has agreed to pay $3.1 billion to settle opioid-crisis lawsuits brought by several U.S. states and municipalities, adding to a landmark settlement with rival pharmacy chains.
The agreement resolves a collection of lawsuits brought by states, cities and Native American tribes. Earlier this month,
CVS Health Corp.
CVS 1.08%
and
Walgreens
WBA 1.75%
Boots Alliance Inc. agreed to pay roughly $5 billion apiece to settle the lawsuits. The companies didn’t admit wrongdoing in their deals.
The Walmart agreement was announced the same morning that the retail giant reported its latest quarterly results. The company said it took $3.3 billion in charges in the last quarter related to opioid settlements.
Walmart reported stronger-than-expected sales in the October-ended quarter and raised sales and profit goals for the year, signs the big discount chain is drawing in shoppers despite high inflation. Walmart shares rose over 8% in midmorning trading.
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Each state, local government and tribe will need to decide whether to participate in the settlement. Plaintiff’s attorneys that lead negotiations are encouraging them to do so, saying the payments hold the pharmacies accountable for their alleged roles in the opioid abuse.
Walmart said that it strongly disputes allegations made in the lawsuits and that the settlement isn’t an admission of liability. The company said its settlement payments will reach communities faster than other deals. CVS is paying out over 10 years, and Walgreens over 15 years.
Walmart has roughly half as many locations as either CVS or Walgreens, which combined have roughly 19,000 U.S. drugstores. Walmart has faced scrutiny from the federal government related to how it prescribed opioids.
The Justice Department filed a lawsuit in December 2020 over its alleged role in the opioid crisis, claiming Walmart sought to boost profits by understaffing its pharmacies and pressuring employees to fill prescriptions quickly. The settlement with the states doesn’t cover the federal case, which Walmart has sought to have dismissed.
The Justice Department sued Walmart a few months after the company had pre-emptively sued the federal government, saying the Justice Department and Drug Enforcement Administration were attempting to scapegoat the company for their failings. Walmart’s suit was dismissed in February 2021. Walmart appealed the dismissal, but lost that case late last year.
Opioid abuse has claimed more than half a million lives and triggered more than 3,000 lawsuits by governments, hospitals and others against players in the pharmaceutical industry, including manufacturers, distributors and drugstores.
The fact that Walmart will pay out funds almost immediately rather than over a decade or more “is particularly noteworthy considering that Walmart dispensed fewer opioids, and at lower dosages, than the other pharmacy defendants,” said lawyer
Paul Geller,
of Robbins Geller, a who is representing local communities.
Write to Sharon Terlep at sharon.terlep@wsj.com and Sarah Nassauer at Sarah.Nassauer@wsj.com
is nearing a deal to combine with a big owner of medical practices and urgent-care centers in a transaction worth roughly $9 billion including debt, according to people familiar with the matter, the latest in a string of acquisitions by big consumer-focused companies aiming to delve deeper into medical care.
The drugstore giant’s primary-care-center subsidiary, Village Practice Management, would combine with Summit Health, the parent company of CityMD urgent-care centers, in an agreement that could be reached as early as Monday, the people said.
Health insurer
Cigna Corp.
CI 0.73%
is expected to invest in the combined company, the people said.
There is no guarantee the parties will reach a deal, the people cautioned, noting that they are still hammering out details of an agreement.
Summit Health, which is backed by private-equity firm Warburg Pincus LLC, has more than 370 locations in New York, New Jersey, Connecticut, Pennsylvania and Central Oregon, according to the company’s website. Current and former physicians also own a large interest in the business.
Village Practice Management, which does business as VillageMD, provides care for patients at free-standing practices as well as at Walgreens locations, virtually and in the home. In 2021, Walgreens announced it had made a $5.2 billion investment in VillageMD, boosting its stake to 63%. At the time, Walgreens said the investment would help accelerate the opening of at least 600 Village Medical at Walgreens primary-care practices across the country by 2025 and 1,000 by 2027.
The expected deal follows a string of mergers involving companies like VillageMD and CityMD as big healthcare providers seek more direct connections with patients.
Amazon.com Inc.
in July agreed to purchase primary-care operator
1Life Healthcare Inc.,
which operates under the name One Medical, for about $4 billion. In September,
CVS Health Corp.
struck a deal to acquire home-healthcare company Signify Healthcare Inc. for $8 billion.
