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140 posts categorized "Earnings reports"

November 08, 2014

Mayo Clinic docs make millions by consulting with drug/device companies

Here's some from the lead article in my package of stories about Mayo Clinic doctors and their financial relationships with drug/medical device companies in this weekend's Post-Bulletin.

FYI, the front page article is continued on page A2 and more articles and data are printed on page B4.

An unprecedented disclosure of payments from drug companies shows that $3.07 million for consulting was paid in 2,388 payments to Rochester-based Mayo Clinic researchers, doctors and hospitals during five months last year.

11082014drugmoneygraphicHowever, Mayo Clinic officials point out that they have a strict policy about such payments, which all must be approved by its Conflict of Interest Committee. Such policies, which many medical centers have, are a way of preventing medical professionals from being unduly influenced by money from drug companies in their decisions, such as what drugs they prescribe.

For the same period, Cleveland Clinic staff collected $4.3 million in private money for consulting, while Johns Hopkins Hospital employees took in a mere $4,627.

Dr. Richard Ehman, vice-chair of the Conflict of Interest Committee, said that Mayo Clinic's restrictive policies are unusual within the medical industry.

"We know all of the financial relationships of our staff. That's unheard of," said Ehman.

Cleveland Clinic and Johns Hopkins urge their employees to disclose their private contracts, though they stop short of requiring it in every case, according to their policies posted on their websites. Mayo, Cleveland and Johns Hopkins all agree that a physician or scientist serving as primary leader of a research project are banned from having private contracts with the companies involved.

800px-Gonda_building,_closer_upHundreds of Mayo Clinic doctors are receiving millions from drug companies and medical device makers for private consulting every year, while many others are paid one-third of the royalties generated by their work.

Disclosing all of the financial contracts between private companies and doctors is the goal of the Open Payments website run by Centers for Medicare and Medicaid Services. It features a database of doctors and the money they receive from outside sources. It's now required by the Physician Payment Sunshine Act, which was part of the Affordable Care Act health reform.

In late September, data from August to December 2013 was released on the site. This batch of records includes about 4.4 million payments made to about 550,000 doctors and 1,360 teaching hospitals. However, some of the information reported by private companies is incomplete, confusing and, in some cases, incorrect.

For Mayo Clinic doctors, 100 percent of the payments for private consulting go directly to them. Mayo began allowing such consulting contracts in 1999, when it changed the rule that required all consulting payments to go to the clinic.

The payments for those five months show all different types, including royalties, research money and royalties.

In addition to the consulting payments during those five months, a total of 68 payments totaling $3.01 million were made to Mayo Clinic for research, according to the database.

All research money, like grants, goes directly to Mayo Clinic.

However, physicians or researchers receive one-third of the amount of royalty payments received by the clinic from drug companies, according to clinic policy. During the five months of reports, Mayo Clinic received a total of $1.9 million in royalties.

Just one company -- DePuy Synthes Sales Inc., a subsidiary of heath care giant Johnson & Johnson, reported paying a total of more than $1.15 million to Mayo Clinic or its doctors in 278 payments from August to December.

In the wake of the recent federally-mandated deluge of information about the financial ties between doctors and private drug/medical device companies, Ehman explained that Mayo Clinic does allow its employees to personally profit from such agreements. However, every financial relationship must be approved by the Conflict of Interest Committee.

Mayo Clinic approved 1,003 consulting contracts for 308 doctors and researchers in 2013 to personally work with private companies on their own time. The Mayo Clinic committee, which meets every other week, approved 953 such agreements with 301 individuals in 2012 and 1,071 for 292 employees in 2011.

June 30, 2014

Hormel bulks up portfolio by buying maker of Muscle Milk

Austin-based Hormel Foods Corp. is bulking up its portfolio of companies by buying the maker of Muscle Milk protein drinks for $450 million.

UrlHormel, which produces Spam, Jennie-O Turkey and Skippy Peanut Butter among many other products, announced Monday evening that it had signed a deal to buy Benicia, Calif.-based CytoSport Holdings, Inc.

“Muscle Milk products will serve as a growth catalyst for our Specialty Foods segment, providing this division with a leading brand in the high-growth sports nutrition category,” stated Hormel CEO and President Jeffrey M. Ettinger in the press announcement. “The acquisition of CytoSport expands our offerings of portable, immediate, protein-rich foods, and broadens our appeal with younger consumers.”

