Walgreens tops quarterly revenue estimates, but narrows profit outlook in ‘challenging’ economy

A person rides past a Walgreens truck, owned by the Walgreens Boots Alliance, Inc., in Manhattan, New York City, U.S., November 26, 2021. 

Andrew Kelly | Reuters

Walgreens on Thursday reported fiscal second-quarter sales that beat Wall Street’s expectations, but lowered the high end of its full-year adjusted earnings outlook in part due to a “challenging” retail environment in the U.S.

The company also posted a steep net loss for the quarter as it recorded a hefty nearly $6 billion charge related to the decline in value of its investment in primary-care provider VillageMD. Walgreens has closed 140 VillageMD clinics amid financial woes for the business, which it sees as critical to its ongoing push to transform from a major drugstore chain into a large health-care company.

But Walgreens does not believe the VillageMD charge “will have a significant impact on our financial position, or our ability to invest across businesses going forward,” Walgreens global CFO Manmohan Mahajan said during an earnings call Thursday.

The results come as Walgreens’ new CEO, Tim Wentworth, works to slash costs and steer the company out of a rough spot with a slate of new executives. Shares of Walgreens fell 30% last year as the company faced weakening demand for Covid products, low pharmacy reimbursement rates, an unsteady push into health care and a challenging macroeconomic environment. 

In a release Thursday, the company said it is confident it will meet its goal of saving $1 billion during fiscal 2024 through its ongoing cost-cutting program. Walgreens has laid off employees, closed unprofitable stores and used artificial intelligence to make its supply chain more efficient, among other efforts.

Here’s what Walgreens reported for the quarter, compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

  • Earnings per share: $1.20 adjusted vs. 82 cents expected
  • Revenue: $37.05 billion vs. $35.86 billion expected

Walgreens narrowed its fiscal 2024 adjusted earnings guidance to between $3.20 and $3.35 per share. That compares with the company’s previous outlook of $3.20 to $3.50 per share. Analysts surveyed by LSEG expect full-year adjusted earnings of $3.24 per share.

Walgreens said the new guidance reflects the hurdles facing retailers in the U.S. and an early wind-down of its sales-leaseback program. It also takes into account lower earnings due to Walgreens’ forward sale of shares of drug distributor Cencora, formerly known as AmerisourceBergen.

The company said a stronger performance in its pharmacy services segment and a lower adjusted effective tax rate helped to offset the factors dragging on its earnings. 

But Mahajan said Walgreens expects the current economic backdrop will “continue to negatively impact our U.S. retail sales in the short term.”

Wentworth noted on the call that the company is “exploring innovative ways to boost profitability and growth” in its retail pharmacy division, such as through new pharmacy reimbursement models.

The company did not give a new revenue forecast for the fiscal year. Walgreens has not provided that guidance since October, when it said it sees $141 billion to $145 billion in sales. 

The company reported a net loss of $5.91 billion, or $6.85 per share, for the quarter. That compares with a net income of $703 million, or 81 cents per share, for the same period a year ago. a

Excluding certain items, including the $5.8 billion non-cash charge related VillageMD, adjusted earnings per share were $1.20 for the quarter.

The company booked sales of $37.05 billion in the quarter, a roughly 6% jump from the same period a year ago. 

Walgreens sees growth across all divisions

The company said that increase reflects sales growth across its three business segments. But Walgreens’ U.S. health-care division stood out as sales jumped about 33% in the fiscal second quarter compared with the same period a year ago. 

Revenue for the segment came in at $2.18 billion.

The company said the higher sales reflect VillageMD’s acquisition of multispecialty care provider Summit Health and growth across all businesses in the segment on a pro-forma basis.

VillageMD sales grew 20% due to same-clinic growth, among other factors. Sales from the segment’s specialty pharmacy company, Shields Health Solutions, grew 13%, due to new contracts and expansions of current partnerships.

Specialty pharmacies are designed to deliver medications with unique handling, storage and distribution requirements, often for patients with complex conditions such as cancer and rheumatoid arthritis.

Walgreens and VillageMD

Source: Walgreens

Meanwhile, Walgreens’ U.S. retail pharmacy segment generated $28.86 billion in sales in the fiscal second quarter, an increase of almost 5% from the same period last year.

That segment operates more than 8,000 drugstores across the U.S., which sell prescription and nonprescription drugs as well as health and wellness, beauty, personal care, and food products. 

Walgreens said pharmacy sales for the quarter rose 8.2% compared with the year-ago quarter. Comparable sales climbed 8.7% due to price inflation in brand medications and “strong execution” in pharmacy services, largely driven by the company’s vaccine portfolio.

Total prescriptions filled in the quarter including immunizations totaled 305.7 million, a more than 2% increase from the same period a year ago. 

Retail sales for the quarter fell 4.5% from the prior-year quarter, and comparable retail sales declined 4.3%. The company pointed to a challenging retail environment and a weaker respiratory season, among other factors. 

Walgreens’ international segment, which operates more than 3,000 retail stores abroad, posted $6.02 billion in sales in the fiscal second quarter. That’s an increase of more than 6% from the year-ago period. 

The company said sales from its U.K. subsidiary, Boots, grew 3%.

When asked on the call about Eli Lilly‘s new direct-to-consumer website aimed at expanding access to its weight loss drug Zepbound, Wentworth did not comment on the program specifically.

But he noted that the company is a “natural partner” for pharmaceutical companies that may “want to go directly to patients for a particular product, where the normal supply chain, reimbursement model, et cetera isn’t working effectively.”

As an example, Wenworth pointed to GLP-1s, a new class of weight loss and diabetes drugs that includes Zepbound. Those drugs must be taken chronically but carry hefty price tags, which can be a hurdle for both patients and insurance plans and other payers.

Walgreens is “uniquely positioned” to distribute drugs and serve as a “clinically aligned partner” that can help patients navigate their treatment safely, according to Wentworth.

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February was a great month for Wall Street. These were our 5 best-performing stocks

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., February 23, 2024. 

Brendan McDermid | Reuters

February was a strong month for stocks and the Club’s portfolio.

The advance came as investors parsed through fourth-quarter earnings results and fresh economic data, searching for clues about when the Federal Reserve will finally cut interest rates. The Nasdaq Composite led the march higher in February, gaining 6.1% and finishing the month at its first record close since November 2021. Meanwhile, the Dow Jones Industrial Average and S&P 500 both hit a series of all-time highs throughout the month, climbing 2.2% and 5.2%, respectively.

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Biogen revenue and profit shrink on Aduhelm costs, slumping sales of multiple sclerosis therapies

A Biogen facility in Cambridge, Massachusetts.

Brian Snyder | Reuters

Biogen on Tuesday reported fourth-quarter revenue and profit that shrank from a year ago, as it recorded charges related to dropping its controversial Alzheimer’s drug Aduhelm and as sales slumped in its multiple sclerosis therapies, the company’s biggest drug category.

Biogen booked sales of $2.39 billion for the quarter, down 6% from the same period a year ago. It reported net income of $249.7 million, or $1.71 per share, for the fourth quarter, down from net income of $550.4 million, or $3.79 per share, for the same period a year ago. Adjusting for one-time items, the company reported $2.95 per share.

The drugmaker’s fourth-quarter earnings per share, both unadjusted and adjusted, saw a negative impact of 35 cents associated with previously disclosed costs of pulling Aduhelm, which had a polarizing approval and rollout in the U.S.

Biogen is cutting costs while pinning its hopes on its other Alzheimer’s drugs, including its closely watched treatment Leqembi, and other newly launched products to replace declining revenue from its multiple sclerosis therapies.

Shares of Biogen closed more than 7% lower on Tuesday.

