IBM Acquires Truven Health For $2.6 million

The Big Blue is after every opportunity it sees in the healthcare.

IBM has announced the probable acquisition of Truven Health for a disclosed amount of $2.6 million. Reportedly, the prospective acquisition will bring around “200 million more live” to IBM’s arsenal of data.

General Manager, Deborah DiSanzo, of IBM Watson Health expressed an opinion on the acquisition that for the big data analytics, it is more beneficial and better if the company has more data. Through the acquisition of Truven, the $132 billion organization has strengthened the assembly of data pool of its own and assembled through acquisitions.

DiSanzo explained that through Truven, the North Castle, New York firm has achieved 200 million more records, which will be combined with the already existing 100 million records of the patients. The GM further added that the company could now integrate the sets of data, which may include greater accessibility, with electronic health records of medical health, genetics, and the likes from Truven and Phytel.

Last May, the tech corporation, for an unrevealed amount, bought a health management software business, called Phytel. At present, CEO Ginny Rometty has spent around $4 billion on the acquisition of health care related software companies. Apart from Phytel and Truven, IBM has spent around $1 billion while acquiring a medical imaging organization ‘Merge Healthcare’ last August. It had also previously acquired Cleveland Clinic spinoff, Explorys last April. The past trend of the business indicates that the recent acquisition holds colossal importance for it. The step can be crucial for its cognitive computer product; Watson.

Similarly, having earlier been integrated for years with IBM Cognos business and been, for the past 15 months, in a partnership with IBM’s Watson unit, Truven offers an extensive spectrum of the services of data analytics.

The work of Truven includes, but not limited to, ranking the U.S. hospitals in terms of improvement rate and the current performance. The company is behind the annual survey dubbed as “100 Top Hospitals.”

The deal is likely to bring a substantial number of clients for IBM as the acquired Truven Health has got around 2,500 employees across the country. It also has presence in Cambridge, Mass., sharing the same region where Watson Health is also located.

The acquired business has been reported to make a claim of having 8,500 clients, which include state and federal agencies, hospitals, and insurance companies. Big names like Cigna, CalPERs, Liberty Mutual Insurance, Hospital Corporation of America, and Newton-Wellesley Hospital has been in the list of the Truven’s client. Hence, DiSanzo strong expectations from the company are not unreasonable. She has said, “This combination of data, analysis, and insights will help healthcare providers, payers, and individual consumers.”

The step will ensure boastful returns for the Big Blue. Although it is important to note that not only New York based company is seeking opportunity in health. Rival Google and Microsoft have allegedly invested in healthcare to keep the profit coming from multiple revenue streams.

At the market close on Thursday, International Business Machines Corporation had a price of $132.46. The 52-week range of stock is $116.9 to $176.3.

PharMerica Rings Alarm Bells Over Cardinal Health Contract

Leaders and executives spill the beans by pointing out that the contract signed with Cardinal will cut profits.

Leaders and executives of PharMerica, Louisville-based institutional, specialty home infusion, hospital, and oncology pharmacy services provider, have spoken out against the wholesale drug store distribution agreement signed with Cardinal Health Inc. (NYSE:CAH) a few months ago, arguing that it would cut into the company’s margins.

Executive vice president and CFO, Dave Froesel, made that statement during an earnings guidance call and announced that the beginning of the second quarter heralded the start of the operation of using Cardinal Health for the purpose of drug and health care sourcing and distribution. However, the agreement which was signed a few months ago, has come under fire from many, including Mr. Froesel, who stated that the cost of distribution of drugs under Cardinal will be more than with the previous wholesale pharmaceutical supplier, AmerisourceBergen. That, according to Foresel, is going to affect the company’s margins and bottom-line quite badly.

The reason for the termination of PharMerica Corp’s previous working relationship with AmerisourceBergen arises from a legal dispute. The company claims that AmerisourceBergen owes it more than $8 million because of rebate provision that the two companies agreed to in a previous contract. The contract states that it can buy most of its generic drugs from AmerisourceBergen, though the contract included a phrase that allowed it to purchase a portion of other drugs from other sources if it can get a better price. That is where the disturbance all began.

Therefore, the center of dispute lies on the fact that the pricing is based on the wholesale level, but after market changes, it has been dubbed as non-viable. AmerisourceBergen claims that PharMerica inflated its rebate prices and accuses it of breaching the contract by not paying it. AmerisourceBergen hits back, arguing that the contract gives room for both parties to renegotiate in the event of unexpected market changes.

Froesel highlighted that once PharMerica announced its intention to go ahead with the deal with Cardinal, AmerisourceBergen decided to withhold its rebate payments. It is not known if the company will try to pursue the case or whether it feels that the relationship has deteriorated enough to not think about it.

