Zevtera (NDA expected in March/April 2023) and the introduction of novel late pre-clinical/clinical anti-infective assets in Basilea’s development pipeline. Our updated valuation is CHF785m or CHF65.7/share (previously CHF921.7m or CHF77.8/share), reflecting our revised estimates and the recent sale of oncology assets, partially offset by lower net debt (CHF46.7m at end-FY22) following repayment of the 2022 convertibles.

• Cardinal Health, one of the largest wholesalers of the healthcare industry in the U.S., continued its strong performance in the last quarter and managed to deliver an all-around beat.
• Cardinal Health’s total revenue has increased by 13% in the last quarter, and the gross margin increased by 3%, driven by the Pharma segment.
• There was an increasing overall pharmaceutical demand and a strong performance from the Generics programs.

• Gilead had a very strong quarter with solid growth in each of its core franchises and across all geographies led by oncology and HIV.
• In the U.S., Sunlenca received its foremost approval for heavily treatment-experienced adults having multidrug-resistant HIV infection.
• The company continues to add further programs, including its new preclinical candidate to collaborate with lenacapavir for its long-acting HIV treatment programs.