Here’s what Biogen reported for the fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv: 

  • Earnings per share: $2.95 adjusted vs. $3.18 expected
  • Revenue: $2.39 billion vs. $2.47 billion expected

Also on Tuesday, Biogen issued full-year 2024 guidance that calls for adjusted earnings of $15 to $16 per share. Analysts surveyed by LSEG had expected full-year earnings guidance of $15.65 per share.

The drugmaker said it expects 2024 sales to decline by a low to mid-single digit percentage compared with last year. But the company anticipates its pharmaceutical revenue, which includes product revenue and its 50% share of Leqembi sales, to be flat this year compared with 2023.

Multiple sclerosis drug sales slump

Biogen’s fourth-quarter revenue from multiple sclerosis products fell 8% to $1.17 billion as some of the therapies face competition from cheaper generics.

The company’s once-blockbuster drug Tecfidera, which is facing competition from a generic rival, posted revenue that fell 17.8% to $244.3 million in the fourth quarter. Analysts had expected that drug to book sales of $233.1 million, according to FactSet.

Vumerity, an oral medication for relapsing forms of multiple sclerosis, generated $156.4 million in sales. That came in below analysts’ estimates of $174.4 million, FactSet estimates said. 

“We’ve had several years of declining revenue and profit, which is not unusual when you’re dealing with patent expirations,” Biogen CEO Christopher Viehbacher told reporters on a media call Tuesday. He added that one of the key ways Biogen will return to growth is to “reposition the company away from our legacy franchise of multiple sclerosis towards new products.”

Meanwhile, Biogen’s rare disease drugs recorded $471.8 million in sales, up 3% from the same period a year ago. 

Spinraza, a medication used to treat a rare neuromuscular disorder called spinal muscular atrophy, recorded $412.6 million in sales. That came under analysts’ estimate of $443.4 million in revenue, according to FactSet. 

Biogen’s biosimilar drugs booked $188.2 million in sales, up 8% from the year-earlier period. Analysts had expected sales of $196.7 million from those medicines.

Leqembi, other new drugs

The results come amid the rollout of Biogen and Eisai’s Leqembi, which became the first drug found to slow the progression of Alzheimer’s disease to win approval in the U.S. in July.

Eisai, which reported earnings last week, recorded $7 million in fourth-quarter revenue and $10 million in full-year sales from Leqembi.

Biogen CEO Viehbacher told reporters on the media call Tuesday that there are around 2,000 patients currently on Leqembi. That makes Biogen’s target of 10,000 patients by the end of March 2024 look increasingly difficult to hit, but Viehbacher emphasized that the company is focused more on the long-term reach of Leqembi rather than meeting that benchmark. 

“I think what’s important is we are now making progress,” he told reporters. “The 10,000 isn’t really hard and I think we are now really focusing on commercial plans — how do we get to the next 100,000?”

Notably, the low rate of adoption isn’t due to lack of demand: There are some 8,000 U.S. patients currently waiting to get on treatment, executives from Eisai said on an earnings call last week. 

More CNBC health coverage

The companies are also working toward Food and Drug Administration approval of an injectable version of Leqembi, which showed promising initial results in a clinical trial in October. 

Leqembi is currently administered twice monthly through the veins, a method known as intravenous infusion. The injectable form would be a new and more convenient option for administering the antibody treatment to patients, which could pave the way for higher uptake. 

But investors also have their eyes on other newly launched drugs. 

That includes Skyclarys from Biogen’s acquisition of Reata Pharmaceuticals in July. That drug brought in $56 million in fourth-quarter revenue, according to Biogen.

The FDA cleared Skyclarys last year, making it the first approved treatment for Friedreich ataxia, a rare inherited degenerative disease that can impair walking and coordination in children as young as 5.

On Monday, European Union regulators approved Skyclarys for the treatment of Friedreich ataxia in patients ages 16 and up. 

Biogen has also partnered with Sage Therapeutics on the first pill for postpartum depression, which won FDA approval in August. But the agency declined to clear the drug for major depressive disorder, which is a far larger commercial opportunity. 

Biogen said that pill, called Zurzuvae, generated roughly $2 million in sales for the fourth-quarter.

Don’t miss these stories from CNBC PRO:

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No antibiotics worked, so this woman turned to a natural enemy of bacteria to save her husband’s life | CNN



CNN
 — 

In February 2016, infectious disease epidemiologist Steffanie Strathdee was holding her dying husband’s hand, watching him lose an exhausting fight against a deadly superbug infection.

After months of ups and downs, doctors had just told her that her husband, Tom Patterson, was too racked with bacteria to live.

“I told him, ‘Honey, we’re running out of time. I need to know if you want to live. I don’t even know if you can hear me, but if you can hear me and you want to live, please squeeze my hand.’

“All of a sudden, he squeezed really hard. And I thought, ‘Oh, great!’ And then I’m thinking, ‘Oh, crap! What am I going to do?’”

What she accomplished next could easily be called miraculous. First, Strathdee found an obscure treatment that offered a glimmer of hope — fighting superbugs with phages, viruses created by nature to eat bacteria.

Then she convinced phage scientists around the country to hunt and peck through molecular haystacks of sewage, bogs, ponds, the bilge of boats and other prime breeding grounds for bacteria and their viral opponents. The impossible goal: quickly find the few, exquisitely unique phages capable of fighting a specific strain of antibiotic-resistant bacteria literally eating her husband alive.

Next, the US Food and Drug Administration had to greenlight this unproven cocktail of hope, and scientists had to purify the mixture so that it wouldn’t be deadly.

Yet just three weeks later, Strathdee watched doctors intravenously inject the mixture into her husband’s body — and save his life.

Their story is one of unrelenting perseverance and unbelievable good fortune. It’s a glowing tribute to the immense kindness of strangers. And it’s a story that just might save countless lives from the growing threat of antibiotic-resistant superbugs — maybe even your own.

“It’s estimated that by 2050, 10 million people per year — that’s one person every three seconds — is going to be dying from a superbug infection,” Strathdee told an audience at Life Itself, a 2022 health and wellness event presented in partnership with CNN.

“I’m here to tell you that the enemy of my enemy can be my friend. Viruses can be medicine.”

sanjay pkg vpx

How this ‘perfect predator’ saved his life after nine months in the hospital

During a Thanksgiving cruise on the Nile in 2015, Patterson was suddenly felled by severe stomach cramps. When a clinic in Egypt failed to help his worsening symptoms, Patterson was flown to Germany, where doctors discovered a grapefruit-size abdominal abscess filled with Acinetobacter baumannii, a virulent bacterium resistant to nearly all antibiotics.

Found in the sands of the Middle East, the bacteria were blown into the wounds of American troops hit by roadside bombs during the Iraq War, earning the pathogen the nickname “Iraqibacter.”

“Veterans would get shrapnel in their legs and bodies from IED explosions and were medevaced home to convalesce,” Strathdee told CNN, referring to improvised explosive devices. “Unfortunately, they brought their superbug with them. Sadly, many of them survived the bomb blasts but died from this deadly bacterium.”

Today, Acinetobacter baumannii tops the World Health Organization’s list of dangerous pathogens for which new antibiotics are critically needed.

“It’s something of a bacterial kleptomaniac. It’s really good at stealing antimicrobial resistance genes from other bacteria,” Strathdee said. “I started to realize that my husband was a lot sicker than I thought and that modern medicine had run out of antibiotics to treat him.”

With the bacteria growing unchecked inside him, Patterson was soon medevaced to the couple’s hometown of San Diego, where he was a professor of psychiatry and Strathdee was the associate dean of global health sciences at the University of California, San Diego.

“Tom was on a roller coaster — he’d get better for a few days, and then there would be a deterioration, and he would be very ill,” said Dr. Robert “Chip” Schooley, a leading infectious disease specialist at UC San Diego who was a longtime friend and colleague. As weeks turned into months, “Tom began developing multi-organ failure. He was sick enough that we could lose him any day.”