Cano Health Inc.,
which operates primary-care centers, has attracted interest from both CVS and insurer
Humana Inc.
in recent months, The Wall Street Journal has reported.
Bloomberg a week ago reported VillageMD’s interest in Summit Health.
Walgreens appears to have pre-empted a sale process for Summit Health that was set to kick off next year, according to the people, who said the company was about to interview banks before it received interest from VillageMD.
Summit Health has been backed by Warburg Pincus since 2017, when it took a stake in CityMD, a large chain of New York City urgent-care centers.
Since that time, Warburg has helped the company complete multiple transformative acquisitions, including the 2019 merger of CityMD and multi-speciality medical-practice group, Summit Medical Group.
New York-based Warburg, which has more than $85 billion in assets under management, is no stranger to healthcare. The firm counts healthcare-IT business Modernizing Medicine Inc. and Ensemble Health Partners, a revenue-cycle management business for hospitals, among its portfolio companies.
Walgreens Boots Alliance on Thursday exceeded fiscal fourth quarter sales and earnings expectations, as the drugstore chain turns itself into a more health-care focused company.
The company said it anticipates full-year adjusted earnings per share of $4.45 to $4.65 in the coming fiscal year, which is about in line with what Wall Street expected. Yet Walgreens said its business growth will face tough comparisons as it laps strong demand for Covid vaccines and gets hits by the strength of the dollar.
Shares were up about 5% in premarket trading.
Here’s what the company reported compared with what analysts were expecting for the fiscal fourth quarter ended Aug. 31,based on Refinitiv data:
Earnings per share: 80 cents, adjusted, vs. 77 cents expected
Revenue:$32.45 billion vs. $32.09 billion expected
Sales declined from the previous year’s quarter. Including certain costs, Walgreens swung to a loss in the three-month period. Its net loss was $415 million, or 48 cents per share, compared with a net income of $627 million, or 72 cents per share, a year earlier.
The company said its profits took a hit from a non-cash impairment charge in its Boots UK business and from its long-term cost management program. A year ago, Walgreens laid out a cost savings goal of $3.3 billion by 2024.
Walgreens has made significant investments to transform from a major drugstore chain to a large health-care company. It is opening hundreds of doctor offices with VillageMD. It invested $5.2 billion to become majority owner of the primary-care company. It recently announced plans to accelerate acquisitions of two other companies: CareCentrix, which coordinates care and benefits for at-home care, and Shields Health Solutions, a specialty pharmacy company.
Walgreens CEO Roz Brewer said in a news release that the coming fiscal year “will be a year of accelerating core growth and rapidly scaling our U.S. Healthcare business.”
At the end of the quarter, Walgreens had a total of 334 doctor offices with VillageMD. The clinics, called Village Medical, are located next to its drugstores. It also has 70 stores with Health Corners, a designated space where a registered nurse or pharmacist can schedule a mammogram, screen a patient for high blood pressure or diabetes or help with other health-care needs.
Covid vaccines, which boosted Walgreens’ sales and foot traffic, have fallen off significantly. In the fourth quarter, the drugstore chain administered 2.9 million vaccinations. That’s a decline from 4.7 million vaccines in its fiscal third quarter, and a sharp drop from the 15.6 million vaccines in the first quarter and the 11.8 million in the second quarter.
Sales in Walgreens’ retail and pharmacy division in the U.S. decreased by 7.2% to $26.7 billion in the fourth quarter compared with the year-ago period. Comparable sales rose 1.6%, however.
Its international business took a big hit from currency headwinds. It had fourth quarter sales of $5.1 billion, a drop of 6.6% from the year-ago period. That included a 13.3% adverse currency impact.
As customers come back to stores, Walgreens also said it is investing in its workforce to return to normal operating hours. However, it has continued to see some changes in shopping habits. Its U.S. digital sales growth grew 14% in the fourth quarter, on top of an 82% increase in the year-ago period.
On Thursday, the company raised its outlook for the health care division. It said it now anticipates a sales target of $12 billion, rather than $11 billion, for fiscal 2025.
As of Wednesday’s close, Walgreens shares are down nearly 39% so far this year. That trails behind the S&P 500, which is down about 25%. Shares of Walgreens closed Wednesday at $31.94, down about 2%.
Read the company’s earnings release here.