Last week, PharMerica released its earnings result, which saw its revenue rose 13% to $511 million, whereas its net income grew two-fold to less than $10 million. Cardinal Health Inc. stock price ended the day at $86.83, a gain of more than 0.80%, suggesting that the deal has support from investors despite PharMerica leaders’ objection.

Where Does Arena Pharmaceuticals Go From Here Now Following Its Q1 Results

Lowering first quarter loss does not mean that the company would have an easy time ahead due to toughening competition and sales volatility.

Arena Pharmaceuticals (NASDAQ:ARNA) has announced its first quarterly results for this year, reporting a net loss at $24.3 million, lower than $25.3 million of the same quarter a year ago. The loss per share was clocked in at $0.10, compared to $0.12 to the same quarter a year ago. Meanwhile, revenue was reported at $12.26 million, compared to $6.81 million a year ago.

However, the first quarter results do not serve a cause for celebration. Arena managed to trimmed down their losses, albeit marginally, but it is not providing the bigger picture – sales of its medicines are flattening out, and it is getting highly competitive out there in the health care services sector, aside from political factors. For example, Arena’s sales of anti-obesity drug, belviq, has flattened out for the past several weeks, while its competitor, Origen, doles out is product, Contrive, in the market.

Sales have increased by a mere 1%, rising from 14000 scripts to less than 14500 scripts. At the same time, Contrive has seen its sales boom from more than 10000 drug scripts to less than 13000 scripts, a boost of 3.6% growth. Actually, the entire pharmaceutical sector has gone through a thrilling ride, and Arena’s products have failed to take advantage of it, giving room for competitors to grow.

The major worry here is what happened to Qsymia, a product of Vivus, might also happen to Belviq, though that has not to say that it will surely happen but there is no ruling out the possibility. Ever since Qsymia hit its peak last year, its equity has gone flat ever since, even the introduction of a new product in the market. Not that Belviq may suffer the same fate, but its sales growth has not been impressive either.

Based on the overall market situation, Belviq seems like it is indeed losing ground to Contrive, as the sales volume gap in terms of absolute sales is also increasing as well. It was 1600 scripts earlier this year and that has now increased to 3900 in March. It is likely to grow from thereon. Finally, Belviq may have a 37% market share, but Contrive is catching up fast with a market share of 33%.

So what is for food and drug producer to do? Clearly, they need to revamp the brand image of Belviq and try to match up with Contrive’s capabilities, which demand more time and investment on it. The problem is that the product is still relatively young, which it leaves many investors wondering to level it to the second phase. How long will Arena hold on to this product or decide to elevate it to the next level is yet to be seen, especially when the gap between the timing of the trials and the gap in cash in hand is taken into account.

CVS Health Corp. Rating and price target update

Morningstar an investment research and management company has given BBB+ rating to CVS Health Corporation.  This rating represents that the health care company stands at a reasonable default risk. Morningstar also gave the company a one star rating.

Various other research firms’ analysts have also reviewed CVS Health stock. Deutsche Bank analysts upraised their target price to $109 from $100 on company’s share and also assigned a rating of Hold on February 13^th research note. Citigroup analysts restated its Hold rating and gave a new target price of $110 increased from $102 on CVS stock also on 13^th February note. Standard & Poor equity research analysts demoted the stock of the company and rated it as Hold on February 11^th research note.in the end , Cantor Fitzgerald analysts repeated it Hold rating and set a new target price of $83 on CVS Corp stock on Wednesday 11^th February note. Out of 22 research analyst covering the stock, two have given it a Sell rating, five assigned a Hold rating and remaining fifteen have rated the stock a Buy. The 12-month target price based on consensus is $98.15.

The American based company reported its October to December quarter earnings last month on 10^th February. According to which it had an earnings of $1.21 per share surpassing $1.20 per share estimation of analysts by 1 cent. It also posted revenue of $37.06 billion for last three months of the year, almost 1 billion more than consensus estimate of $36.06 billion. During the similar quarter last year, the health care company reported earnings of $1.12 per share. However, its revenue was up by 12.9% on annual basis. Overall, analysts predict that CVS will be able to capture the earnings per share figure of $5.16 for the fiscal year 2015.

The American retailer and health care company declared its quarterly dividends, to be paid on 4^th May Monday. Shareholders on board as of 24^th April will be given $0.35 dividend against each share they own. This signifies an annual dividend of $1.40 and 1.37% yield.

CVS Health Corp (NYSE:CVS) stock was trading at $101.90 on market close Friday 6^th March. The health care company has a 52 week low and high of $72.05 and $104.84 respectively. The share has a 50-day and 200-day average of $101 and $90. It has a market cap of $116.17 billion and P/E ratio equals to 25.74 with almost 4.50 million shares exchanging hand in average 30 days.