Patterson's body was systemically infected with a virulent drug-resistant bacteria that also infected troops in the Iraq War, earning the pathogen the nickname

After that reassuring hand squeeze from her husband, Strathdee sprang into action. Scouring the internet, she had already stumbled across a study by a Tbilisi, Georgia, researcher on the use of phages for treatment of drug-resistant bacteria.

A phone call later, Strathdee discovered phage treatment was well established in former Soviet bloc countries but had been discounted long ago as “fringe science” in the West.

“Phages are everywhere. There’s 10 million trillion trillion — that’s 10 to the power of 31 — phages that are thought to be on the planet,” Strathdee said. “They’re in soil, they’re in water, in our oceans and in our bodies, where they are the gatekeepers that keep our bacterial numbers in check. But you have to find the right phage to kill the bacterium that is causing the trouble.”

Buoyed by her newfound knowledge, Strathdee began reaching out to scientists who worked with phages: “I wrote cold emails to total strangers, begging them for help,” she said at Life Itself.

One stranger who quickly answered was Texas A&M University biochemist Ryland Young. He’d been working with phages for over 45 years.

“You know the word persuasive? There’s nobody as persuasive as Steffanie,” said Young, a professor of biochemistry and biophysics who runs the lab at the university’s Center for Phage Technology. “We just dropped everything. No exaggeration, people were literally working 24/7, screening 100 different environmental samples to find just a couple of new phages.”

While the Texas lab burned the midnight oil, Schooley tried to obtain FDA approval for the injection of the phage cocktail into Patterson. Because phage therapy has not undergone clinical trials in the United States, each case of “compassionate use” required a good deal of documentation. It’s a process that can consume precious time.

But the woman who answered the phone at the FDA said, “‘No problem. This is what you need, and we can arrange that,’” Schooley recalled. “And then she tells me she has friends in the Navy that might be able to find some phages for us as well.”

In fact, the US Naval Medical Research Center had banks of phages gathered from seaports around the world. Scientists there began to hunt for a match, “and it wasn’t long before they found a few phages that appeared to be active against the bacterium,” Strathdee said.

Dr. Robert

Back in Texas, Young and his team had also gotten lucky. They found four promising phages that ravaged Patterson’s antibiotic-resistant bacteria in a test tube. Now the hard part began — figuring out how to separate the victorious phages from the soup of bacterial toxins left behind.

“You put one virus particle into a culture, you go home for lunch, and if you’re lucky, you come back to a big shaking, liquid mess of dead bacteria parts among billions and billions of the virus,” Young said. “You want to inject those virus particles into the human bloodstream, but you’re starting with bacterial goo that’s just horrible. You would not want that injected into your body.”

Purifying phage to be given intravenously was a process that no one had yet perfected in the US, Schooley said, “but both the Navy and Texas A&M got busy, and using different approaches figured out how to clean the phages to the point they could be given safely.”

More hurdles: Legal staff at Texas A&M expressed concern about future lawsuits. “I remember the lawyer saying to me, ‘Let me see if I get this straight. You want to send unapproved viruses from this lab to be injected into a person who will probably die.’ And I said, “Yeah, that’s about it,’” Young said.

“But Stephanie literally had speed dial numbers for the chancellor and all the people involved in human experimentation at UC San Diego. After she calls them, they basically called their counterparts at A&M, and suddenly they all began to work together,” Young added.

“It was like the parting of the Red Sea — all the paperwork and hesitation disappeared.”

The purified cocktail from Young’s lab was the first to arrive in San Diego. Strathdee watched as doctors injected the Texas phages into the pus-filled abscesses in Patterson’s abdomen before settling down for the agonizing wait.

“We started with the abscesses because we didn’t know what would happen, and we didn’t want to kill him,” Schooley said. “We didn’t see any negative side effects; in fact, Tom seemed to be stabilizing a bit, so we continued the therapy every two hours.”

Two days later, the Navy cocktail arrived. Those phages were injected into Patterson’s bloodstream to tackle the bacteria that had spread to the rest of his body.

“We believe Tom was the first person to receive intravenous phage therapy to treat a systemic superbug infection in the US,” Strathdee told CNN.

“And three days later, Tom lifted his head off the pillow out of a deep coma and kissed his daughter’s hand. It was just miraculous.”

Patterson awoke from a coma after receiving an intravenous dose of phages tailored to his bacteria.

Today, nearly eight years later, Patterson is happily retired, walking 3 miles a day and gardening. But the long illness took its toll: He was diagnosed with diabetes and is now insulin dependent, with mild heart damage and gastrointestinal issues that affect his diet.

“He isn’t back surfing again, because he can’t feel the bottoms of his feet, and he did get Covid-19 in April that landed him in the hospital because the bottoms of his lungs are essentially dead,” Strathdee said.

“As soon as the infection hit his lungs he couldn’t breathe and I had to rush him to the hospital, so that was scary,” she said. “He remains high risk for Covid but we’re not letting that hold us hostage at home. He says, ‘I want to go back to having as normal life as fast as possible.’”

To prove it, the couple are again traveling the world — they recently returned from a 12-day trip to Argentina.

“We traveled with a friend who is an infectious disease doctor, which gave me peace of mind to know that if anything went sideways, we’d have an expert at hand,” Strathdee said.

“I guess I’m a bit of a helicopter wife in that sense. Still, we’ve traveled to Costa Rica a couple of times, we’ve been to Africa, and we’re planning to go to Chile in January.”

Patterson’s case was published in the journal Antimicrobial Agents and Chemotherapy in 2017, jump-starting new scientific interest in phage therapy.

“There’s been an explosion of clinical trials that are going on now in phage (science) around the world and there’s phage programs in Canada, the UK, Australia, Belgium, Sweden, Switzerland, India and China has a new one, so it’s really catching on,” Strathdee told CNN.

Some of the work is focused on the interplay between phages and antibiotics — as bacteria battle phages they often shed their outer shell to keep the enemy from docking and gaining access for the kill. When that happens, the bacteria may be suddenly vulnerable to antibiotics again.

“We don’t think phages are ever going to entirely replace antibiotics, but they will be a good adjunct to antibiotics. And in fact, they can even make antibiotics work better,” Strathdee said.

In San Diego, Strathdee and Schooley opened the Center for Innovative Phage Applications and Therapeutics, or IPATH, in 2018, where they treat or counsel patients suffering from multidrug-resistant infections. The center’s success rate is high, with 82% of patients undergoing phage therapy experiencing a clinically successful outcome, according to its website.

Schooley is running a clinical trial using phages to treat patients with cystic fibrosis who constantly battle Pseudomonas aeruginosa, a drug-resistant bacteria that was also responsible for the recent illness and deaths connected to contaminated eye drops manufactured in India.

And a memoir the couple published in 2019 — “The Perfect Predator: A Scientist’s Race to Save Her Husband From a Deadly Superbug” — is also spreading the word about these “perfect predators” to what may soon be the next generation of phage hunters.

VS Phages Sanjay Steffanie

How naturally occurring viruses could help treat superbug infections

“I am getting increasingly contacted by students, some as young as 12,” Strathdee said. “There’s a girl in San Francisco who begged her mother to read this book and now she’s doing a science project on phage-antibiotic synergy, and she’s in eighth grade. That thrills me.”

Strathdee is quick to acknowledge the many people who helped save her husband’s life. But those who were along for the ride told CNN that she and Patterson made the difference.

“I think it was a historical accident that could have only happened to Steffanie and Tom,” Young said. “They were at UC San Diego, which is one of the premier universities in the country. They worked with a brilliant infectious disease doctor who said, ‘Yes,’ to phage therapy when most physicians would’ve said, ‘Hell, no, I won’t do that.’