Spammy2Muscle Milk power and drinks are used by many bodybuilders as muscle-building boost. It's considered the top brand in the ready-to-drink protein drink category. CytoSport launched Muscle Milk in 2000 and its grown to be its most popular brand. The company also makes other products like protein bars, oatmeal and ready-to-drink products.

Hormel anticipates CytoSport's total 2014 sales to hit an estimated $370 million. The deal is expected to officially close within 30 days.

CytoSport, which is owned by the Pickett family, first started talking to potential buyers in the fall of 2013. Hormel was considered a possible buyer from the start, along with Irish cheese maker Glanbia and Colorado-based butter and soy milk maker Whitewave Foods. The early pricing talk in 2013 was that CytoSport was looking for $500 million for the company.

Hormel already has a protein drink product line made by Hormel Health Labs, but HealthyShot drinks are aimed at medical patients and seniors who have trouble eating or swallowing.

This is acquisition follows another Hormel non-meat protein buy in 2013, when it bought Unilever's Skippy peanut-butter business for $700 million.

May 28, 2014

Analyst speculates that Hormel may be target of takeover bid

There's a lot of merger and acquistion activity cooking in the meatier aisles of the financial markets these days.

Spammy2The latest was Pilgrim Pride's surprise move to buy Hillshire Brands. Lots of investors with stock options profited from the $6.4 billion deal and that's leading to speculation about the next meat deal to hit the grill might be.

I spotted a very speculative column today on Barron's website by Scott H. Fullman of investment research firm, Increasing Alpha, on that topic. Fullman focused Austin's favorite Fortune 500 company and the creator of Spam, Hormel Foods, as a takeover candidate.

I have no idea if his theories make sense.

Here's some from Fullman's piece:

"Often when such an acquisition takes place, we look for other candidates. One stock seeing increased interest re Spamproductscently is Hormel Foods Corp, which rose back above its 100-day moving average Tuesday and was attempting to break above its 50-day moving average, but ended the day just below it. Momentum is rising sharply and volume is higher as well.

We are seeing a slight increase in implied volatility for Hormel, even as the shares jumped. The 30-day implied volatility is up more than 0.7% for calls, and down 0.8% for puts, indicating a sharp shift in bullish sentiment.

Despite the rise, those risk premiums are still close to their 52-week lows. Clearly, other traders are having the same thought as we are.

If you are looking for a low-cost, low-dollar-risk entry, consider purchasing the Hormel July $50 calls, which are offered at 40 cents. The delta on that option, which shows the current relationship between the movement of the stock and the option, is 23%, but it is expected to rise as the call becomes closer to being at-the-money, thereby increasing the leverage of the option. If the stock rises 10% from here to $52.58, the options will be worth $2.58, for a gain of $2.18 per share, or 545%. If the shares fail to rise, you will lose 40 cents per share, or 100% of your investment.

That compares, however, to a potential loss of $1.14 for those purchasing shares if the stock reverts to Friday's closing price.

Our suggestion is to purchase an equivalent number of calls to the amount of stock you can afford to buy, thereby keeping your risk in check.

November 06, 2013

Mayo Clinic-linked Cardio3 Biosciences stock surges

On the record, everybody always says that competition is good. I actually suspect many of the businesses that say that don't really believe that. However, here's a concrete example of competition directly bringing in money for a company.
Cardio3 BioSciences, the Belgium biotech firm based on Mayo Clinic research, saw its stock on the NYSE Euronext stock exchanges in Brussels and Paris spike this week after a competitor, Mesoblast, got the greenlight from the FDA to start clinical trials of its C3bs_logosimiliar regenerative treatment.
Cardio3's therapy uses stem cells from a patient's  bone marrow. Through a proprietary process called Cardiopoiesis, Cardio3 re-programs those cells to become heart cells. The cells are then injected back into the patient's heart to repair damaged tissue.
As a shareholder, Mayo Clinic controls 10.44 percent of Cardio3's stock, according to Cardio3.
Here's some from a Tuesday piece by Simeon Bennett of Reuters about this week's bump.

Cardio3 advanced 50 cents to 24.50 euros at the 5:35 p.m. close of trading on Euronext Brussels, giving the Mont-Saint-Guibert-based company a market value of 155.2 million euros ($209.1 million). More than 544,000 shares were traded, 38 times the three-month daily average. The stock has surged 78 percent in the past eight trading days.

Mesoblast Ltd., an Australian company that’s using similar technology, rose to an eight-month high on Nov. 1 after saying it gained Food and Drug Administration approval to start a late-stage study with its partner, Teva Pharmaceutical Industries, of its stem cell in patients with heart failure.