This story is developing. Please check back for updates.
is in advanced talks to acquire the home-healthcare company
Signify Health Inc.
SGFY 1.34%
for around $8 billion, according to people familiar with the matter.
CVS appears to have beat out other heavy hitters including
Amazon.com Inc.
and
UnitedHealth Group Inc.,
which had been circling Signify for a deal that could be announced soon. UnitedHealth never submitted an official bid, one of the people said.
There is still no guarantee that CVS will reach a deal for Signify, which has been exploring strategic alternatives since earlier this summer.
Bids for the company were due Sept. 6, but people familiar with the matter have said that an eager buyer could make a move before then.
Signify’s valuation has ballooned since The Wall Street Journal reported in August that it was for sale. Shares of the company closed at $28.77 on Friday, giving it a market capitalization of roughly $6.7 billion.
Signify works with a large group of doctors to facilitate house calls. It uses analytics and technology to help physician groups, health plans, employers and health systems with in-home care. It offers health evaluations for Medicare Advantage and other plans.
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At the close of its deal this year to buy Caravan Health, Signify said that it supported roughly $10 billion in total medical spending.
The company went public in February 2021, raising more than $500 million as a result of the offering. On the day of its initial public offering, shares of the company priced above its expected range, at $24.
New York-based New Mountain Capital has backed Signify since 2017. The firm—which had more than $37 billion in assets under management as of early August—has steadily expanded Signify through a series of mergers and acquisitions since its initial investment.
New Mountain is well-versed in the healthcare sector. It previously sold the healthcare payments firm Equian LLC to UnitedHealth for roughly $3.2 billion in 2019.
For CVS, the deal builds on an effort years in the making to transform itself into a major provider of healthcare services through acquisitions and expanded medical services. The company had been struggling to counter slowing revenue from prescription drugs, which drive the bulk of its sales, and to ward off competition from
Amazon
AMZN -0.24%
for retail dollars.
CVS, the nation’s largest drugstore chain by stores and revenue, acquired Aetna in 2018, arguing that melding the insurance company’s patient data with its network of nearly 10,000 bricks-and-mortar sites would squeeze out costs while improving care and convenience.
The strategy has paid off, buoyed by a surge in demand for Covid-19 vaccines and tests at the height of the pandemic. CVS’s market capitalization has grown to more than $130 billion from around $75 billion since the Aetna deal.
The line between Amazon and Walmart is becoming increasingly blurred, as the two companies seek to maintain their slice of the estimated $5 trillion retail market while chipping away at each other’s share, often by borrowing ideas. Photos: Amazon/Walmart
The company is outperforming
Walgreens Boots Alliance Inc.,
which opted against major acquisitions, in the years since. Walgreens, also racing to expand into healthcare, focused largely on partnerships rather than deals. But last year it bought a controlling stake in the primary-care network Village MD, giving it doctors’ offices that CVS had said it could do without.
CVS Chief Executive
Karen Lynch
has since said that the company must have a foothold in primary care if it is to become a full-service medical provider.
CVS had previously been interested in a deal for the parent of One Medical, people familiar with the matter have said.
Amazon
AMZN -0.24%
agreed to purchase the primary-care clinic operator for about $3.9 billion in July.
The Federal Trade Commission is currently investigating the deal. The parent company of One Medical,
1Life Healthcare Inc.,
disclosed the investigation in a securities filing. The disclosure said One Medical and Amazon each received a request for additional information about the deal from the FTC.
While Wall Street has largely focused on CVS’s efforts to acquire primary-care practices, executives have also discussed ambitions to expand its in-home health presence.
A deal for Signify would represent a bright spot in an otherwise lackluster run for deals lately. Deal volumes globally are down roughly 30% this year after a flurry of activity last year, because of a drop in companies’ valuations, market volatility and other factors including Russia’s war in Ukraine.
Healthcare deal making in particular has slowed more than many other sectors. Over $200 billion of healthcare deals announced so far this year has compared with over $400 billion at this time last year, according to Dealogic. The largest healthcare deal to date this year in the U.S. is
Pfizer Inc.’s
$11.6 billion agreement in May to purchase the rest of
Biohaven Pharmaceutical Holding Co.