“And then there is Steffanie’s passion and energy — it’s hard to explain until she’s focused it on you. It was like a spiderweb; she was in the middle and pulled on strings,” Young added. “It was just meant to be because of her, I think.”

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Jim Cramer’s top 10 things to watch in the stock market Friday

My top 10 things to watch Friday, Nov. 3

1. U.S. stocks climb higher in premarket trading Friday, with S&P 500 futures up 0.46% after rising nearly 5% over the previous four sessions. Equities remain on track for their biggest weekly gain of the year. Government bonds also continue to rally this week, with the yield on the 10-year Treasury pulling back to around 4.5%. Oil prices tick up 0.78%, bringing West Texas Intermediate crude to just above $83 a barrel.

2. U.S. employment growth slows in October, with the economy adding just 150,000 jobs, according to the Labor Department’s monthly nonfarm payrolls report. That compares with September’s revised gain of 297,000 jobs and a Dow Jones estimate for October of 170,000 jobs. The news could take further pressure off the Federal Reserve in its ongoing battle to bring down inflation through higher interest rates.

3. Club holding Apple (AAPL) delivers an uneven fiscal fourth-quarter, with shares falling on lower-than-expected guidance for the current quarter. Analysts are using the results to reset expectations and lower price targets. Apple stock is down 1.7% in premarket trading, at $174.57 a share.

4. Semiconductor firm Skyworks Solutions (SWKS) reports a weak quarter as a result of Apple’s slowdown, prompting a slate of price-target reductions Friday. Barclays lowers its price target on the stock to $90 a share, down from $115, while maintaining an overweight rating on shares.

5. The takeaway from Club holding Starbucks‘ (SBUX) fiscal fourth-quarter beat is that the coffee maker needs so many more stores both in the U.S. and in China, while it’s barely begun to tackle India. Baird on Friday raises its price target on Starbucks to $110 a share, up from $100, while reiterating a neutral rating.

6. Barclays on Friday raises its price target on Club name Eli Lilly (LLY) to $630 a share, up from $590, while maintaining an overweight rating on the stock. The call seems like a good idea after Eli Lilly delivered solid quarterly results on the back of its blockbuster drug Mounjaro.

7. Shares of cybersecurity firm Fortinet (FTNT) plunge nearly 20% in early trading after its third-quarter results miss on analyst expectations, while providing a weak outlook for the current quarter. Multiple Wall Street firms downgrade Fortinet Friday on the weak quarter and signs secure networking is seeing slower growth.

8. Barclays lowers it price target on Clorox (CLX) to $115 a share, down from $118, while maintaining an underweight rating on the stock — and that seems harsh. The firm calls Clorox’s reduced outlook “prudent given the uncertainty ahead.” Clorox warned last month that an August cyber attack had significantly weighed on sales and profits.

9. KeyBanc upgrades Uber Technologies (UBER) to overweight from a neutral-equivalent rating, with a $60-per-share price target. The firm says Uber’s expense discipline should continue to drive earnings and free cash flow, while advertising “provides a lever to keep prices low to drive volumes.” Uber is set to report third-quarter results on Nov. 7.

10. Gordon Haskett upgrades Ross Stores (ROST) to buy from accumulate, with a $135-per-share price target. The firm says its third-quarter proprietary store manager survey “paints a positive picture” for both Ross and Club name TJX Companies (TJX).

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‘COVID isn’t done with us’: So why have so many people started rolling the dice?

Hersh Shefrin, a mild-mannered behavioral economist at Santa Clara University, still wears a mask when he goes out in public. In fact, he wears two masks: an N95 medical-grade mask, and another surgical mask on top. “I’m in a vulnerable group. I still believe in masking,” Shefrin, 75, told MarketWatch. It’s worked so far: He never did get COVID-19. Given his age, he is in a high-risk category for complications, so he believes in taking such precautions.

But not everyone is happy to see a man in a mask in September 2023. “A lot of people just want to be over this,” Shefrin, who lives in Menlo Park, Calif., said. “Wearing a mask in public generates anger in some people. I’ve had people come up to me and set me straight on why people should not wear masks. I’ve had people yell at me in cars. It might not match with where they are politically, or they genuinely feel that the risks are really low.”

His experience speaks to America in 2023. Our attitude to COVID-related risk has shifted dramatically, and seeing a person wearing a mask may give us anxiety. But how will we look back on this moment —  3½ years since the start of the coronavirus pandemic? Will we think, “There was a mild wave of COVID, but we got on with it”? Or say, “We were so traumatized back then, dealing with the loss of over 1.1 million American lives, and struggling to cope with a return to normal life”?

We live in a postpandemic era of uncertainty and contradiction. Acute respiratory syndrome coronavirus 2, or SARS-CoV-2, is back, yet it never really went away. Roughly a quarter of the population has never tested positive for COVID, but some people have had it twice or three times. Few people are wearing masks nowadays, and the World Health Organization recently published its last weekly COVID update. It will now put out a new report every four weeks.

‘I’ve had people come up to me and set me straight on why people should not wear masks.’


— Hersh Shefrin, 75, behavioral psychologist 

People appear sanguine about the latest booster, despite the Centers for Disease Control and Prevention recommending that people get the updated shot. Fewer than a quarter of Americans (23%) said they were “definitely” planning to get this shot, according to a report released this week by KFF, the nonprofit formerly known as the Kaiser Family Foundation. Some 23% said they will “probably get it,” 19% said they will “probably not get it” and 33% will “definitely not get it.”

Do we throw caution to the wind and treat fall and winter as flu, RSV and COVID season? It’s hard both to avoid COVID, many people contend, and to lead a normal life. The latest wave so far is mild, notwithstanding recent reports of extreme fatigue. Scientists have voiced concerns about potential long-term cognitive decline in some severe cases, but most vaccinated people recover. Still, scientists say it’s too early to know about any long-term effects of COVID.

Amid all these unknowns are many risk-related theories: The psychologist Paul Slovic said we evaluate risk based on three main factors. Firstly, we rely on our emotions rather than the facts (something he calls “affect heuristic”). Secondly, we are less tolerant of risks that are perceived as dreadful and unknown (“psychometric paradigm theory”). Thirdly, we become desensitized to catastrophic events and unable to appreciate loss (“psychophysical numbing”).

Shefrin, the behavioral economist, said these three theories influence how we cope with COVID. “Early in the pandemic, the ‘dread factor’ and ‘unknown factor’ meant we all felt it was very risky,” he said. “But we began to see that the people who were most affected were older with comorbidities. The dread factor is way down because of successful vaccinations. We certainly feel that the unknowable factor is down, but with new variants there is potentially something to worry about.”

Hersh Shefrin: “We certainly feel that the unknowable factor is down, but with new variants there is potentially something to worry about.”


c/o Hersh Shefrin

Habituation and status quo lead to inaction

The profile of risk has changed dramatically since the pandemic began. Vaccines protect the majority of people from the most serious effects of COVID — for the 70% of Americans who have gotten the two initial COVID shots. So should we focus on living for today, and stop worrying about tomorrow? Or, given all the unknowns, are we still rolling the dice with our health by boarding crowded subway trains, socializing at parties and stepping into the office elevator?

The number of people dying from COVID has, indeed, fallen dramatically. Weekly COVID deaths in the U.S. peaked at 25,974 during the week of Jan. 9, 2021. There had been 60 COVID-related deaths during the week of March 14, 2020 — when the WHO declared the outbreak a worldwide pandemic — far fewer than the 607 deaths during the week of Sept. 23, the most recent week for which data are available. But in March 2020, with no vaccine, people had reason to be scared.

“COVID deaths are actually worse now than when we were all freaking out about it in the first week of March 2020, but we’re habituated to it, so we tolerate the risk in a different way. It’s not scary to us anymore,” said Annie Duke, a former professional poker player, and author of books about cognitive science and decision making. “We’re just used to it.” Flu, for example, continues to kill thousands of people every year, but we have long become accustomed to that.