That development “makes us quite confident in seeing the technology as an emerging one, and more than that, an approvable one,” Arnaud Guerin, an analyst with Portzamparc Societe de Bourse in Nantes, France, said by phone today.

August 29, 2013

Scraps of IBM news on servers, chips

Here's a sort of round-up of IBM news tidbits. They are mostly about the chip and server struggles, but I end on a brighter note about the Power8 chips. No word on how all of this could directly impact Rochester, but I am pursuing a story what the Power consortium means for the Rochester campus.

• Here's the take from the IDG News Service in PC World on the latest server sales report.

The server business continued to slide in the second quarter with worldwide revenue and unit sales down, IDC said Tuesday.

Revenue was down 6.2 per cent to $11.9 billion in the second consecutive quarter of year-over-year decline, as demand for servers continued to soften in most geographic regions, the research firm said. Unit shipments were also down 1.2 percent to 2 million, after also falling in the previous two quarters.

5115638122_5bf17912ccThe highest fall in revenue was in midrange systems, which dipped by about 22 percent year-over-year, while volume systems had a 2.4 percent revenue decline and revenue from high-end systems dipped 9.5 percent in the quarter ended June.

IBM held the number one position in the server market with a 27.9 percent share of revenue, but its share was down from over 29 percent last year. The company’s server revenue fell in the quarter by 10 percent year-over-year because of low demand for System x and Power Systems. IBM’s System z mainframe running z/OS, however, had a third consecutive quarter of growth, with revenue up by 9.9 percent year-over-year to $1.2 billion. The mainframe accounted for 9.8 percent of server revenue in the quarter.

• Here's some from a gloomy overall commentary from EE Times' Silicon Valley Bureau Chief Rick Merritt with the headline "IBM's Last Stand in CPUs?"

The Open Power Consortium could become IBM's last stand in microprocessors with huge implications for the future of Big Blue.  

Years ago, IBM took a shot at the mainstream PC market when it forged its PowerPC alliance with Motorola. Intel won, and the partners retrenched into the embedded market with the Power.org consortium. These days, their embedded partners -- LSI, Freescale, and others -- are all shifting to ARM cores.

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IBM buildinglogoExacerbating IBM's woes, the company appears to have been designed out of at least two of the three next-generation game consoles where it once provided its Cell multicore processor, ASIC technology, and other goodies. Microsoft's Xbox One and Sony's Playstation 4 both use AMD's cores. The muscular, custom console processors once were significant drivers of process technology and profits for Big Blue.

Now IBM is left to defend its main stronghold, the high-end server. This, too, is under siege.

These days the massive scale-out datacenters of web giants such as Amazon, Facebook, Google, and Microsoft are increasingly driving server technology and volumes. The x86 rules here along with an emerging streamlined style of design that's in opposition to the muscular scale-up style IBM practices for its classic customers in banking, government, and scientific markets.

Even in the Top 500 Supercomputers, IBM's old turf, it is losing ground to scale out designs using Nvidia GPUs paired with racks of x86 systems. Now Intel is coming on strong here with its own multicore Xeon Phi, which some say is offering higher performance, lower cost, and easier development than Nvidia GPUs.

In the coldest cut of all, Amazon recently won a deal to supply computer services to the CIA, encroaching on the business of IBM's federal systems division, the bluest of Big Blue business units. Like everyone else, the government is under pressure to try out cloud computing services such as Amazon to reduce cost.

• On a more upbeat note, IBM rolled out its new Power8 chips at the Hot Chips conference this week. Timothy Prickett Morgan covered it for The Register and IT Jungle.

Big iron sales are still generating $6bn to $7bn a year for IBM - which is enough to justify designing its own Power processors and building its own wafer baker.

At the Hot Chips conference at Stanford University on Monday, some of the chief architects behind the Power8 electronics were on hand to show off the feeds and speeds of the next-generation motor for the company's Power Systems lineup.

Significantly, the Power8 chip is also the foundation for Big Blue's OpenPower consortium - an effort to make it easier to hook networking, accelerators and other features into Power processors by allowing third parties to license chunks of intellectual property in the style of ARM Holdings and its RISC cores.

Ibm_power8_die_shotIBM announced the OpenPower effort earlier this month, with GPU maker Nvidia, network chip maker Mellanox Technologies, motherboard maker Tyan, and advertising moneymaker Google all lending their support to the cause.