Write to Laura Cooper at laura.cooper@wsj.com, Sharon Terlep at sharon.terlep@wsj.com and Cara Lombardo at cara.lombardo@wsj.com
SAN JOSE, Calif.—Ramesh “Sunny” Balwani wasn’t in charge at Theranos Inc., and the blood-testing company was neither his idea nor his creation, his attorney told a jury Tuesday as the second criminal-fraud trial involving the defunct Silicon Valley startup got under way.
The responsibility for the rise and fall of Theranos rests on founder and Chief Executive
Elizabeth Holmes,
attorney Stephen Cazares said in opening statements as he outlined the main points of Mr. Balwani’s defense.
“Sunny Balwani did not start Theranos, he did not control Theranos,” said Mr. Cazares. “Elizabeth Holmes, not Sunny, founded Theranos and built Theranos.”
By the time Mr. Balwani joined Theranos in 2009 as president and chief operating officer, Ms. Holmes had spent six years building “a small but sophisticated company,” said Mr. Cazares. His knowledge of the company was largely based on what Ms. Holmes, who was also his girlfriend, and Theranos scientists told him, Mr. Cazares said.
Elizabeth Holmes’s former top deputy at Theranos, Ramesh ‘Sunny’ Balwani, faces charges of defrauding investors and patients about the startup’s blood-testing capabilities, which he denies. Photo: Getty Images
Mr. Balwani, 56 years old, faces a dozen counts of wire fraud and conspiracy to commit fraud for allegedly lying to investors and patients about the blood-testing startup’s technology. Mr. Balwani helped run the company from 2009 to 2016 alongside Ms. Holmes, and helped finance it by underwriting a $13 million loan and buying $5 million in stock. The two had a romantic relationship that spanned more than a decade and was intertwined with their co-leadership of the company, according to evidence in the case.
Ms. Holmes was found guilty of wire fraud and conspiracy in January in a separate criminal trial.
Ms. Holmes and Mr. Balwani were indicted together in June 2018, but U.S. District Judge
Edward Davila
agreed in March 2020 to Mr. Balwani’s request to sever the trials so they would have separate court appearances. Judge Davila presided over Ms. Holmes’s trial and is also overseeing Mr. Balwani’s proceedings; the same assistant U.S. attorneys who brought Ms. Holmes’s case are also prosecuting Mr. Balwani’s case.
Mr. Balwani’s trial had faced delays due to a prolonged jury selection and the Covid-19 pandemic, and because Ms. Holmes gave birth to a baby boy last year, which postponed her own trial.
The government has accused Mr. Balwani, like Ms. Holmes, of misleading investors, business partners and patients about the capabilities of Theranos’s technology and its finances. Theranos claimed it could test for more than 200 health conditions using just a few drops of blood from a finger prick. Prosecutors have alleged and witnesses in Ms. Holmes’s trial testified that the company used its proprietary device for just 12 types of patient tests, and those tests could be inaccurate. Theranos relied on commercial blood analyzers for the majority of its tests, lawyers for both sides have said.
Mr. Cazares said that Theranos used investor money as it promised—to build the company. When Mr. Balwani left in May 2016, Theranos had hundreds of millions of dollars in the bank, patents and hundreds of blood tests developed by Theranos scientists, Mr. Cazares said.
“The money was there, the business was there,” said Mr. Cazares. And Mr. Balwani, whose stake in Theranos was worth as much as $500 million on paper, walked away from Theranos without selling any stock.
By the time Mr. Balwani left in 2016, Theranos was struggling with unreliable and inaccurate blood tests, deteriorating retail partnerships, unhappy investors and regulatory scrutiny, The Wall Street Journal has reported. Regulators had uncovered major deficiencies in the lab he oversaw. The company dissolved in 2018 following civil lawsuits, a settlement with the Securities and Exchange Commission over fraud charges in which Theranos didn’t admit or deny wrongdoing but paid a penalty, and the federal indictment.
The government’s indictment alleges fraud spanning from 2010 to 2016, during which Mr. Balwani was at the company. In Ms. Holmes’s trial, she described Mr. Balwani as her closest business mentor who had influence over how she ran the business—though he wasn’t the ultimate decision maker.
The government’s opening statements gave a preview of a case that echoed the one against Ms. Holmes.
“This is a case about fraud. About lying and cheating to obtain money and property,” said Assistant U.S. Attorney
Robert Leach.
