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Innovator U.S. Equity Accelerated 9 Buffer ETF - July

<h4>Key Takeaways:</h4>
<ul>
<li>New Horizon Health has brought in experienced accountants as independent directors and set up a special committee to investigate the allegations</li>
<li>The controversy revolves around the company&rsquo;s revenue accounting method, in which over-shipments of goods to distributors could inflate sales figures</li>
</ul>
By Molly Wen
It was a Chinese success story in the health technology sector, feted by the stock market.&nbsp;New Horizon Health Ltd.&nbsp;was the country&rsquo;s first cancer-screening company to go public and enjoyed fast revenue growth, before doubts began to surface last year about its sales figures.
The controversy roared back into the headlines in recent weeks when New Horizon Health failed to release its annual earnings report and its auditor, Deloitte, expressed reservations about the company&rsquo;s sales record.
The biotech, which went public on the Hong Kong stock market in 2021, supplies tests for gastric, colorectal and cervical cancer through hospitals, healthcare websites and other sales outlets. New Horizon&rsquo;s business performance was once the envy of the industry, with revenue surging more than 20 times in the three years through 2023 and gross margin jumping from 52% to 90%.
However, in the second half of last year an investigation by the U.S. financial website CapitalWatch cast doubt on the stellar numbers, arousing suspicions among stock investors.
In January this year the company issued positive&nbsp;<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0122/2024012200416.pdf">earnings guidance</a>&nbsp;to the market, predicting revenue for 2023 would range between 1.98 billion yuan ($273 million) and 2.05 billion yuan, a rise of 158.9% to 168.2% from the previous year. The bowel cancer screening product ColoClear was estimated to have racked up sales of more than 1 billion yuan as the firm&rsquo;s blockbuster product.
However, the March earnings season came and went without any sign of the full results. On the day of the expected release, the company announced that investors would have to wait until March 28 to see the full report, towards the end of Hong Kong&rsquo;s annual reporting period.
However, the earnings release did not materialize on that day. Instead, investors heard the&nbsp;<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0328/2024032806372.pdf">bombshell</a>&nbsp;news that Deloitte, the auditing firm that had served New Horizon since its IPO, had questioned the validity of some sales transactions for key products such as ColoClear, Pupu Tube and UU Tube. Deloitte also raised concerns about the firm&rsquo;s sales and marketing model, concluding that an independent investigation was needed. In short, the auditors had serious doubts about the accounts and could not sign off the results, hence the publication delay.
Investors could sense trouble in the days leading up to the Deloitte news. New Horizon&rsquo;s share price suddenly plunged 19.8% before the market closed on March 28. Including a drop the day before, the company&rsquo;s stock shed 25% of its value to sink to a 17-month low in the two sessions before trading was suspended.
Then on April 8 New Horizon&nbsp;<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0408/2024040802038.pdf">announced</a>&nbsp;that two independent non-executive directors had joined its board, both with extensive experience in accounting, audit investigations and internal corporate controls. The two new directors had also both worked at Deloitte, one of them as a partner there for 17 years.
In a further response to the concerns raised by Deloitte, the company said it had set up a special committee of board members, including non-executive directors, to oversee an independent investigation by third-party experts into the allegations.
Such committees are usually convened when listed companies are suspected of having corporate governance problems or are facing regulatory investigations. They are typically staffed by independent directors with legal or accounting expertise who have no vested interest in the matters under investigation.
<h3>What Is The Controversy About?</h3>
The details of Deloitte&rsquo;s concerns have not been made public, but potential clues can be gleaned from the CapitalWatch investigation published last August.
The short-seller website said a 16-month investigation had concluded that New Horizon Health was over-supplying to distributors who then struggled to sell the products, resulting in inflated sales figures. &nbsp;Taking the core product as an example, the report said the company sold 6,000 ColoClear products to public hospitals in 2022 for 500 yuan per unit, generating verified revenue of only 3 million yuan. &nbsp;However, the company said it made 260 million yuan by selling about 172,000 units to hospitals for about 1,483 yuan each, far above the 500 yuan cited in the investigative report and higher than the product&rsquo;s retail price in some hospitals.
At the time, the company disputed the investigation&rsquo;s findings as a distortion of the facts. But there is something unusual about the way it calculates revenue. Some expired products are counted in the revenue figures, including samples sent back to the lab for testing and ones sold to consumers after the 12-month cut-off date. In 2022, ColoClear reported shipments of 806,000 units, and 361,000 were recognized in revenue. In the first half of 2023, 539,000 units were shipped, with 429,000 units included in revenue. This suggests shipments could be overstated in financial statements or revenues otherwise inflated.
Moreover, accounts receivable as a share of total revenue have also been rising, from 31% in 2019 to 117% in the first half of 2023. CapitalWatch suspected the high receivables resulted from excessive shipments of goods to distributors, while the company cited its revenue recognition method whereby most revenue from one accounting period lands in the corporate coffers in the next period.
The independent probe is likely to take some time.&nbsp; But in the long run, New Horizon Health could still enjoy a promising future because of rising demand for cancer testing kits. Its three key screening products, ColoClear, Pupu Tube and UU Tube, target colorectal and stomach cancer, the two most common types of gastrointestinal cancer in China.
As home testing takes off, New Horizon&rsquo;s market could expand further. Right now, investors are waiting to see if the investigation commissioned by the company can reassure the market.
This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.