Whether or not the OpenPower effort gains traction remains to be seen; the Power8 is so clearly engineered for midrange and enterprise systems for running applications on a giant shared memory space, backed by lots of cores and threads. Power8 does not belong in a smartphone unless you want one the size of a shoebox that weighs 20 pounds. But it most certainly does belong in a badass server, and Power8 is by far one of the most elegant chips that Big Blue has ever created, based on the initial specs.

April 23, 2013

Tech columnist on Decline and Fall of IBM

I've pointed out the writings of well-known tech columnist Bob Cringely and his dire (and sometimes accurate) predictions about IBM.

As a long-time tech writer, he seems to have to pretty good grasp of how IBM has changed over the years. He has always been very critical of Big Blue's management, which he sees as creating profits at the expense of their employees instead creating of good technology.

CringleyCringely's latest prediction is that IBM will withdraw its 401K contributions for its employees. They have already made some significant changes in that area, from shifting from making 401k contributions in every paycheck to doing it just once a year.

I wonder what local IBMers think about that. Is it possible? Could that be in the works?

The Decline and Fall of IBM is the headline of Cringely's latest column as well as the title of an e-book that is releasing soon.

Here's an excerpt from the column:

IBM is in trouble, you see, serious trouble caused primarily by executive corrosion from within. Not only did Big Blue miss its earnings target last quarter for the first time in years, if the rumors I am hearing are correct the company’s primary response will be to screw U.S. employees even more than they have already.

The rumor I’ve heard is that IBM, which not long ago changed its 401k contribution policy to push what had been a biweekly payment into an annual one right at the end of the year, may have decided this year (and in the future?) not to make any 401K contribution at all. Since IBM’s U.S. employees can divert up to eight percent of their gross compensation into the 401K and IBM has traditionally made a comparable matching payment, this possible change in compensation policy could save the company close to $1 billion.

In one sense one might ask what’s wrong with that? Companies have to do what they have to do in this economy and workers sometimes suffer. But for IBM it indicates the company is getting near the bottom of its bag of tricks for maintaining earnings growth toward that ambitious 2015 goal of $20 per share. Management seem to be down to three ideas to improve the numbers: 1) savage the 401K plan; 2) sell the low-end server business to Lenovo for a reported $2.5 billion, and; 3) expect a miracle called PureSystems.


 

 

 

February 22, 2013

Highlights of Mayo Clinic's 2012 financials

Here are a few random, fun facts from Mayo Clinic's 2012 financials:

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800px-Gonda_building,_closer_up• Spent on charity care: $83.4 million, up from $61.8 million in 2011.

• Spent to support Medicaid: $321.7 million, up from $260.4 million in 2011.

• Revenue from retail pharmacy sales: $149 million, up from $134 million in 2011.

• Revenue from technology commercialization, health information and medical products: $34.1 million, down from $40.4 million in 2011.

• Revenue from cafeteria sales: $28.8 million, down from $30.3 million in 2011.

• Cash and cash equivalents: $59.6 million, down from $141.3 million in 2011

• Earned incentive from federal government for introducing electronic medical records: $44.7 million

December 25, 2012

Moody's downgrades RPU bond rating

Evidently, not everyone is happy when RPU doesn't raise its utility rate.
Last week Moody's Investors Service downgraded Rochester's electric utility bond rating to Aa3, down from Aa2.
Here's part of the explanation of why RPU's grade went down:

The rating action reflects the lower credit metrics over the last few years, which is at least partly due to the fact that there have been no rate increases in the last few years and none are expected in 2013. There have also been declining sales of off-system power.

GetFileThe rating action also reflects the heavy reliance on one generation or fuel source; namely, Southern Minnesota Municipal Power Agency's (SMMPA, rated A1) 41% ownership of the Sherco 3 coal-fired plant, which remains out of service due to a failure during re-start in November 2011 following a routine shut down for maintenance.

Having said that, the Aa3 rating reflects the benefits of a long-term take and pay contract with SMMPA under which SMMPA has agreed to sell and deliver electric power to Rochester, and Rochester has agreed to take and pay for electric power as needed for the operation of its system up to 216MWs. The contract expires in 2030.

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The rating also reflects Rochester's local rate setting authority without state oversight. Rates are set at levels necessary to cover operating and maintenance costs and 120% of debt service. Rochester also benefits from a strong service area economy.

 

On the flip side, Moody's sees a lot of positives at RPU.

*RPU is a well-established enterprise with a long, stable operating history and good liquidity.

 *RPU's service area is economically sound with a highly educated workforce and low unemployment.

 *The likelihood of deregulation in Minnesota is diminished. RPU has exclusive control over its service territory.