A dramatic example of the “habituation effect”: Duke compares COVID and flu to infant mortality throughout the ages. In 1900, the infant-mortality rate was 157.1 deaths per 1,000 births, falling to 20.3 in 1970, and 5.48 deaths per 1,000 births in 2023. “If the 1900 infant-mortality rate was the same infant-mortality rate today, we’d all have our hair on fire,” she said. “We think we would not live through that time, but we would, as people did then, because they got used to it.”

‘COVID deaths are actually worse now than when we were all freaking out about it in the first week of March 2020.’


— Annie Duke, former professional poker player

Duke, who plans to get the updated booster shot, believes people are rolling the dice with their health, especially concerning the long-term effects. The virus, for example, has been shown to accelerate Alzheimer’s-related brain changes and symptoms. Could it also lead to some people developing cognitive issues years from now? No one knows. “Do I want to take the risk of getting repeated COVID?” Duke said. “We have this problem when the risks are unknown.”

When faced with making a decision that makes us uncomfortable — usually where the outcome is uncertain — we often choose to do nothing, Duke said. It’s called “status quo bias.” There’s no downside to wearing a mask, as doctors have been doing it for years, but many people now eschew masks in public places. Research suggests vaccines have a very small chance of adverse side effects, but even that highly unlikely outcome is enough to persuade some people to opt out.

And yet Duke said people tend to choose “omission” over “commission” — that is, they opt out of getting the vaccine rather than opting in. But why? She said there are several reasons: The vaccine comes with a perceived risk, however small, that something could go wrong, so if you do nothing you may feel less responsible for any negative outcome. “Omission is allowing the natural state of the world to continue, particularly with a problem that has an unknown downside,” she said. 

Here’s a simple example: You’re on the way to the airport in a car with your spouse, and there’s a roadblock. You have two choices: Do you sit and wait, or do you take an alternative route? If you wait and miss your flight, you may feel that the situation was beyond your control. If you take a shortcut, and still miss your flight, you may feel responsible, and stupid. “Now divorce papers are being drawn up, even though you had the same control over both events,” Duke said.

Annie Duke: “COVID deaths are actually worse now than when we were all freaking out about it in the first week of March 2020.”


c/o Annie Duke

Risk aversion is a complicated business

Probably the most influential study of how people approach risk is prospect or “loss-aversion” theory, which was developed by Daniel Kahneman, an economist and psychologist, and the late Amos Tversky, a cognitive and mathematical psychologist. It has been applied to everything from whether to take an invasive or inconvenient medical test to smoking cigarettes in the face of a mountain of evidence that smoking can cause cancer. 

In a series of lottery experiments, Kahneman and Tversky found that people are more likely to take risks when the stakes are low, and less likely when the stakes are high. Those risks are based on what individuals believe they have to gain or lose. This does not always lead to a good outcome. Take the stock-market investor with little money who sells now to avoid what seems like a big loss, but then misses out on a life-changing, long-term payday.

As that stock-market illustration shows, weighing our sensitivity to losses and gains is actually very complicated, and they are largely based on people’s individual circumstances, said Kai Ruggeri, an assistant professor of health policy and management at Columbia University. He and others reviewed 700 studies on social and behavioral science related to COVID-19 and the lessons for the next pandemic, determining that not enough attention had been given to “risk perception.”

So how does risk perception apply to vaccines? The ultimate decision is personal, and may be less impacted by the collective good. “If I perceive something as being a very large loss, I will take the behavior that will help me avoid that loss,” Ruggeri said. “If a person believes there’s a high risk of death, illness or giving COVID to someone they love, they will obviously get the vaccine. But there’s a large number of people who see the gain and the loss as too small.”

‘If a person believes there’s a high risk of death, illness or giving COVID to someone they love, they will obviously get the vaccine.’


— Kai Ruggeri, psychologist

In addition to a person’s own situation, there is another factor when people evaluate risk factors and COVID: their tribe. “Groupthink” happens when people defer to their social and/or political peers when making decisions. In a 2020 paper, social psychologist Donelson R. Forsyth cited “high levels of cohesion and isolation” among such groups, including “group illusions and pressures to conform” and “deterioration of judgment and rationality.”

Duke, the former professional poker player, said it’s harder to evaluate risk when it comes to issues that are deeply rooted in our social network. “When something gets wrapped into our identity, it makes it hard for us to think about the world in a rational way, and abandon a belief that we already have,” she said, “and that’s particularly true if we have a belief that makes us stand out from the crowd in some way rather than belong to the crowd.”

Exhibit A: Vaccine rates are higher among people who identify as Democrat versus Republican, likely based on messaging from leaders in those respective political parties. Some 60% of Republicans and 94% of Democrats have gotten a COVID vaccine, according to an NBC poll released this week. Only 36% of Republicans said it was worth it, compared with 90% of Democrats. “When things get politicized, it creates a big problem when evaluating risk,” Duke added.

Risk or no risk, “COVID isn’t done with us,” Emily Landon, an infectious-diseases specialist at the University of Chicago, told MarketWatch. “Just because people aren’t dying in droves does not mean that COVID is no big deal. That’s an error in judgment. Vaccination and immunity is enough to keep most of us out of the hospital, but it’s not enough to keep us from getting COVID. What if you get COVID again and again? It’s not going to be great for your long-term health.”

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Urinary tract infections in men: Here are 10 things to know | CNN

Editor’s Note: Dr. Jamin Brahmbhatt is a urologist and robotic surgeon with Orlando Health and president of the Florida Urological Society.



CNN
 — 

While urinary tract infections are more common in women, men can still get what’s commonly known as a UTI. Here are 10 things I’d like you to know about urinary tract infections, including who’s more at risk and how to get treatment.

UTI is short for urinary tract infection. It’s an infection of the organs in your body – I call them pipes – that are meant to funnel your urine out of your system and into the urinal. Most UTIs are caused by bacteria that work their way into the urethra, prostate, bladder or kidneys.

Way more women than men are diagnosed with UTIs. Anatomically, we feel this happens because women have a shorter urethra – the tube that connects the bladder to the outside world. The shorter length makes it easier for bacteria to travel to the urinary system. Men have longer urethras and therefore can be protected against urinary infections.

But the length of the urethra alone cannot protect men against UTIs – over their lifetimes, 12% of men will get urinary symptoms linked to a UTI. This by no means implies a urethra or penis are short or small. In men, there is usually a more clear pathologic cause to the infection beyond just the length of the urethra.

There are many reasons why a guy may get a UTI – all of them we take seriously and should not be ignored.

Men older than 50 tend to get more infections than younger men. As a urologist, I see men get recurrent infections when they do not properly empty their bladder because of an enlarged prostate. Beyond the prostate, men may not empty their bladder if they have nerve damage from stroke, uncontrolled diabetes or injury to the spine.

Men can also get infections that start from the prostate or testicles that seed up into the bladder, or the opposite can happen where the infection goes from the bladder to the other organs. Kidney stones can also be a cause of infection. (I know this from personal experience – I’ve had a kidney stone myself!)

Younger men may also present with urinary infections because of sexually transmitted diseases. Men can also get an infection if they have a recent procedure done in the urinary system.

4. What are the signs and symptoms of a UTI?

Burning with urination (dysuria), increased urinary frequency, urgency, incontinence, foul smell, blood in the urine, fevers, chills, pain in the abdomen near the bladder. Believe it or not, some men may have zero symptoms and still get diagnosed with a UTI based on urine cultures done for other purposes.

UTI is diagnosed by sending your urine off for a culture. This is when a sample of your urine is processed and evaluated for various strains of bacteria. The most common bacteria identified in urinary tract infections is E.coli. Once the culture is done, the results can guide treatment, which is usually oral antibiotics. There is a test called a urine analysis which can be done quickly in our office which can suggest an infection. However, the best test is an actual culture.