New Horizon Health Launches Probe Into Disputed Sales Figures

Raymond James analyst Josh Beck maintains Meta Platforms (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/META#NASDAQ">META</a>) with a Strong Buy and lowers the price target from $550 to $525.

News

Price Target

Analyst Ratings

Raymond James Maintains Strong Buy on Meta Platforms, Lowers Price Target to $525

Scotiabank analyst Maher Yaghi maintains AT&amp;T (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/T#NYSE">T</a>) with a Sector Outperform and raises the price target from $22 to $22.5.

Scotiabank Maintains Sector Outperform on AT&T, Raises Price Target to $22.5

Guidance

European Aeronautic Defence And Space Unsponsored

EADSY

Airbus Says A220 Ramp-up Continues Towards A Monthly Production Rate Of 14 Aircraft In 2026; A320 Company Is Making Progress Towards Rate Of 75 Aircraft Per Month In 2026; Continues To Target Rate 4 For A330 In 2024; As Basis For Its 2024 Guidance, Assumes No Additional Disruptions To World Economy, Air Traffic, Supply Chain, Company's Internal Operations, And Its Ability To Deliver Products And Services

RBC Capital analyst Deane Dray maintains Fortive (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/FTV#NYSE">FTV</a>) with a Sector Perform and lowers the price target from $93 to $83.

RBC Capital Maintains Sector Perform on Fortive, Lowers Price Target to $83

Raymond James analyst Brian Vaccaro reiterates Chipotle Mexican Grill (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CMG#NYSE">CMG</a>) with a Outperform and raises the price target from $3300 to $3340.

Reiteration

Raymond James Reiterates Outperform on Chipotle Mexican Grill, Raises Price Target to $3340

RBC Capital analyst Joseph Spak maintains Ford Motor (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/F#NYSE">F</a>) with a Sector Perform and raises the price target from $12 to $13.

RBC Capital Maintains Sector Perform on Ford Motor, Raises Price Target to $13

Airbus Says 2024 Guidance Unchanged; Gross Commercial Aircraft Orders Totaled 170 With Same Number Of Net Orders Due To No Cancellations; Order Backlog Amounted To 8,626 Commercial Aircraft At End Of March 2024; Decision To Increase Production Rate For A350 To 12 Aircraft A Month In 2028

Scotiabank analyst Himanshu Gupta maintains FLAGSHIP CMNTYS REAL ESTATE INVT TR (TSX:<a class="ticker" href="https://www.benzinga.com/stock/MHC#TSX">MHC</a>) with a Sector Outperform and lowers the price target from C$21.5 to C$20.