Mr. Balwani “did this to get money from investors, and he did this to get money and business from paying patients who were counting on Theranos to deliver accurate and reliable blood tests so that they could make important medical decisions.”
Mr. Leach said Mr. Balwani was responsible for what he described as false financial projections that were given to investors. Mr. Leach said Mr. Balwani told investors to expect Theranos would have $990 million in revenue in 2015, when in fact the company had less than $2 million in sales, among other projections Mr. Leach said were misleading.
Mr. Cazares countered that allegation, saying Mr. Balwani accurately portrayed the company’s expected revenue growth based on an agreement from
Walgreens Boots Alliance Inc.
to put Theranos blood-testing devices in thousands of retail pharmacies.
Mr. Balwani is an entrepreneur and immigrant from a family of farmers, who became wealthy from his own success in tech startups before going to work at Theranos, Mr. Cazares said. Mr. Balwani had worked as a software engineer and had a business degree when he went to the blood-testing company, where he was put in charge of the lab despite having no medical or laboratory experience.
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Mr. Cazares took issue with the government for charging Mr. Balwani without reviewing a database that contained all of Theranos’s lab testing data, including 9 million patient test results.
The database is a thorny issue. The government subpoenaed a copy of Theranos’s proprietary lab-result database, but in August 2018, just days after the government received a copy on an external hard drive, Theranos officials destroyed the entire database, the Journal has reported. The government later learned that a passcode needed to make use of their hard drives was missing.
Before Mr. Balwani’s lawyers outlined the broad strokes of his defense, prosecutors on Tuesday described Mr. Balwani as one-half of a business duo that lied to cheat investors and patients out of money. “They were partners in everything, including their crimes,” said Mr. Leach.
Mr. Balwani was a full participant in the lies Theranos spread, Mr. Leach said, driven by its dwindling cash reserves and unreliable technology. The company went years without revenue and its cash had diminished to $6.9 million by 2013, he said.
For a time, said Mr. Leach, their fraud scheme was enormously successful: They raised hundreds of millions of dollars from investors, and it “brought them fame and adoration.”
Mr. Leach told the jury that they would soon see text message exchanges Mr. Balwani and Ms. Holmes shared during their yearslong personal relationship, which was largely hidden from Theranos investors, employees and board directors. Prosecutors also introduced hundreds of these messages during Ms. Holmes’s trial, showing the two worked in tandem as the top officers of a multibillion-dollar company and as romantic partners.
“They candidly explained to each other how bad things were inside Theranos at the time they were touting Theranos as a revolution in healthcare,” said Mr. Leach.
Theranos and the ‘Sunny’ Balwani Trial
Write to Heather Somerville at Heather.Somerville@wsj.com
Hector Garcia capitalized on the opportunity of his lifetime Saturday night.
The largely unknown underdog overwhelmed heavily favored 130-pound contender Chris Colbert en route to beating up the brash Brooklyn native and winning a 12-round unanimous decision in Showtime’s main event from The Chelsea inside The Cosmopolitan of Las Vegas. Colbert (16-1, 6 KOs) never dealt well with the Dominican southpaw’s pressure or body punching.
Judges Dave Moretti (118-109), Patricia Morse Jarman (119-108) and Steve Weisfeld (118-109) all gave Garcia clear credit for his work, which included a seventh-round knockdown.
Garcia’s confidence never wavered, as he hammered Colbert to the head and body in a completely one-sided fight. Caesars Sportsbook listed Colbert as a 22-1 favorite before Garcia, a late replacement for WBA champion Roger Gutierrez, upset him.
The 30-year-old Garcia (15-0, 10 KOs, 3 NC), a 2016 Olympian for the Dominican Republic, had more than 300 amateur fights. His experience was as evident as his toughness during just his second televised fight in the United States.
“When I was told three weeks ago that I was gonna take this fight, I saw in my eyes that my life was gonna change,” Garcia told Showtime’s Jim Gray through a translator. “So, I needed to come in my best shape.”
Garcia produced a career-best performance without his head trainer, Ismael Salas, in his corner. Assistant trainer Bob Santos served as Garcia’s chief second because Salas traveled to Glasgow, Scotland, for two-time Olympic gold medalist Robeisy Ramirez’s third-round stoppage of Eric Donovan on the Josh Taylor-Jack Catterall undercard at OVO Hydro.
