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Philips (PHG), Advanced ICU Team Up to Deliver tele-ICU care

Zacks Equity Research
Updated

Koninklijke Philips N.V. PHG and Advanced ICU Care recently expanded their multi-year partnership by signing a new 12-year agreement. The joint venture will leverage Philips’ tele-ICU technology to assist power nine virtual care hubs in monitoring about 1,000 ICU beds across the United States.

The latest collaboration is built upon the long-term strategic partnership between the two companies. This will enable both companies to deliver the top level of care to the most critically ill patients, thus enhancing clinical outcomes. In fact, Advanced ICU Care’s Care-as-a-Service model along with Philips’ advanced remote monitoring and health informatics technology will offer a turnkey approach toward the adoption of tele-ICU.

Advanced ICU Care has both capabilities and experiences in providing the tele-ICU services across broad range of Electronic Health Record implementations and various hospital systems in a simultaneous way. Also, the tele-ICU programs are supported by intensivists and critical care nurses of the company’s increasing number of virtual care centers. Notably, the company’s intensivist care sustains patients in more than 65 hospitals in the United States supported by a technology stack, including the latest version of Philips eCareManager.

Our Take

In recent times, Philips has broadened its presence in the healthcare markets and expects this segment to be a long-term growth driver. Meanwhile, the company’s focus on improving its enterprise wide solutions for health systems and collaboration with health care organizations is anticipated to enhance its stronghold in the healthcare industry. Going forward, the company believes that the recent product launches might propel mid-to-high single-digit growth in Personal Health solutions. Moreover, the company remains optimistic about the prospects of its Diagnosis & Treatment vertical on account of positive industry trends since Image-Guided Therapy and Ultrasound equipment sales are acting as major profit churners.

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Further, Philips recently completed the buyout of VitalHealth that would complement Philips Wellcentive’s solutions, including health informatics and patient engagement programs. Also, the company announced deals to acquire Electrical Geodesics, Respiratory Technologies and Australian Pharmacy Sleep Services. We believe that steady traction of these offerings and the latest acquisitions will prove beneficial to the top-line performance.

In a year’s time, this Zacks Rank #3 (Hold) company has returned 29.9%, outperforming the industry’s growth of 17.4%.

 

However, the company’s near-term profitability is likely to be hurt by sluggish growth prospects of the healthcare market on a global scale. Additionally, due to the uncertainties like slowing government spending and events surrounding the ACA (Affordable Care Act) legislation Philips expects the United States to witness low-single digit growth. Furthermore, country-specific risks for China like anti-corruption initiatives, slow GDP growth and centralized tendering are likely to dampen the prospects of the healthcare industry, thwarting its growth.

Stocks to Consider

Some better-ranked stocks from the same space are DST Systems, Inc. DST, Broadcom Limited AVGO and CDK Global, Inc. CDK. While DST Systems sports a Zacks Rank #1 (Strong Buy), Broadcom and CDK Global carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DST Systems has surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 11.9%.

Broadcom has outpaced estimates in the preceding four quarters, with an average earnings surprise of 4.5%.

CDK Global has surpassed estimates in the preceding four quarters, with an average positive earnings surprise of 11.3%.

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