Many healthcare stocks' earnings reports lately include the phrases "inflationary pressures," "labor shortages," "supply chain issues," and "short-term macroeconomic conditions" to describe why earnings are flat or down.
The S&P 500 index is down more than 20% so far this year and even the healthcare sector, which is considered non-cyclical and somewhat recession-proof, is down more than 7% in 2022.
That's not the case with all healthcare stocks, though. UnitedHealth Group (UNH 2.78%), AbbVie (ABBV 1.01%), and Vertex Pharmaceuticals (VRTX 2.90%) are all up 8.5% or more this year despite the headwinds affecting so many companies.
UnitedHealth Group's rise makes sense
It's easy to see why UnitedHealth Group's shares are up more than 8.5% so far this year. The managed healthcare and insurance company's numbers are well ahead of last year's pace.
NYSE: UNH
Key Data Points
Through the first nine months, the company has earned revenue of $192.5 billion, up 14% year over year, while earnings per share (EPS) was $16.15, compared to $13.82 in the same period last year. The company operates in two segments: UnitedHealthcare, which provides a full range of healthcare insurance, and Optum Health, which provides data-driven healthcare through its surgery centers, clinics, doctor practices, and its related pharmacy management company, OptumRx. Both segments are thriving as the company boosted full-year guidance of $20.85 to $21.05 in EPS, compared to 2021 annual EPS of $18.08.
The driver for that growth is increased subscribers to its services, with the total number of people served by UnitedHealthcare increasing by 850,000 this year, including 185,000 added in the third quarter. The company also has a dividend to attract investors. It raised its quarterly dividend by 14% this year to $1.65, the 13th consecutive year it has increased its dividend and its yield is around 1.22%.
AbbVie continues to surprise
Analysts have been predicting doom for pharmaceutical giant AbbVie for years because its blockbuster immunology drug, Humira, is already seeing lessened sales overseas due to biosimilar competition and will hit a patent cliff next year in the United States. However, the strong sales for two rising immunology drugs have created optimism about the company's future.
NYSE: ABBV
Key Data Points
AbbVie's shares are up more than 9% so far this year. In the third quarter, the company reported revenue of $14.8 billion, up 3.3% year over year, and EPS of $2.21, up 24.2% over the same period last year. While Humira continues to be the company's biggest seller with $4.96 billion up 7.4% year over year, in the U.S. alone. Two other immunology therapies, Skyrizi and Rinvoq, had revenue of nearly $1.4 billion and $695 million, up 75.4% and 53.5%, respectively, over the same period last year. Those numbers will grow as the company is in the process of getting label expansions approved for both.
The company also has a huge pipeline that should help deliver revenue in the coming years, including a combination therapy of two oncology drugs Imbruvica and Venclexta that could be used to treat chronic lymphocytic leukemia (CLL), the most common form of leukemia in adults, as well as mantle cell lymphoma (MCL).
AbbVie, thanks to its time as a part of Abbott Laboratories, is a Dividend King, having increased its dividend for 50 consecutive years. That streak will continue as the company has already increased its quarterly dividend by 5% to $1.48, starting in the first quarter of 2023, giving it a forward yield of around 4.07%.
Vertex Pharmaceuticals has double-digit share, revenue growth
Vertex's shares are up over 38% this year, thanks to a combo of the revenue growth of its cystic fibrosis (CF) therapies and the huge potential of exa-cel, the CRISPR gene-editing therapy it is developing with CRISPR Therapeutics that has shown the potential to treat two hereditary blood disorders, severe sickle-cell anemia (SCD) and transfusion-dependent beta-thalassemia (TDT).
NASDAQ: VRTX
Key Data Points
In the third quarter, the company reported revenue of $2.3 billion, up 18% year over year, led by increased sales for its lead CF therapy Trikafta, which had $2 billion in sales in the quarter, up 29% over the same period last year. Net income was $931 million and EPS was $3.59, both of which were up 9% year over year.
Vertex bumped up full-year revenue guidance to between $8.8 billion and $8.9 billion, compared to earlier estimates of between $8.6 billion and $8.8 billion and representing an eighth consecutive year of double-digit revenue growth.
Besides exa-cel, which is in the process of a rolling review of its biologics licensing application (BLA) by the Food and Drug Administration, the company has two therapies in its pipeline that are in phase 3 trials: VX-548 to treat acute pain and neuropathic pain, and Inaxaplin to treat APOL1-Mediated Kidney Disease.