“I wanna give a lot of credit to the professor, Ismael Salas,” Garcia added, “who gave me the confidence to say, ‘You can win this fight.’ ”
Garcia took this fight on less than three weeks’ notice. Colbert was supposed to battle Gutierrez for Gutierrez’s WBA world super featherweight title, but Gutierrez contracted COVID-19 while training and withdrew from what was supposed to be a mandatory title defense.
Colbert-Garcia was an elimination match, thus Garcia expects to challenge Argentina’s Gutierrez (26-3-1, 20 KOs) in his next fight.
Colbert graciously gave Garcia credit for his accomplishment.
“I’d like to thank everybody that came out here to support me,” Colbert said. “I’m sorry I let y’all down, but tonight he was just a better man. I’m gonna take my defeats as I take my [wins], as a man. I’m gonna keep my head up and I wanna run it back. Let’s do it again.”
Colbert wouldn’t use a late switch in opponents, from a right-handed fighter to a southpaw, as justification for suffering his first defeat.
“No, no, no. It’s no letdown, it’s no none of that,” Colbert said. “It’s no excuses. I’m gonna take my losses the way I take my wins. He was the better man tonight. Let’s run it back.”
In need of a knockout, Colbert tried to bang it out with Garcia as soon as the 12th round began. Garcia’s power quickly made him think twice about that strategy and forced Colbert to stay away from him.
Obviously ahead on points, Garcia battered Colbert throughout a one-sided 11th round. Colbert moved away from him at times, when he clearly needed to attack an opponent who obviously was well ahead on points.
Referee Kenny Bayless admonished Colbert for shoving Garcia 35 seconds into the 10th round. A straight left by Garcia backed Colbert into a corner with 1:35 to go in the 10th round.
Colbert held Garcia with just over a minute to go in the 10th round. Garcia later unloaded a combination on Colbert when he was backed into a corner.
Colbert blasted Garcia with a flush right hand during the eighth round, but Garcia took it well. That at least provided evidence that Colbert would fight hard to remain unbeaten.
After sending Colbert to the canvas during the seventh round, Garcia overpowered him again during the eighth round. Garcia unloaded power punches to the head and body in the eighth round, when he backed a game but out-gunned Colbert into the ropes and beat him up.
Garcia stung Colbert with two jabs that connected with just over 1:40 remaining in the seventh round. A counter left hand by Garcia knocked Colbert flat on his back with 1:15 on the clock in the seventh round.
Colbert got up from the first knockdown of his career by the time Bayless counted to five. He held once the action resumed and moved his way toward the bell to end the round, yet not before Garcia landed a couple more hard lefts.
A counter right hand by Colbert landed early in the sixth round. Colbert backed into a corner later in the sixth round and waved Garcia forward.
Garcia obliged by landing hard shots to Colbert’s head and body. He stopped Colbert in his tracks with a left hand that landed with 30 seconds to go in the sixth round.
Garcia tattooed Colbert with a straight left up top that backed him into the ropes with 25 seconds on the clock in the fifth round. The underdog had his way with Colbert in that round when Colbert backed into the ropes, though Colbert succeeded early in the fifth when he kept the action in the middle of the ring.
An aggressive Garcia pressured Colbert throughout the fourth round, when he kept throwing body shots and consistently moved Colbert backward. Colbert waved him forward, but clearly had difficulty dealing with Garcia’s body work and activity.
Colbert again stood his ground and slugged it out with Garcia in the third round. Garcia missed many of his attempts to Colbert’s head, yet he kept catching Colbert to his body.
Colbert drilled Garcia with a right to his body with about 35 seconds to go in the third round. Garcia landed a straight left in the final 10 seconds of the third round, which made Colbert fire back with a right hand.
Colbert stood and traded with Garcia throughout the second round, but Garcia got the better of the action again in those three minutes. Garcia continued to go after Colbert’s body and caught Colbert with a counter right hook toward the end of the second round.
Garcia landed a hard left to Colbert’s body and then caught him with a stiff jab in the opening minute of the first round. Garcia continued to hit Colbert with lefts to his body during the first round.
Keith Idec is a senior writer/columnist for BoxingScene.com. He can be reached on Twitter @Idecboxing.
Friends and families relying on at-home rapid COVID-19 tests to safely celebrate the holidays should do those tests as close to the point of arrival as possible, and not one or two days earlier or even the morning of.
