Raphael Stevens

Home Depot said it’s acquiring SRS Distribution in an $18.25 billion deal.
It’s the company’s latest and biggest push to win sales from home professionals such as contractors who tackle major projects.
The acquisition is the largest in Home Depot’s history.

Home Depot on Thursday said it is acquiring SRS Distribution in an $18.25 billion deal, the latest and largest sign of its ambitions to drive sales by winning more business from contractors, roofers and other home professionals.
The home improvement retailer expects the acquisition to close this fiscal year, which ends in late January. It said it will finance the deal through cash on hand and debt.

Home Depot already draws half of its business from pros, while the other half comes from do-it-yourself customers. With the deal, the Atlanta-based company is making yet another push to gain the customers who tackle complex and lucrative construction jobs, particularly as homeowners pull back on DIY projects. That was one of the priorities that Home Depot leaders laid out for this year. It’s also why the company has been opening a growing network of distribution centers that can stock large quantities of items that pros need, such as lumber or shingles, and deliver them directly to a job site.
The acquisition is the largest in Home Depot’s history.
In an interview with CNBC, CEO Ted Decker described the deal as “a complementary accelerator” to its efforts to attract more pros. He said the deal increases Home Depot’s total addressable market by $50 billion.
SRS Distribution sells supplies to professionals in the landscaping, pool and roofing businesses. The McKinney, Texas-based company has approximately 11,000 employees and 760 branches across 47 states. It also has a fleet of 4,000 delivery trucks and a dedicated salesforce that caters to the home pros, Decker said.
The acquisition adds to other recent deals that the retailer has made in the pro space. They include the approximately $8 billion acquisition of HD Supply, a national distributor of maintenance, repair and operations products in the multifamily and hospitality markets, in 2020. Last year, it also made two other acquisitions for undisclosed amounts: International Designs Group, which owns Construction Resources, a distributor of surfaces, appliances and other products that sells to home pros; and Temco, an appliance delivery and installation company.

Decker said he’s confident the deal will get approved by federal regulators, even as they increase scrutiny of mergers and acquisitions.
“With the separate customer base, different channels, different purchase occasions, we feel good that this will go through,” he said.
The acquisition is expected to be dilutive to Home Depot’s earnings per share due to amortization, but accretive in terms of cash earnings per share in the first year after the deal closes.
Home Depot has leaned into the pro business as its growth stagnates. The retailer, a major beneficiary of pandemic trends, has dealt with moderating sales as consumers take on fewer home projects and spend more on grocery bills and experiences. Over the past few quarters, customers have bought fewer big-ticket items and tackled smaller, less pricey projects. 
Decker said last month on an earnings call that Home Depot would focus on opening new stores, attracting more pro sales and trying to make customers’ shopping experience more seamless.
Home Depot plans to open a dozen new stores during the fiscal year. It recently announced it will open four distribution centers that cater to pros. 
The acquisition comes after the home improvement retailer said last month that it expects slower sales trends to continue. It said it anticipates total sales for the full year will grow about 1%, including an additional week in the fiscal year. Yet it expects comparable sales, which take out the effect of store openings and closures and do not include the additional week, to drop by about 1%.
Home Depot had a total of 2,335 stores across the U.S., Mexico and Canada as of the end of the fiscal year in late January. It has about 465,000 employees. 
As of Wednesday’s close, shares of Home Depot are up about 11% this year. That’s slightly ahead of the 10% gains of the S&P 500. Home Depot’s stock closed at $385.89 on Wednesday, bringing its market value to about $382 billion. More

Walgreens reported fiscal second-quarter sales that beat Wall Street’s expectations.
But the retail pharmacy giant lowered the high end of its fiscal 2024 adjusted profit guidance 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.

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 been closing dozens of VillageMD clinics amid financial woes and sees the business as critical to its ongoing push to transform from a major drugstore chain into a large health-care company.

