Why Are Dialysis Provider Stocks Trading Higher On Tuesday?

Tuesday, Novo Nordisk A/S NVO released the headline results from the kidney outcomes trial, FLOW.

The trial achieved its primary endpoint by demonstrating a statistically significant and superior reduction in kidney disease progression as well as cardiovascular and kidney death of 24% for people treated with semaglutide 1.0 mg compared to placebo. 

Stocks of kidney dialysis-focused DaVita Inc DVA, Fresenius Medical Care AG FMS, and Baxter International Inc BAX shares fell sharply when Novo Nordisk stopped the semaglutide kidney outcomes trial FLOW based on early signs of efficacy in October last year.

Whereas, kidney dialysis stocks are trading higher today as Novo Nordisk’s popular diabetes drug, Ozempic, fell short of some expectations.

Citing J.P.Morgan analyst, Reuters noted, “We see 24% as at the low end of expectations – that is, there were some fears out there that the impact could have been higher,” adding that this could be contributing to the relief in Fresenius’ shares.

DaVita and German competitor Fresenius have downplayed concerns regarding GLP-1 drugs like Ozempic and Wegovy, which exhibit significant advancements in treating obesity and diabetes. The emergence of these drugs has led to a contraction in the kidney care market.

In October, citing Citi analyst, Reuters noted that GLP-1 drugs could “potentially negatively impact” the size of the dialysis patient population over time.

Price Action: DVA shares are up 7.99% at $135.78, FMS stock is up 11.4% at $20.80, and BAX shares are up 1.88% at $43.30 on the last check Tuesday.

Image By Natalia Varlei On Shutterstock