TSX:MHC

Scotiabank Maintains Sector Outperform on FLAGSHIP CMNTYS REAL ESTATE INVT TR, Lowers Price Target to C$20

Earnings

Airbus Q1 Q1 EPS €0.76; Revenue €12.83 Billion Vs €12.87 Billion Est.

WIIM

AZZ shares are trading lower after the company announced a proposed public offering of 4 million shares of common stock.

RBC Capital analyst Mark Dwelle maintains Chubb (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CB#NYSE">CB</a>) with a Outperform and lowers the price target from $295 to $285.

RBC Capital Maintains Outperform on Chubb, Lowers Price Target to $285

CNMD

CONMED shares are trading lower after the company reported Q1 financial results. Needham, Piper Sandler and Wells Fargo lowered their respective price targets on the stock.

Raymond James analyst Jayson Bedford maintains Boston Scientific (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BSX#NYSE">BSX</a>) with a Strong Buy and raises the price target from $73 to $85.

Raymond James Maintains Strong Buy on Boston Scientific, Raises Price Target to $85

RBC Capital analyst Shagun Singh maintains Boston Scientific (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BSX#NYSE">BSX</a>) with a Outperform and raises the price target from $78 to $82.

RBC Capital Maintains Outperform on Boston Scientific, Raises Price Target to $82

Whirlpool shares are trading lower after the company reported Q1 financial results. The company announced that it is currently evaluating certain follow-on restructuring actions for the remainder of 2024 and expects to incur about $50 million of restructuring charges.

RBC Capital analyst Jon Arfstrom maintains BOK Financial (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BOKF#NASDAQ">BOKF</a>) with a Sector Perform and raises the price target from $94 to $98.

BOKF

RBC Capital Maintains Sector Perform on BOK Financial, Raises Price Target to $98

Raymond James analyst Michael Rose reiterates BOK Financial (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BOKF#NASDAQ">BOKF</a>) with a Outperform and raises the price target from $103 to $105.

Raymond James Reiterates Outperform on BOK Financial, Raises Price Target to $105