The results come as Walgreens’ new CEO, Tim Wentworth, works to slash costs and steer the company out of a rough spot. 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. 
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, as comparable sales climbed 8.7% due to price inflation in brand medications and “strong execution” in pharmacy services. 
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%. More

Moderna announced positive clinical trial data on three experimental vaccines and said it will move those shots to final stage studies.
The update brings the biotech company a step closer to having multiple products on the market, which it badly needs amid plunging demand for Covid shots worldwide.
Moderna will chart its post-Covid future Wednesday during its fifth annual “Vaccines Day,” an investor event in Boston.

Nikos Pekiaridis | Lightrocket | Getty Images

Moderna has more to offer beyond its Covid vaccine.
The biotech company Wednesday announced positive clinical trial data on three experimental vaccines against other viruses. The company is moving those shots to final stage studies, it said.

The update brings Moderna a step closer to having multiple products on the market, which it badly needs amid plunging demand for Covid shots worldwide. The company’s Covid jab is its only commercially available product.
Moderna’s stock has long been tied to that vaccine, with shares falling nearly 45% last year. But shares of the company closed 3% higher on Wednesday after the announcements.
Moderna will chart its post-Covid future Wednesday during its fifth annual “Vaccines Day,” an investor event in Boston focused on the company’s vaccine portfolio.
That business has an estimated total addressable market of $52 billion for infectious disease shots, which includes $27 billion for respiratory vaccines and more than $25 billion for latent shots and other jabs.
A category of viruses called latent viruses linger inside patients for prolonged periods without causing any symptoms but can “reactivate” and cause serious health complications later in their lives. They represent a huge unmet need that Moderna can address, Moderna CEO Stéphane Bancel told CNBC in an interview on Wednesday.

“Once those viruses are in your body, it’s in your body forever,” he said, adding that there are no approved shots for several of the latent viruses, including some that Moderna is targeting.
The company will present new clinical trial data on the three vaccines, including some against latent viruses, at the event Wednesday.
Those vaccines include a shot against norovirus, a highly contagious stomach bug that causes vomiting and diarrhea; a vaccine against Epstein-Barr virus, a common herpes virus that can cause contagious infections and is associated with some cancers; and a shot designed to target a virus that causes shingles and chickenpox.

More CNBC health coverage

Moderna will also discuss other updates across its vaccine business. The company has five other shots in late-stage clinical trials and said it expects to release data on two of those jabs this year. That includes its combination vaccine against Covid and the flu and a shot against another common herpes virus called cytomegalovirus, or CMV. 
Among the other vaccines in late-stage development is a jab against respiratory syncytial virus, or RSV, which is expected to win regulatory approval in the U.S. in May. 
It also includes a new and improved version of Moderna’s Covid shot. The company on Tuesday said its “next-generation” Covid shot triggered a stronger immune response against the virus than its current vaccine on the market in a late-stage clinical trial.
Another shot in phase three trials is the company’s flu vaccine.
Also on Wednesday, Moderna said it recently entered into a development and commercialization funding agreement with Blackstone Life Sciences, a private equity segment of The Blackstone Group. Blackstone will fund up to $750 million to advance Moderna’s flu shot program, with “a return based on commercial milestones” and low single-digit royalties. 
Bancel told CNBC the company’s messenger RNA platform, used in its Covid vaccine, “is working so well” against other diseases. That mRNA technology works by teaching the body to produce a harmless piece of a virus, which triggers an immune response against certain diseases.
“Think about the [total addressable market] Moderna is going after – we’re going to be one of the most important vaccine companies in the world,” he said.
Still, it will take time before Moderna’s pipeline will pay off.
The company in its third-quarter earnings release in November said it expects revenue to fall to $4 billion in 2024 before it grows again in 2025. It expects to break even in 2026, executives said during a November earnings call.