The standard thinking until now has been that performing a rapid test one to three days before an event, such as an international flight or a party, was enough to demonstrate that someone wasn’t sick at the time of the test.
Rapid, or antigen, tests can detect if you have a current infection, though they are considered less sensitive than PCR tests.
But the new omicron variant, which is driving the surge in cases in the U.S., has changed that thinking. This variant is more transmissible, has a shorter incubation period than other strains, is causing breakthrough infections among the vaccinated, and it’s hitting the U.S. at the start of the holiday season.
“There have been plenty of examples where perhaps you test negative in the morning, but you could be testing positive by the afternoon or the evening,” said Rachael Piltch-Loeb, an associate research scientist at NYU School of Global Public Health and a preparedness fellow at Harvard T.H. Chan School of Public Health.
One of those examples comes from an office holiday party in Oslo, Norway, in late November. Eighty-one out of 110 people who attended the party had confirmed or probable cases of COVID-19, according to preliminary research published Dec. 16. Everyone who attended the party was fully vaccinated, primarily with the mRNA shots, though no one had received a booster. Each person had to get a negative test one to two days before the party.
“That’s really dramatic transmission,” Michael Osterholm, an epidemiologist and director of the University of Minnesota’s Center for Infectious Disease Research and Policy, told SiriusXM last week. “This thing goes through red lights at 300 miles an hour.”
This is why some public-health experts are instead suggesting that it’s better to conduct rapid at-home tests within minutes of arriving at a gathering of any kind.
“I would argue that a much more reliable result, even amidst omicron, is a test taken 15 minutes before you enter into a gathering,” said Dr. Michael Mina, an epidemiologist who recently left Harvard to join eMed, which markets at-home COVID-19 tests, as chief science officer.
Mina made the remarks Tuesday during a press call.
Not only is omicron thought to be more transmissible than other SARS-CoV-2 strains, it also is believed to have a much shorter incubation period, of two to three days, compared with four days for delta and approximately five days for the original strain of the virus. Within weeks of omicron’s detection in the U.S., it’s already the most dominant version of the virus in the U.S.
“It replicates incredibly quickly,” Piltch-Loeb said. “That’s why we’re seeing shorter incubation periods with this variant. And that’s also why our protocol for using rapid tests should be a little bit different.”
The emergence of this particularly vexing variant heading into the second pandemic holiday season has renewed COVID-19 anxieties for some people and raised broader questions about how best to use tools like at-home tests. Though they are considered a positive addition to the pandemic toolbox, rapid at-home tests are also expensive, at least $10 per test, and not always easy to find on store shelves.
Experts say the tools that have been available all along this year—vaccination, testing, using outdoor space to gather, if possible, and masking—still work. We just have to make some tweaks, especially how we use and supply rapid at-home tests.
Mina recommends that people perform rapid tests in their cars in the driveway when they arrive at a party or gathering and to keep the tests at room temperature, saying that cold temperatures can damage their effectiveness.
“There’s a real need to be able to live life in the safest way possible while still having it move forward,” he said. “Rapid tests are one of the most powerful tools that have not really been utilized in a powerful way in this pandemic.”
The White House said Tuesday it is planning to provide 500 million free rapid, at-home tests to people in the U.S., starting in January.
At the same time, the exponential growth in new COVID-19 cases over the last week has fueled demand for at-home tests, including Abbott Laboratories’
ABT,
+2.75%
BinaxNOW, iHealth Labs. Inc.’s at-home antigen test, and Quidel Corp.’s
QDEL,
-0.42%
QuickVue At-Home test. (The Food and Drug Administration said Wednesday that the BinaxNOW and QuickVue antigen tests can pick up omicron as well as other variants.)
Many pharmacy chains that carry at-home COVID-19 tests say they are seeing unprecedented demand for these products right now. Some tests are unavailable to purchase online. The stores say they can be found on shelves, though purchases are now being limited.
As of Tuesday, CVS Health Corp.
CVS,
+0.11%
said it is limiting the purchase to six at-home tests per order. Walgreens Boots Alliance Inc.
WBA,
+0.90%
has a limit of four at-home tests per purchase, and Walmart Inc.
WMT,
+0.13%
limits orders to 8 testing kits, according to statements from each company. On Wednesday morning, several tests were out of stock online at these chains.
