Competitive Intelligence

Maximilian Wang

I decided to choose Community Health Systems because over a 5 year period it has seen a significant drop in its stock price. 

1. Industry Trend Analysis

Industry Total Size Summary

• The two chosen industries selected (Healthcare Equipment & Services and Pharmaceuticals,Biotechnology & Life Sciences) are plotted.
• Healthcare Equipment & Services earns more then Pharmaceuticals in revenue, with also achieving a strong growth from 2018-2022 as indicated by the line. 
• Pharmaceuticals net income seem to be higher then Healthcare, indicating higher expenses that Healthcare has to deduct after revenue. We a similar idea portrayed in the operating income/loss graph. Healthcare seems to have more operating expenses to deduct from
• Lastly, whats interesting is that Healthcare and Pharmaceuticals both have very similar probability in terms of their enterprises. This suggests a strong general profit among firms.

Profitability Summary

• We first see that Pharmaceuticals has higher median gross margins. This provides a clearer image of how profitable it is, before deducting taxes or interest expense
• Median net margins for both companies are positive. This shows that the those in the middle sector of in both industries reported moderate positive net income as a percentage of their revenue.
• Median operating margin is also positive for both industries, with Pharmaceuticals climbing higher. This showcases another example of positive profits, when taking into account operating expenses.
• Lastly, the median profit before tax reports has a big difference, suggesting less taxes incurred for those within the Pharmaceutical sector

Financial Health Summary

• The current ratio is higher for the Pharma industry, showing that they have more asset compared to their liabilities.
• The median total cash flow from operating activities is negative for both industries, with the Pharma industry going from -14 million in 2016 all the way down to -29 million in 2022. The Healthcare industry went from -.02 million to -3 million. We can see for both industries, especially Pharma, have companies that are lacking in liquidity and therefore shows the state of financial health these companies are in.
• The median liability asset ratio seems to be the similar for both industries, with both having similar amounts of liabilities. They have since reduced the amount, signaling a stronger presence in asset accumulation.
• The Pharma industry seems to have a bit more cash then the Healthcare side but both seem to be healthy in retaining cash within their respective industries.

2. Concentration and Competition Intensity

Market Share By Total Revenue (Healthcare Equipment & Services) Summary

• It can be seen that the top 3 companies dominate this market (United Health Group, Mckesson, Amerisourcebergen)
• When looking back from 2016, there has been minimal change among the top 3 companies, instead we see many changes in the lower levels of the bar graph. This demonstrates the overall strength among the 3 companies within this sector.
• A company that has seen gradual growth is CIGNA (in pink). Over time we see its larger domination among the graph.

Market Share By Total Revenue  (Pharmaceuticals, Biotechnology, and Life Sciences) Summary

• By looking at the graphs across all time periods, we see nothing has really changed in terms of market share. If anything, we see a few bumps during the middle of the years leading up to 2022. 
  • • One thing that strikes me is the ongoing battle between Pfizer and Johnson & Johnson to claim more market share. Over the course of some years we saw the Johnson & Johnson claimed a bit more market share but it seemed to equal in most recent years

3. Value Chain Analysis

Supply Chain Mapping - Net Margin Summary

• By looking at the graphs across all time periods, we see nothing has really changed in terms of market share. If anything, we see a few bumps during the middle of the years leading up to 2022. 
  • • One thing that strikes me is the ongoing battle between Pfizer and Johnson & Johnson to claim more market share. Over the course of some years we saw the Johnson & Johnson claimed a bit more market share but it seemed to equal in most recent years
    • Everything is fairly balanced in terms of the overall market share within this map.

Supply Chain Mapping - Net Margin Summary

• When zooming out and observing the global mapping of all firms within the "Healthcare facilities" we see a different picture compared to the previous slide. In the previous slide, US firms were fairly equal in terms of market share. Here we see a clear dominance on a global scale, with Summerset Group Holdings claiming a large part of it. 
• My chosen company has too small of a net margin to be viewed here.

Competitive Positioning Analysis Section 2

1.  Profit Frontier

2. Enterprise Ranking

3. KPI Examination

Step 1. Profit Frontier

Diving deeper by looking at Healthcare Providers & Services

Revenue vs. Cost Summary

• • The United States seem to dominate the Healthcare Providers and Services sector, compared to that of China and India with multiple US companies high up in the Revenue Vs. Cost line. This provides a unique perspective behind the strength of the Healthcare equipment industry.