New clinical trial data on three vaccines

Moderna’s latest shots to move into late-stage trials represent significant opportunities for the company.
There is currently no approved shot to prevent norovirus, the most common cause of the stomach flu. The virus results in approximately 200,000 deaths per year and substantial health-care costs, according to Moderna. 
The company examined two different norovirus shot candidates in a phase one trial on more than 600 patients ages 18 to 49 and 60 to 80 in the U.S.
An interim analysis showed that a single dose of a trivalent vaccine called mRNA-1403 targeting three norovirus strains triggered a strong immune response across all dose sizes. The shot also had a “clinically acceptable” safety profile. 
Moderna said it is moving that shot to a phase three trial. The market for norovirus vaccines represents a $3 billion to $6 billion annual market, according to the company. 

Grace Cary | Moment | Getty Images

There are also no shots currently approved to prevent Epstein-Barr virus. It accounts for more than 90% of cases of infectious mononucleosis, a contagious infection known as mono, which can cause fever, sore throat and chronic fatigue.
Both the virus and mono are associated with a higher risk of certain cancers. The virus also increases a patient’s risk of developing multiple sclerosis by 32-fold, according to Moderna. That disease is characterized by the the immune system eating away at the protective covering of nerves.
“It’s a big issue for teenagers. There are sometimes kids who have to redo a year of high school or college, which is a big waste of your life,” Bancel said. “But it has also been associated with multiple sclerosis, which is a terrible disease affecting mostly women … so we think we could prevent that.”
Moderna has been developing two shots designed to tackle multiple conditions associated with Epstein-Barr virus. That includes a shot designed to prevent mono called mRNA-1189, which will move to a phase three study after positive early stage trial data.
A phase one trial examined that vaccine in patients 12 to 30 years old in the U.S. The study found that the shot produced an immune response against mono and was overall well tolerated across all dose sizes.
Moderna is developing another shot called mRNA-1195, which is designed to target multiple sclerosis and a subcategory of lymphoma in solid organ transplant patients. A phase one trial on that vaccine is fully enrolled, according to the company.
Bancel said the company believes the Epstein-Barr virus will be “a several billion dollar market.”
Varicella-Zoster virus causes both chickenpox and shingles. Older adults have declining immunity against that virus, making them more vulnerable to developing painful, itchy and blister-like rashes. About 1 in 3 adults in the U.S. will develop shingles at some point in their lives, according to the Centers for Disease Control and Prevention. 
Moderna studied its vaccine against the virus, mRNA-1468, in an early to mid-stage trial on healthy adults ages 50 and older in the U.S.
The shot caused a strong immune response at one month after the second dose and was generally well tolerated by patients, according to the company. Additional data from that ongoing trial will be available later this year.
Moderna estimates that the market for Varicella-Zoster virus could be $5 billion to $6 billion annually.  More

The blockbuster diabetes drug Ozempic could be manufactured for less than $5 a month, even as Novo Nordisk charges almost $1,000 per month for the injection in the U.S. before insurance, a new study suggests.
Researchers found that a month’s supply of the treatment could be made for an estimated 89 cents to $4.73, figures that include a profit margin.
The study raises more questions about the hefty price tag of the top-selling diabetes treatment along with similar drugs for weight loss, which are all part of a new class of drugs called GLP-1s.

A box of Ozempic and contents sit on a table in Dudley, North Tyneside, Britain, October 31, 2023. 
Lee Smith | Reuters

The blockbuster diabetes drug Ozempic could be manufactured for less than $5 a month, even as Novo Nordisk charges close to $1,000 per month for the injection in the U.S. before insurance, a study released Wednesday suggests.
The study, from researchers at Yale University, King’s College Hospital in London and the nonprofit Doctors Without Borders, raises more questions about the hefty price tag of the top-selling diabetes treatment and similar drugs for weight loss, which are all part of a new class of treatments called GLP-1s.

