Medtechs adapt to new sales reality amid halt on elective surgeries, hospitals’ financial stress

One by one, medtech companies have warned investors that a temporary pause on elective procedures — the bread and butter for many device maker and hospital balance sheets alike — render best-laid 2020 forecasts obsolete.

Earnings reports kick off next week — J&J, Abbott and Intuitive are all on deck — and based on pre-announced results, analysts at Needham & Co. estimated Thursday that medtechs saw an average sales decline of 40% to 50% late last month, ​potentially indicative of the steep drops likely to persist during the second quarter.

The American College of Surgeons, Surgeon General and Center for Medicare and Medicaid Services are among the authorities that in mid-March implored hospitals to postpone a range of high-margin surgeries. The impetus was to keep uninfected people out of high-risk centers and allow diversion of critical supplies and staff to an anticipated surge in COVID-19 patients.

Intuitive Surgical was earlier than many to report impact to its business from initial hotspot regions like China and Italy, and acknowledge a trend about to balloon in its key U.S. and European markets.​ Boston Scientific, Smith & Nephew and Stryker followed suit and formally rescinded previous financial guidance for the year.

While social distancing policies only came into play during the latter part of the first quarter, some particularly elective surgery-dependent companies report already sizable hits from the shock to the healthcare system. Orthopaedics-focused Zimmer Biomet preliminarily said this week its revenue during the quarter was down roughly 10%.

Some potential good news for these device makers: Many analysts project that revenues lost during the down period, however long it may last, will be waiting on the other side.

By Maria Rachal | MEDTECH DIVE

Image Credit: Dollar Photo Club

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About Peter Coffaro 779 Articles
A growth-driven and strategic executive, Peter Coffaro commands more than 20 years of progressive management success within the orthopedic industry. Recognized by MedReps.com as one of the top medical sales influencers in the industry; he has 10 years of combined sales management experience and has held positions as a Director, General Manager and Distributor. Peter has worked for some of the top orthopedic companies in the world - Zimmer, DePuy and Stryker. He is also the founder of OrthoFeed: a popular blog that covers orthopedic news and emerging medical technologies. Peter is a three-time Hall of Fame award winner at Johnson and Johnson and has an extensive background in organizational development, business development, sales management, digital marketing and professional education. Peter holds a B.S. degree in Biology from Northern Illinois University.

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