latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/us-medical-distributors-expect-sales-drop-as-covid-19-related-surge-tapers-off-58731880 content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

US medical distributors expect sales drop as COVID-19 related surge tapers off

COVID-19 Pandemic Likely To Cause US Telemedicine Boom

Gauging Supply Chain Risk In Volatile Times

S&P Global Market Intelligence

Cannabis: Hashing Out a Budding Industry

Segment

IFRS 9 Impairment How It Impacts Your Corporation And How We Can Help


US medical distributors expect sales drop as COVID-19 related surge tapers off

The top U.S. healthcare distributors reported lower-than-average revenue in April after seeing an uptick in pharmaceutical sales during March as consumers prepared for an extended stay at home due to the COVID-19 pandemic.

AmerisourceBergen Corp., Cardinal Health Inc. and McKesson Corp. all described similar trends during their recent earnings calls: A decline in pharmaceutical sales primarily due to a drop in elective procedures and physician office visits along with delays in diagnosis and necessary testing.

McKesson Executive Vice President and CFO Britt Vitalone said during a May 20 earnings call that the company anticipates a positive progression of earnings over the course of fiscal 2021 with the first quarter of that year, which began April 1, to be "sharply down" on both an annual and a sequential basis.

The Irving, Texas-based pharmaceuticals and medical supplies company expects a modest recovery starting in the fiscal second quarter and further progressing into the back half of the fiscal year, Vitalone added. McKesson's fiscal 2021 guidance estimates adjusted EPS to be between $13.95 and $14.75.

AmerisourceBergen lowered its adjusted EPS guidance for fiscal 2020, ending in September, to $7.35 to $7.65, down from earlier guidance of $7.55 to $7.80.

"Normally, after the execution and performance of our businesses in the first half, we would be raising our full-year guidance, however, given these unprecedented times, we must revise guidance to reflect the potential impacts of COVID-19 for the second half of the year," AmerisourceBergen Executive Vice President and CFO James Cleary noted during a May 7 earnings call.

The company saw higher revenue and gross profit as many of its customers increased purchases with the onset of the coronavirus pandemic, although it did not see any significant impact on its operating income due to elevated operating expenses.

Fitch Ratings affirmed Chesterbrook, Pa.-based AmerisourceBergen's long-term and short-term issuer default ratings earlier in the month, saying the company has a solid position as one of the largest global providers of pharmaceuticals, with a stable operating profile and consistent cash generation.

AmerisourceBergen Chairman, President and CEO Steven Collis said the strength of the company's infrastructure allows it significant technological and structural flexibility. The healthcare distributor, which operates 26 pharmaceutical and three specialty distribution centers in the U.S. in addition to nine distribution centers in Canada, efficiently moved volume to other locations after one of its distribution centers was temporarily closed because of its proximity to a COVID-19 hot spot, Collis said.

In response to a question from Nephron Research analyst Eric Percher regarding shortages on the supply side, Collis noted that the company was ready when the crisis hit and had upped the inventory where it was needed.

Dublin, Ohio-based healthcare distributor Cardinal Health reaffirmed its EPS guidance in the range of $5.20 to $5.40 for fiscal 2020, ending in June.

Activity in Cardinal Health's nuclear and specialty businesses started to slow down in March, following a surge in pharmaceutical sales driven by accelerated purchases related to the COVID-19 outbreak. The reduced activity was not a material driver in the fiscal third quarter, which ended March 31, and will have more impact on the company's fourth-quarter results, the company's interim CFO David Evans said during a May 11 earnings call.

Sales for the company were below average early in the fourth quarter of the fiscal year 2020, Evans added. He expects the activities will gradually rebound over the calendar year.

SNL Image

Coronavirus vaccine distribution

The distributors are preparing for the eventual introduction of a vaccine against the coronavirus that causes COVID-19.

Biotechnology company Moderna Inc. said on May 18 that its coronavirus vaccine candidate mRNA-1273, which has also received funding from the U.S. Department of Health and Human Services, helped induce immune response among patients enrolled in an early-stage study.

Pharmaceutical companies like Johnson & Johnson, GlaxoSmithKline PLC and others are also developing vaccine candidates to slow down coronavirus infection rates.

"From a vaccine perspective, it's a little early," McKesson CEO Brian Tyler said during the May 20 call. "Vaccines are not on market. But I would remind everybody we have quite an extensive footprint in the distribution of vaccines today."

Tyler said McKesson is engaged with various agencies that will have interest in this and as vaccines come to market the company will look at the production and its scale-up.

AmerisourceBergen's CEO said on the earnings call that vaccine manufacturers tend to do more direct sales, resulting in "a much more bifurcated market." He said he expects an increase in demand for flu shots this season in the wake of the COVID-19 pandemic.

SNL Image