Demand for those medicines has soared over the last year, even as more insurers drop them from their plans due to cost, leaving some patients unable to afford the drugs. 
The study also comes after years of political pressure on Novo Nordisk and other drugmakers to slash high costs of diabetes care, especially insulin. 
Ozempic can generally be produced for less than various forms of insulin, according to the study published in JAMA Network Open. 

More CNBC health coverage

Researchers found that a month’s supply of the treatment could be manufactured for an estimated 89 cents to $4.73. They evaluated manufacturing costs for the weekly injection along with a profit margin with an allowance for tax to produce those estimates, which they call “cost-based prices.” 
Novo Nordisk’s list price for a monthly package of Ozempic is $935.77 before insurance and other rebates. The findings suggest that GLP-1s “can likely be manufactured for prices far below current prices, enabling wider access,” the researchers concluded. 

In a statement on Wednesday, Novo Nordisk declined to provide production costs for Ozempic and its weight loss drug counterpart Wegovy. But the Danish drugmaker noted that it spent almost $5 billion on research and development last year, and will spend more than $6 billion on a recent deal to boost manufacturing to meet demand for GLP-1s.
It also said 75% of its gross earnings go to rebates and discounts to ensure patients have access to its products. 
The company also said out-of-pocket costs for Ozempic depend on a patient’s insurance coverage. Patients with private or commercial coverage for Ozempic can access a savings card and pay as little as $25 for a one-month, two-month or three-month supply of the treatment for up to 24 months. 
Separate research from the University of Liverpool and other researchers has found that Wegovy could be produced for $40 a month.
A survey released this month from Evercore ISI found that more than half of people currently taking a GLP-1 said they are paying a monthly price of $50 or less out of pocket. Nearly 75% of respondents who used to take one of the drugs said they spent the same amount.

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Hyundai Motor is considering producing hybrid or plug-in hybrid electric vehicles at a $7.59 billion plant in Georgia in addition to all-electric vehicles.
The reassessment comes amid slower-than-excepted adoption of EVs, as well as the Biden administration revising emissions rules.

Hyundai CEO Jae Hoon Chang (left) and José Muñoz, Hyundai president and global chief operating officer, attend the 2024 New York International Auto Show
Michael Wayland | CNBC

NEW YORK – Hyundai Motor is reevaluating its plans to exclusively produce all-electric vehicles at a new plant under construction in Georgia, an executive told CNBC on Wednesday.
José Muñoz, Hyundai president and global chief operating officer, said the company is evaluating whether or not to produce hybrid or plug-in hybrid electric vehicles at the $7.59 billion plant in addition to all-electric vehicles.  

“We are now getting ready for a ramp-up on electric vehicles and then we are evaluating if we need to maybe add some additional technologies into the plan depending on the market evaluation,” Muñoz said on the sidelines of the New York International Auto Show.
The reassessment comes amid slower-than-excepted adoption of EVs, as well as the Biden administration revising emissions rules to better take into account hybrid and plug-in hybrid electric vehicles rather than a focus on all-electric vehicles.
Hyundai is in the middle of investing $12.6 billion in Georgia, including for the new Hyundai Motor Group Metaplant America site in Bryan County and battery manufacturing through joint ventures with fellow South Korea-based companies LG Energy Solution and SK On, which will be a separate facility
Muñoz said Hyundai remains committed to EVs but also knows hybrids and plug-in hybrid vehicles may be better for some consumers.  
“Everything is on the table,” Muñoz said. “We will adjust to the market demand and, for the time being, we are on track for what the regulators are requesting.”

Hyundai on Wednesday revealed a refreshed Tucson crossover that will be offered as a traditional gas engine, hybrid and plug-in hybrid electric vehicle.
“I think the PHEV is a key strategic topic for us. We’ve been one of the pioneers on PHEV and I think we want to take advantage of that,” Muñoz said. “But hybrid is very important … our hybrid production in growing. There’s a high demand for it. So you’re going to see an increase in the mix of hybrids in Hyundai as well.”

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