People can also get in-person rapid or PCR tests at clinics and mobile testing sites; however, in regions undergoing surges, like New York City, that can require waiting sometimes hours to get a test, and results can be delayed.
“I personally believe that we’re way beyond the days of standing in line,” Mina said. “And I’m totally disheartened to drive down Boston [Street] and see people standing in the cold in line to get a PCR test because they can’t get a rapid test anywhere.”
Read more of MarketWatch’s coverage of rapid, at-home COVID-19 tests:
‘This is a critical moment,’ Biden says, while rolling out free, at-home COVID tests as omicron spreads
Biden plans to distribute 500 million at-home COVID-19 test kits. Here are the states and cities already providing free tests.
Is it safe to travel for Christmas as omicron spreads? Here are 5 steps to stay healthy during the holidays
Here’s what we’re watching ahead of Wednesday’s opening bell.
—U.S. stock futures slipped, as investors awaited a bumper day of major earnings reports and a meeting of the Federal Reserve.
S&P 500 futures were down 1.1%, while futures tied to the technology-heavy Nasdaq-100 edged down 0.7%. Dow Jones Industrial Average futures fell 1.1%.
What’s Coming Up
—Earnings updates expected:
Tesla,
TSLA -0.71%
Apple
AAPL -0.22%
and
Facebook
FB -2.39%
are due after the close. The electric-car maker is expected to record its first full-year profit.
The Federal Reserve releases a policy statement at 2 p.m. and Chairman Jerome Powell holds a press conference at 2:30 p.m.
Market Movers to Watch
—And then there’s GameStop. Its stock popped again ahead of the bell, soaring 73% in wildly volatile trading. CNBC reported that Melvin Capital, a hedge fund that has posted big losses so far this year in part because of a wager against the videogame retailer’s stock, had closed out its short position on Tuesday afternoon. The report caused a stir on the online platform Reddit—popular among day traders waging a battle against hedge-fund short-sellers—where some members wrote that it was an attempt to pull
GameStop
GME 109.79%
‘s share price back down. And
Elon Musk
weighed in on the stock again last night with a tweet, “Gamestonk!!“
—The show must go on: Another heavily shorted stock, movie-theater operator
AMC Entertainment Holdings,
AMC 133.87%
saw its shares vault more than 350% higher premarket.
—Headphone maker
Koss
KOSS 72.20%
has also joined the party, and its shares jumped 109% premarket.
—
Bed Bath & Beyond
BBBY 28.21%
resumed its upward trajectory, up 20% ahead of the bell. Online traders point to an early 2020 change in management and the fact that the company is buying back shares as signs that the share price will continue to increase.
—
Microsoft
MSFT 1.44%
shares are up 2.1% premarket. The software giant’s profit and sales jumped, propelled by pandemic-fueled demand for videogaming and accelerated adoption of its cloud-computing services.
—
Boeing
BA -4.46%
shares fell 3.3% premarket after the plane maker reported its biggest-ever annual loss and took a huge financial hit on its new 777X jetliner, reflecting the pandemic’s worsening toll.
—
Abbott Laboratories
ABT 1.12%
shares added 1.5% premarket after it logged hearty profit growth in the latest quarter as a surge in demand for its Covid-19 diagnostics services contributed to higher revenue.
—
Starbucks
SBUX -5.30%
slipped 3% premarket after the coffee chain reported that sales fell during the holiday quarter but showed signs of recovery, particularly in China. Its operating chief
Roz Brewer
is leaving to become CEO of
Walgreens
WBA 6.21%
Boots Alliance, where she’ll be the only Black woman leading a Fortune 500 company. Walgreens shares climbed 5%.
A Walgreens store in Tomball, Texas, Jan. 16, 2021.
Photo:
Jeff Lautenberger for The Wall Street Journal
—
AT&T
T -1.11%
shares slipped 1.3% premarket after it reported a fourth-quarter loss as it booked a $15.5 billion charge on its pay-TV business.
—Chip maker
Texas Instruments
TXN -2.81%
‘s shares slipped 1.7% premarket even though quarterly results and outlook both topped Wall Street estimates after Tuesday’s close.
Market Fact
Retail order flows have reached 20% of the U.S. stock market’s total, according to
UBS
research, twice what they were in 2010.
Chart of the Day
GameStop shares have become a favorite of online traders who are seeking to make money from buying options.
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