 *RPU has local rate-setting autonomy (City Council approval is required), with no state oversight.

 RPU also has a few challenges, according to Moody's.

*RPU's take-and-pay contract with Southern Minnesota Municipal Power Agency (SMMPA, rated A1) accounts for majority of its supply and limits its overall fuel diversity. There are other sources of power in RPU's owned generation: the 105MW coal-fired Silver Lake Plant (set for decommissioning in late 2015), the 80MW gas-fired Cascade Creek Plant and two hydro units as well as diesel generation for peaking purposes. However, most of the power source comes from the SMMPA contract for 216MWs.

* Although RPU as local rate-setting authority, RPU has not raised rates its rates for several years, at least partly due to concerns about competitiveness. This has resulted in some decline in the credit metrics over the last few years.

*RPU has concentration risk; its top 10 customers represent 35.1% of the total kWh sales in 2011 and 32.2% of revenues in 2011.

*Transmission constraints are forecast for 2014 and beyond, which RPU plans to address through participation in CapX 2020, a regional effort to build transmission lines in Minnesota.

July 19, 2012

IBM earnings hold steady, despite weak revenue

Here's a take on IBM's quarter earnings report by the AP with a Rochester angle added.

Were there any other Rochester-specific aspects to this report that I missed?

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Technology business worldwide is sputtering, affecting the bottom line for many suppliers. But Big Blue is holding steady, despite weak revenue.

IBM delivered solid quarterly profits on Wednesday that easily surpassed Wall Street's expectations, even though it reported lower revenue because of economic troubles in some markets, lower hardware sales and the impact of a strengthening dollar.

6a00d83451cc8269e2010535c75537970b-800wiNet income increased 6 percent to $3.9 billion, and revenue dropped 3 percent to $25.8 billion.

IBM was sufficiently encouraged by the results to slightly lift its guidance for the full year to "at least $15.10 a share," from $15 a share previously.

Success was partly fueled by several of the projects in which IBM's Rochester facility was a key player. That includes the Blue Gene super computing program that created Sequoia, which was recently ranked as the fastest computer in the world. In addition, revenue from the Smarter Planet initiative, which hopes to create interconnected, efficient systems, is up more than 20 percent in the first half. Cloud revenue doubled in that time.

The introduction of the PureSystems family of machines, which were designed in Rochester and are being made here, did not affect this quarter's earnings. IBM expects volume shipments of PureSystems to begin in the fourth quarter.

The quarterly result, said A.M. Sacconaghi, an analyst at Sanford C. Bernstein, pointed to "fortress IBM," a company whose profit performance seems all but impervious to industry cycles.

The company, Sacconaghi noted, has raised its full-year guidance in 12 of the last 14 quarters and met or beat Wall Street's average earnings estimate for 29 consecutive quarters. "It's boringly predictable," he said.

IBM is the largest global supplier of information technology — hardware, software and services — to corporations and governments.

In a statement, Virginia Rometty, IBM's chief executive, said the strong profit performance reflected the success of the company's "long-term business model." That model combines focusing on higher-margin businesses and faster-growing markets abroad with aggressive cost-cutting. The strategy has served the company well, with earnings improving steadily throughout the recession and financial crisis.

But the second-quarter report was also the fourth straight quarter that IBM's revenue has fallen below Wall Street's estimates. "But revenue growth is the missing piece of the puzzle in the long term," said Steven Milunovich, an analyst at UBS.

IBM share rose. At mid-morning today, shares were up $7.79, or 4.14 percent, to $196.04 a share. Wednesday, the company's stock price closed up $4.60 at $188.25 a share.

July 18, 2012

Back to the beginning - Fastenal's vending machines

I realize this is not really new info. Winona nuts and bolts powerhouse Fastenal has been intalling industrial 'vending machines' for the past few years.

G111086ex13_pg011cBut I hadn't really looked at this in depth. Vending machines accounted for about 20 percent of net sales this past quarter. Fastenal has 13,036 vending machines in operation right now.

"We believe industrial vending is the next logical chapter in the Fastenal story, we also believe it has the potential to be transformative to industrial distribution, and that we have a 'first mover' advantage. We are investing aggressively to maximize this advantage."

The cool thing about this, to me, is that Fastenal's founder Bob Kierlin actually envisioned vending machines as the original concept for the company in 1967.

The technology of that time made that problematic, so he decided to open stores.

And now his first idea is quickly becoming a major piece of the company's business.

I guess Kierlin's legendary frugality keeps him from throwing much away, even old ideas.