Honeywell International Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/HON#NASDAQ">HON</a>) reported first-quarter <a href="https://www.benzinga.com/pressreleases/24/04/n38424276/honeywell-delivers-strong-first-quarter-results-and-beats-earnings-guidance" target="_blank" rel="noreferrer noopener">fiscal 2024 sales of $9.105 billion</a>.
That&#8217;s up 3% year-over-year on a reported basis and and increase of 3% on an organic basis, beating the consensus of $9.03 billion.
The sales increase was attributed to solid growth in Aerospace Technologies and Energy and Sustainability Solutions.
Adjusted EPS was $2.25 (+9% Y/Y), beating the consensus of $2.17.
Sales by Segments: 
<ul>
<li>Aerospace Technologies$3.67 billion (+18% Y/Y)</li>
<li>Industrial Automation $2.48 billion (-12% Y/Y)</li>
<li>Building Automation $1.43 billion (-4% Y/Y)</li>
<li>And Energy and Sustainability Solutions $1.53 billion (+4% Y/Y).</li>
</ul>
Related: <a href="https://www.benzinga.com/news/earnings/24/04/38423090/honeywell-likely-to-report-higher-q1-earnings-here-are-the-recent-forecast-changes-from-wall-street" target="_blank" rel="noreferrer noopener">Honeywell Likely To Report Higher Q1 Earnings; Here Are The Recent Forecast Changes From Wall Street&#8217;s Most Accurate Analysts</a>
Operating margin expanded by 130 bps to 20.4%. Segment margin expanded by 20 bps to 22.2%, driven by expansion in Aerospace Technologies.
Net cash provided by operating activities for the quarter was $448 million compared to cash used of $million a year ago. Free cash flow was $215 million versus cash outflow of $977 million YoY. (+22% Y/Y).
As long-cycle customer demand remained strong, Honeywell&#8217;s robust backlog increased 6% year over year. It was up sequentially, ending the quarter at a record level of $32 billion, Honeywell CEO Vimal Kapur said. 
&#8220;We also experienced pockets of recovery in short cycle, and expect broader participation as the year unfolds and channels normalize further,&#8221; Kapur said.
Honeywell held cash and equivalents of about $11.756 billion as of March 31, 2023. The company deployed $1.6 billion of capital to share repurchases, dividends, and capital expenditures.
During the quarter, Honeywell announced <a href="https://www.benzinga.com/markets/equities/24/03/37952822/honeywell-takes-flight-in-autonomous-future-with-civitanavi-acquisition" target="_blank" rel="noreferrer noopener">its intention to acquire Civitanavi Systems</a>. The deal would further strengthen its navigation offerings in Aerospace and expand its footprint in Europe.
Q2 Outlook: Honeywell expects sales of $9.2 billion-$9.5 billion versus the consensus of $9.38 billion, Adjusted EPS of $2.25 &#8211; $2.35 versus the consensus of $2.35, and segment margin of 22% &#8211; 22.4%.
2024 Outlook:&nbsp;Honeywell expects sales of $38.1 billion-$38.9 billion versus the consensus of $38.84 billion, with organic sales growth from 4% to 6%.
Honeywell expects Segment margin in the range of 23% to 23.3%, with segment margin expansion of 30 to 60 basis points.
Honeywell sees an adjusted EPS of $9.80-$10.10 versus a consensus of $9.95; anticipates operating cash flow of $6.7 billion-$7.1 billion and free cash flow of $5.6 billion-$6 billion.
Price Action: Honeywell shares are trading higher by 1.13% at $197 premarket at the last check Thursday.
Now Read: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/04/38434513/us-growth-slows-in-q1-yet-inflation-acceleration-signals-stagflation-the-worst-poss">US Growth Slows In Q1, Yet Inflation Acceleration Signals Stagflation &#8211; &#8216;The Worst Possible Outcome For The Fed&#8217;</a>
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Honeywell Aerospace Advances Drive Solid Q1 Results, Exceed Expectations

Plug Power, Inc.&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/PLUG#NASDAQ">PLUG</a>) shares are&nbsp;<a target="_blank" href="https://www.benzinga.com/movers" rel="noreferrer noopener">trading lower on Thursday</a>.
In a press release, the company said it has inked two additional contracts to deliver Basic Engineering and Design Packages (BEDP)<a target="_blank" href="https://www.benzinga.com/pressreleases/24/04/g38426123/plug-signs-additional-bedp-contracts-for-a-total-of-4-5gw-of-electrolyzers-across-europe-and-the-u" rel="noreferrer noopener">&nbsp;for projects in Europe and the U.S.</a>
The orders have a combined capacity of up to 350 megawatts of electrolyzers. To date, Plug Power has already delivered 25 electrolyzer systems to third-party customers.&nbsp;
&#8220;Electrolyzer sales present a substantial business opportunity for us,&#8221; said Plug Power&#8217;s General Manager of Energy Solutions and Chief Strategy Officer Sanjay Shrestha.
Throughout&nbsp;2024, the company plans to deliver 40 electrolyzer&nbsp;systems for a cumulated total of 189 megawatts.
Plug Power is delivering and installing electrolyzers in Europe, the&nbsp;Middle East, the U.S., India, New Zealand, Korea, Japan, Australia, and Africa.&nbsp;&nbsp;
The latest deals boost Plug Power&#8217;s overall BEDP portfolio, bringing&nbsp;the total amount of&nbsp;global BEDP contracts to 4.5 gigawatts.
Earlier this year, Plug finalized a 500 megawatts&nbsp;contract in Europe. With the addition of this 350 megawatts&nbsp;contract, the company has&nbsp;now&nbsp;closed 850 megawatts&nbsp;of BEDP contracts in just four months.
Price Action: PLUG shares are trading lower by 3.9% to $2.3150 at the last check Thursday.
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