Operating Income VS Total Cost Summary

• • We see a similar view here where the US Healthcare Providers and Services industry dominates India and China. These big companies also incur very high cost in comparison to their operating income. While profitable, the US companies incur very high costs.
    

Operating Income vs. Total Assets Summary

• • Once again, the United States continues to dominate the market. While we know that they have higher operating income, US companies within the Healthcare Providers & Services sector also hold a significant amount of assets. China seems to be second to the United States but represents a small amount when compared to the United States.

Operating Margin Vs Total Revenue

• • I see that most companies have positive operating margins in the United States. 
  • The smaller revenue a firm incurs, the higher the operating margin is.

Return on Assets vs. Liability Asset Ratio Summary

• • Most companies are leaned to left, suggesting most companies incur low debt and are recording high return on assets, suggesting that they are making good use of their assets.
  • We also see some companies are plotted on the right, where the liability asset ratio gets bigger when you go to the right. This implies that companies are carrying more debt. This makes more sense when we see that a big portion of these companies are negative in return on assets.
  • Companies may have negative return on assets, but their liability asset remains low, suggesting other reasons that are causing low return on assets.

Step 2 Enterprise Ranking

• • Lets look at two different models:

Enterprise Ranking Summary

• • We can see that between the two models ( The Revenue and Net Margin graphs) we can see the companies in the net margin graph are different from those in the revenue graph. 
  • This might demonstrate the lack of profitability relative to their revenue and may show that those in the net margin graph are much more efficient in turning a profit (although much smaller then those in the total revenue graph) 
  • Companies like UnitedHealth and Cigna are outliers as they appear on both graphs, demonstrating their ability to capture large revenue and secure a good profit as seen in the net margin.

Step 3 KPI Examination

Community Health Systems KPI Examination

• • We can see in the profitability tab that the company is in the green, when a higher percentile indiciating that they are doing better compares to other companies in the same sector
  • Community Health Systems current ratio is rated as low due to its high exposure of debt relative to its assets with a current ratio of 1.4
  • They also have fairly higher SG&A costs and well as longer days for it to sell off its inventory (inventory days of 17.6)

Enterprise Diagnosis - Section 3 

1.  Strengths and weaknesses

2. Value driver analysis

3. Breakdown analysis

Step 1 Strength and Weaknesses

Strength and Weaknesses Summary

• • Community health has same net income,revenue, profit before tax, and operating income/loss as quest diagnosis.Though the three companies do not compare to that of HCA healthcare.  

Strength and Weaknesses Summary

• • We see a significant lack of return on assets and a low net margin compared to others. Still, it lacks operating margin compared to other top companies. 
  • It has a low net margin which is not good since Community Health is also a smaller company. They need to raise profitability to ensure that they are in competition with other companies. 

Enterprise Trend - Size of Healthcare Providers & Services Summary

• • United Health dominates all graphs, showcasing their ability of high revenue and profitability. It really dominates in the overall net income graphs where it is able to minimize its tax expenses compared to all the other companies. 
  • We see a struggle with our company, Community Health, in maximizing net income growth, with some years going negative.

Enterprise Trend - Financial Health Summary

• • Interestingly, Community Health has one of the higher current ratios compared to the big companies (1.62), showcasing that they have more assets to cover their liabilities in the short term
  • They also have a high long term debt ratio, which may not be good if they are not able to pay those debts back in the future. They may run out of liquidity and may not be able to pay its debt. With a good current ratio in the short term but HIGH liability asset ratio, Community Health might be trusted to repay its debt when the deadline is coming up.
  • We see that the bigger companies tend to have lower current ratios,lower liability asset ratios, and lower long term debt ratios. Community Health may be inccuring more long term debt and higher liability asset ratios due to them trying to grow their company.
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Step 2 Value Driver Analysis

Step 3 Breakdown Analysis

Enterprise Breakdown - Revenue Summary

• • We see that most companies have a high cost of revenue (COGS)
  • Community Health specifically seems to incur higher SG&A expenses.
  •  

Enterprise Breakdown - Revenue Summary

• • Big companies such as United Health INC seem to have a lot of net intangible assets on their books (44%). 
  • Looking at my chosen company, Community Health, they seem to have the second most Property Plant and Equipments (37%). If this continues to go up, it may cut into their margins.