Doctors do not wait for the culture results – which can take one to three days – to start treatment. If an infection is suspected, an antibiotic will be started immediately and then adjusted based on the culture results.

UTIs generally are treated with oral or IV antibiotics. Most infections can be treated with oral antibiotics. However there are superbugs that may be resistant to what we can give you by mouth that may require the use of stronger antibiotics through an IV. Most treatments last seven to 10 days, but can be longer.

In severe cases of infection that has spread to the bloodstream, strong IV antibiotics are started immediately to control the infection. Patients are placed in the hospital to start these strong treatments. You do not have to stay in the hospital for weeks if you have infection in your bloodstream. As long as you are doing well – no fever, normal labs, heart and pulse OK – then you may continue these IV treatments from home. Each treatment is tailored to your condition.

As a doctor, my answer is: No. Men should not try to treat infections on their own. If you have symptoms, get yourself to a doctor or emergency room.

The best prevention is making sure first there is nothing anatomical that needs to be corrected, such as an enlarged prostate, kidney stone or blockage.

Proper hygiene can help prevent infections. Men with uncircumcised penises should make sure they can retract the foreskin and clean under the foreskin and the glans properly. Cranberry supplements have been shown to help prevent infections. Staying hydrated by drinking enough fluids/water during the day can also help. Making sure you don’t hold your urine can help, too. Staying in good health to avoid chronic medical conditions such as diabetes and heart disease will also protect against infections.

9. My infection is gone. Are there any long-term effects on my body?

Recurrent, untreated infections could cause strictures, or tight scars, in your urethra that would slow your stream and make it difficult to empty your bladder. Infections could also cause the bladder to lose its ability to fill and empty properly. In the long run, if you are getting constantly treated with antibiotics, we may run out of antibiotics to give you due to resistance.

The first priority is to clear the infection with antibiotics.

From there, we do a full workup with a detailed history, evaluation of chronic medical problems and exam of the genitals to look for anatomic issues such as a foreskin that won’t retract back. Imaging may include a CT scan of the abdomen and pelvis to look for kidney stones, blocked tubes and other abnormalities.

If you see a urologist, you will likely get a cystoscopy, where we place a camera inside of a small tube into the urethra to look at the inside of your urine channel. The cystoscopy helps look for strictures, large obstructing prostates and changes to the bladder walls. Once a cause is found, it’s aggressively treated with either medication or surgery.

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Weight loss drugs boost sales at retail pharmacies, but they may not help profits much

A pharmacist displays boxes of Ozempic, a semaglutide injection drug used for treating type 2 diabetes made by Novo Nordisk, at Rock Canyon Pharmacy in Provo, Utah, U.S. March 29, 2023. 

George Frey | Reuters

Drugmakers aren’t the only ones feeling the impact of the weight loss industry gold rush. 

Retailers with pharmacy businesses, such as Walmart, Kroger and Rite Aid, said increased demand for prescription weight loss drugs helped boost sales for the second quarter. 

But analysts note that those blockbuster treatments are minimally profitable for retail pharmacies – and may even come with margin headwinds.

“More recently, you’re starting to hear retailers talk about these drugs. But I wouldn’t say they’re necessarily beneficiaries of the increased popularity,” Arun Sundaram, an analyst at CFRA Research, told CNBC. “They’re really not making much of a profit on the drugs. So it’s really just a traffic driver and not really a profit pool for retailers.” 

Buzzy drugs like Novo Nordisk‘s obesity injection Wegovy and diabetes treatment Ozempic have skyrocketed in popularity over the last year, with high-profile names like billionaire tech mogul Elon Musk among recent users.

Those treatments are known as GLP-1s, a class of drugs that mimic a hormone produced in the gut to suppress a person’s appetite. 

Other drugmakers, such as Eli Lilly and Pfizer, are developing their own GLP-1s in a bid to capitalize on a weight loss drug market that some analysts project could be worth $200 billion by 2030. An estimated 40% of U.S. adults are obese, making successful treatments a massive opportunity for drugmakers. 

But the boom in demand for GLP-1s is also being felt in other parts of the drug supply chain, including the pharmacies that dispense the prescription drugs to patients. 

Are weight loss drugs profitable? 

On an earnings call Thursday, Walmart CEO Doug McMillon said the company expects weight loss drugs to help drive sales for the rest of the year: “We still expect food, consumables, and health and wellness, primarily due to the popularity of some GLP-1 drugs, to grow as a percent total in the back half.” 

In June, likewise, Rite Aid CFO Matthew Schroeder said a jump in pharmacy revenue and the company’s decision to hike its full-year revenue guidance was “due to the increase in sales volume in Ozempic and other high-dollar GLP-1s.” Schroeder was referring to the hefty price tags of GLP-1s, which range from around $900 to $1,300 in the U.S. 

He said those drugs have high sales amounts per prescription, but emphasized that the increased volume of GLP-1s has a “minimal impact” on Rite Aid’s gross profit. 

Kroger CEO Rodney McMullen similarly said during an earnings call in June that GLP-1 drug “sales dollars are a lot bigger than the margin dollars.” 

“We would expect the GLP-1 type drugs to continue but remember, the impact on profitability is pretty narrow,” he said.

That’s because GLP-1s like Wegovy and Ozempic are branded drugs with “very, very low gross margins,” according to CFRA Research’s Sundaram. 

He said retail pharmacies generate high sales for each GLP-1 prescription they dispense but rake in low profits, which is having a slight negative impact on the overall gross margins of retailers like Walmart and Kroger. 

UBS analyst Michael Lasser similarly highlighted in a recent note that gross margins for Walmart’s U.S. business “would have looked even better had it not been for the contribution of the GLP-1 drugs since these carry very low profit rates.”

A selection of injector pens for the Saxenda weight loss drug are shown in this photo illustration in Chicago, Illinois, U.S., March 31, 2023. 

Jim Vondruska | Reuters

Gross margins for branded medications are 3.5% on average for pharmacies, according to a 2017 study from USC’s Schaeffer Center for Health Policy and Economics. That suggests it may take years before a branded drug significantly contributes to a pharmacy’s bottom line.

In contrast, gross margins for generic drugs – the cheaper equivalents of branded medications – are 42.7% on average for pharmacies. 

There are several reasons for the lower margins of branded drugs. For one, branded drugs don’t directly compete with other medications because they have patent protections. That gives drug manufacturers more power when they negotiate drug discounts with wholesalers, which purchase medications and distribute them to pharmacies. 

As a result, there is “little room for wholesalers and pharmacies to capture large margins due to their relative lack of negotiating power,” according to the Association for Accessible Medicines, a trade association representing the manufacturers and distributors of generic prescription drugs. 

What other impacts do retailers face?

But there are also other impacts of GLP-1s to consider beyond a retailer’s pharmacy business.

For companies like Walmart and Kroger, GLP-1 drugs may be indirectly impacting other business categories in a positive way.

That makes some analysts less worried about margin headwinds in pharmacy: “The gross margin headwind is less of a risk overall for Walmart because any footstep in the door often ends up with multiple items in a basket,” KeyBanc analyst Bradley Thomas told CNBC. 

“Walmart is generally not a quick store that you just pop in on the way home,” he said. “They’re going to make multiple purchases, and I think we’re seeing a lot of discretionary categories actually see a lift from some of this incremental traffic they’ve been getting lately.” 

Thomas added that GLP-1 drugs only fall under one part of Walmart’s business: “If you’re listing off the most important things that are driving Walmart’s strong sales performance right now, it’s probably not making the top 10,” he said. 

It’s a slightly different situation for Rite-Aid and similar companies like CVS Health and Walgreens.

Those companies have retail pharmacies but also other business segments that are directly affected in different ways by the boom in GLP-1 drugs.

For example, CVS also operates a health insurer and pharmacy benefit manager, or PBM, which maintains formularies and negotiates drug discounts with manufacturers on behalf of insurers and large employers.

The increased demand for GLP-1 drugs is likely more of a headwind for health insurers since they have to cover the costly drugs for beneficiaries, but CVS says “the risk is manageable” in that business division.

Meanwhile, PBMs may benefit more from the increase in GLP-1 use since they negotiate significant discounts on drugs and drive competition between manufacturers – but they often don’t pass along all of the savings to insurers.

“Each of the businesses kind of has GLP-1 in them and they are impacting them in a variety of different ways,” CVS CEO Karen Lynch said during an earnings call last month.

Correction: The Association for Accessible Medicines is a trade association representing the manufacturers and distributors of generic prescription drugs. An earlier version misstated its name.

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Here are our top 4 stocks and worst 4 stocks to start the second half of 2023

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 12, 2023. 

Brendan McDermid | Reuters

Two weeks into the second half of the year, we put together a quick look at the top four performers and the bottom four in Jim Cramer’s Charitable Trust, the stock portfolio we use for the Investing Club.

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Black or ‘Other’? Doctors may be relying on race to make decisions about your health | CNN

Editor’s Note: CNN’s “History Refocused” series features surprising and personal stories from America’s past to bring depth to conflicts still raging today.



CNN
 — 

When she first learned about race correction, Naomi Nkinsi was one of five Black medical students in her class at the University of Washington.

Nkinsi remembers the professor talking about an equation doctors use to measure kidney function. The professor said eGFR equations adjust for several variables, including the patient’s age, sex and race. When it comes to race, doctors have only two options: Black or “Other.”

Nkinsi was dumbfounded.

“It was really shocking to me,” says Nkinsi, now a third-year medical and masters of public health student, “to come into school and see that not only is there interpersonal racism between patients and physicians … there’s actually racism built into the very algorithms that we use.”

At the heart of a controversy brewing in America’s hospitals is a simple belief, medical students say: Math shouldn’t be racist.

The argument over race correction has raised questions about the scientific data doctors rely on to treat people of color. It’s attracted the attention of Congress and led to a big lawsuit against the NFL.

What happens next could affect how millions of Americans are treated.

Carolyn Roberts, a historian of medicine and science at Yale University, says slavery and the American medical system were in a codependent relationship for much of the 19th century and well into the 20th.

“They relied on one another to thrive,” Roberts says.

It was common to test experimental treatments first on Black people so they could be given to White people once proven safe. But when the goal was justifying slavery, doctors published articles alleging substantive physical differences between White and Black bodies — like Dr. Samuel Cartwright’s claim in 1851 that Black people have weaker lungs, which is why grueling work in the fields was essential (his words) to their progress.

The effects of Cartwright’s falsehood, and others like it, linger today.

In 2016, researchers asked White medical students and residents about 15 alleged differences between Black and White bodies. Forty percent of first-year medical students and 25% of residents said they believed Black people have thicker skin, and 7% of all students and residents surveyed said Black people have less sensitive nerve endings. The doctors-in-training who believed these myths — and they are myths — were less likely to prescribe adequate pain medication to Black patients.

To fight this kind of bias, hospitals urge doctors to rely on objective measures of health. Scientific equations tell physicians everything from how well your kidneys are working to whether or not you should have a natural birth after a C-section. They predict your risk of dying during heart surgery, evaluate brain damage and measure your lung capacity.

But what if these equations are also racially biased?

Race correction is the use of a patient’s race in a scientific equation that can influence how they are treated. In other words, some diagnostic algorithms and risk predictor tools adjust or “correct” their results based on a person’s race.

The New England Journal of Medicine article “Hidden in Plain Sight” includes a partial list of 13 medical equations that use race correction. Take the Vaginal Birth After Cesarean calculator, for example. Doctors use this calculator to predict the likelihood of a successful vaginal delivery after a prior C-section. If you are Black or Hispanic, your score is adjusted to show a lower chance of success. That means your doctor is more likely to encourage another C-section, which could put you at risk for blood loss, infection and a longer recovery period.

Cartwright, the racist doctor from the 1800s, also developed his own version of a tool called the spirometer to measure lung capacity. Doctors still use spirometers today, and most include a race correction for Black patients to account for their supposedly shallower breaths.

Turns out, second-year medical student Carina Seah wryly told CNN, math is as racist as the people who make it.

The biggest problem with using race in medicine? Race isn’t a biological category. It’s a social one.

“It’s based on this idea that human beings are naturally divided into these big groups called races,” says Dorothy Roberts, a professor of law and sociology at the University of Pennsylvania, who has made challenging race correction in medicine her life’s work. “But that’s not what race is. Race is a completely invented social category. The very idea that human beings are divided into races is a made-up idea.”

Ancestry is biological. Where we come from — or more accurately, who we come from — impacts our DNA. But a patient’s skin color isn’t always an accurate reflection of their ancestry.

Look at Tiger Woods, Roberts says. Woods coined the term “Cablinasian” to describe his mix of Caucasian, Black, American Indian and Asian ancestries. But to many Americans, he’s Black.

CNN RED TIGER WOODS

“You can be half Black and half White in this country and you are Black,” says Seah, who is getting her medical degree and a PhD in genetics and genomics at the Icahn School of Medicine at Mount Sinai in New York. “You can be a quarter Black in this country — if you have dark skin, you are Black.”

So it can be misleading, Seah says, even dangerous, for doctors to judge a patient’s ancestry by glancing at their skin. A patient with a White mother and Black father could have a genetic mutation that typically presents in patients of European ancestry, Seah says, but a doctor may not think to test for it if they only see Black skin.

“You have to ask, how Black is Black enough?” Nkinsi asks. And there’s another problem, she says, with using a social construct like race in medicine. “It also puts the blame on the patient, and it puts the blame on the race itself. Like being Black is inherently the cause of these diseases.”

Naomi Nkinsi is a third-year medical and masters of public health student at the University of Washington in Seattle. She has been advocating for the removal of race correction in medicine.

After she learned about the eGFR equation in 2018, Nkinsi began asking questions about race correction. She wasn’t alone — on social media she found other students struggling with the use of race in medicine. In the spring of 2020, following a first-year physiology lecture, Seah joined the conversation. But the medical profession is nothing if not hierarchical; Nkinsi and Seah say students are encouraged to defer to doctors who have been practicing for decades.

Then on May 25, 2020, George Floyd was killed by police in Minneapolis.

His death and the growing momentum around Black Lives Matter helped ignite what Dr. Darshali A. Vyas calls an “overdue reckoning” in the medical community around race and race correction. A few institutions had already taken steps to remove race from the eGFR equation. Students across the country demanded more, and hospitals began to listen.

History Refocused BLM White Coats

Four days after Floyd’s death, the University of Washington announced it was removing race correction from the eGFR equation. In June, the Boston-based hospital system Mass General Brigham where Vyas is a second-year Internal Medicine resident followed suit. Seah and a fellow student at Mount Sinai, Paloma Orozco Scott, started an online petition and collected over 1600 signatures asking their hospital to do the same.

Studies show removing race from the eGFR equation will change how patients at those hospitals are treated. Researchers from Brigham and Women’s Hospital and Penn Medicine estimated up to one in every three Black patients with kidney disease would have been reclassified if the race multiplier wasn’t applied in earlier calculations, with a quarter going from stage 3 to stage 4 CKD (Chronic Kidney Disease).

That reclassification is good and bad, says Dr. Neil Powe, chief of medicine at Zuckerberg San Francisco General Hospital. Black patients newly diagnosed with kidney disease will be able to see specialists who can devise better treatment plans. And more patients will be placed on kidney transplant lists.

On the flip side, Powe says, more African Americans diagnosed with kidney disease means fewer who are eligible to donate kidneys, when there’s already a shortage. And a kidney disease diagnosis can change everything from a patient’s diabetes medication to their life insurance costs.

Dr. Neil Powe says by simply removing race from the eGFR equations,

Powe worries simply eliminating race from these equations is a knee-jerk response — one that may exacerbate health disparities instead of solve them. For too long, Powe says, doctors had to fight for diversity in medical studies.

The most recent eGFR equation, known as the CKD-EPI equation, was developed using data pooled from 26 studies, which included almost 3,000 patients who self-identified as Black. Researchers found the equation they were developing was more accurate for Black patients when it was adjusted by a factor of about 1.2. They didn’t determine exactly what was causing the difference in Black patients, but their conclusion is supported by other research that links Black race and African ancestry with higher levels of creatinine, a waste product filtered by the kidneys.

Put simply: In the eGFR equation, researchers used race as a substitute for an unknown factor because they think that factor is more common in people of African descent.

Last August, Vyas co-authored the “Hidden in Plain Sight” article about race correction. Vyas says most of the equations she wrote about were developed in a similar way to the eGFR formula: Researchers found Black people were more or less likely to have certain outcomes and decided race was worth including in the final equation, often without knowing the real cause of the link.

“When you go back to the original studies that validated (these equations), a lot of them did not provide any sort of rationale for why they include race, which I think is appalling.” That’s what’s most concerning, Vyas says – “how willing we are to believe that race is relevant in these ways.”

Vyas is clear she isn’t calling for race-blind medicine. Physicians cannot ignore structural racism, she says, and the impact it has on patients’ health.

Powe has been studying the racial disparities in kidney disease for more than 30 years. He can spout the statistics easily: Black people are three times more likely to suffer from kidney failure, and make up more than 35% of patients on dialysis in the US. The eGFR equation, he says, did not cause these disparities — they existed long before the formula.

“We want to cure disparities, let’s go after the things that really matter, some of which may be racist,” he says. “But to put all our stock and think that the equation is causing this is just wrong because it didn’t create those.”

In discussions about removing race correction, Powe likes to pose a question: Instead of normalizing to the “Other” group in the eGFR equation, as many of these hospitals are doing, why don’t we give everyone the value assigned to Black people? By ignoring the differences researchers saw, he says, “You’re taking the data on African Americans, and you’re throwing it in the trash.”

Powe is co-chair of a joint task force set up by the National Kidney Foundation and the American Society of Nephrology to look at the use of race in eGFR equations. The leaders of both organizations have publicly stated race should not be included in equations used to estimate kidney function. On April 9, the task force released an interim report that outlined the challenges in identifying and implementing a new equation that’s representative of all groups. The group is expected to issue its final recommendations for hospitals this summer.

Race correction is used to assess the kidneys and the lungs. What about the brain?

In 2013, the NFL settled a class-action lawsuit brought by thousands of former players and their families that accused the league of concealing what it knew about the dangers of concussions. The NFL agreed to pay $765 million, without admitting fault, to fund medical exams and compensate players for concussion-related health issues, among other things. Then in 2020, two retired players sued the NFL for allegedly discriminating against Black players who submitted claims in that settlement.

01 race correction Kevin Henry Najeh Davenport SPLIT

The players, Najeh Davenport and Kevin Henry, said the NFL race-corrected their neurological exams, which prevented them from being compensated.

According to court documents, former NFL players being evaluated for neurocognitive impairment were assumed to have started with worse cognitive function if they were Black. So if a Black player and a White player received the exact same scores on a battery of thinking and memory tests, the Black player would appear to have suffered less impairment. And therefore, the lawsuit stated, would be less likely to qualify for a payout.

Race correction is common in neuropsychology using something called Heaton norms, says Katherine Possin, an associate professor at the University of California San Francisco. Heaton norms are essentially benchmark average scores on cognitive tests.

Here’s how it works: To measure the impact of a concussion (or multiple concussions over time), doctors compare how well the patient’s brain works now to how well it worked before.

“The best way to get that baseline was to test you 10 years ago, but that’s not something we obviously have for many people,” Possin says. So doctors estimate your “before” abilities using an average score from a group of healthy individuals, and adjust that score for demographic factors known to affect brain function, like your age.

Heaton norms adjust for race, Possin says, because race has been linked in studies to lower cognitive scores. To be clear, that’s not because of any biological differences in Black and White brains, she says; it’s because of social factors like education and poverty that can impact cognitive development. And this is where the big problem lies.

In early March, a judge in Pennsylvania dismissed the players’ lawsuit and ordered a mediator to address concerns about how race correction was being used. In a statement to CNN, the NFL said there is no merit to the players’ claim of discrimination, but it is committed to helping find alternative testing techniques that do not employ race-based norms.

The NFL case, Possin wrote in JAMA, has “exposed a major weakness in the field of neuropsychology: the use of race-adjusted norms as a crude proxy for lifelong social experience.”

This happens in nearly every field of medicine. Race is not only used as a poor substitute for genetics and ancestry, it’s used as a substitute for access to health care, or lifestyle factors like diet and exercise, socioeconomic status and education. It’s no secret that racial disparities exist in all of these. But there’s a danger in using race to talk about them, Yale historian Carolyn Roberts says.

We know, for example, that Black Americans have been disproportionally affected by Covid-19. But it’s not because Black bodies respond differently to the virus. It’s because, as Dr. Anthony Fauci has noted, a disproportionate number of Black people have jobs that put them at higher risk and have less access to quality health care. “What are we making scientific and biological when it actually isn’t?” Roberts asks.

Vyas says using race as a proxy for these disparities in clinical algorithms can also create a vicious cycle.

“There’s a risk there, we argue, of simply building these into the system and almost accepting them as fact instead of focusing on really addressing the root causes,” Vyas says. “If we systematize these existing disparities … we risk ensuring that these trends will simply continue.”

Nearly everyone on both sides of the race correction controversy agrees that race isn’t an accurate, biological measure. Yet doctors and researchers continue to use it as a substitute. Math shouldn’t be racist, Nkinsi says, and it shouldn’t be lazy.

“We’re saying that we know that this race-based medicine is wrong, but we’re going to keep doing it because we simply don’t have the will or the imagination or the creativity to think of something better,” Nkinsi says. “That is a slap in the face.”

Shortly after Vyas’ article published in The New England Journal of Medicine, the House Ways and Means Committee sent letters to several professional medical societies requesting information on the misuse of race in clinical algorithms. In response to the lawmakers’ request, the Agency for Healthcare Research and Quality is also gathering information on the use of race-based algorithms in medicine. Recently, a note appeared on the Maternal Fetal Medicine Units Network’s website for the Vaginal Birth After Cesarean equation — a new calculator that doesn’t include race and ethnicity is being developed.

Dorothy Roberts is excited to see change on the horizon. But she’s also a bit frustrated. The harm caused by race correction is something she’s been trying to tell doctors about for years.

“I’ve taught so many audiences about the meaning of race and the history of racism in America and the audiences I get the most resistance from are doctors,” Roberts says. “They’re offended that there would be any suggestion that what they do is racist.”

Nkinsi and Seah both encountered opposition from colleagues in their fight to change the eGFR equation. Several doctors interviewed for this story argued the change in a race-corrected scores is so small, it wouldn’t change clinical decisions.

If that’s the case, Vyas wonders, why include race at all?

“It all comes from the desire for one to dominate another group and justify it,” says Roberts. “In the past, it was slavery, but the same kinds of justifications work today to explain away all the continued racial inequality that we see in America… It is mass incarceration. It’s huge gaps in health. It’s huge differences in income and wealth.”

It’s easier, she says, to believe these are innate biological differences than to address the structural racism that caused them.



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