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Home » Medical device company stocks aren’t immune from coronavirus

Medical device company stocks aren’t immune from coronavirus

March 9, 2020 By Chris Newmarker

coronavirus medtech medical device industry World Health Organization
[Coronavirus image courtesy of World Health Organization]
Major U.S. medical device company stocks have generally performed as poorly as others over the past two weeks as the global coronavirus outbreak drive markets down.

Among 20 of the largest U.S. companies on Medical Design & Outsourcing and MassDevice‘s annual Big 100 list, both the average and median decline in price was roughly 17% over the past two weeks — about the same as the Dow Jones Industrial Average (–17.77%) and S&P 500 (–17.74%).

Here’s a full table:

Company (Stock) Percent Decline 2/21/20–3/9/20
Owens & Minor (NYSE:OMI)
Zimmer Biomet (NYSE:ZBH)
Dentsply Sirona (NSDQ:XRAY)
Stryker (NYSE:SYK)
Boston Scientific (NYSE:BSX)
Cardinal Health (NYSE:CAH)
Varian Medical Systems (NYSE:VAR)
Henry Schein (NSDQ:HSIC)
Medtronic (NYSE:MDT)
Edwards Lifesciences (NYSE:EW)
Intuitive Surgical (NSDQ:ISRG)
Hologic (NSDQ:HOLX)
Hillrom (NYSE:HRC)
Baxter (NYSE:BAX)
Steris (NYSE:STE)
Danaher (NYSE:DHR)
Abbott (NYSE:ABT)
Alcon (NYSE:ALC)
Becton, Dickinson (NYSE:BDX)
Johnson & Johnson (NYSE:JNJ)
-31.51%
-29.32%
-25.95%
-22.97%
-20.01%
-19.74%
-19.38%
-19.23%
-18.43%
-17.38%
-16.75%
-16.24%
-16.23%
-15.40%
-13.37%
-12.63%
-11.93%
-10.72%
-10.32%
-9.00%

Debbie Wang, a senior analyst at Morningstar who follows the medical device industry, said she and others on the company’s healthcare research team were marveling just how hard healthcare-related stocks are declining. They speculate that potential loss in procedure volume is driving down medtech shares.

“From a medtech standpoint, there is uncertainty in the near term around medical resources and how COVID-19 might dampen the usual procedure volume we see for hip and knee replacements. Even non-elective procedures could be hurt,” Wang said.

If hospital rooms fill up with infected patients as the system focuses on managing COVID-19, then it may more difficult for heart attack and stroke patients to get the focused care they need in a timely fashion, according to Wang. “However, from a longer-term perspective, it’s likely that the majority of procedures will simply be delayed until after the pandemic is addressed.”

Jefferies analysts in a research note last week said they tried to find patterns in the medtech sell-off, looking at such factors as the proportion of business outside the U.S., elective procedure mix, or proportion of revenue that is capital sales. “The exercise proved fruitless, with the correlation on all measures close to zero,” said Raj Denhoy, Anthony Petrone, Zachary Weiner and Briana Warschun at Jefferies. They noted that orthopedic device companies such as Stryker and Zimmer Biomet could be faring worse because they rely more on elective procedures.

The medical device industry has a reputation for being more recession-proof than other industries: The government pays for a large chunk of healthcare even in the U.S., and it’s hard for people to forgo life-saving medical care even in hard times.

Some people will need medical devices to survive the COVID-19 outbreak, too.  Manufacturing conglomerate 3M (NYSE:MMM) — which makes the n95 respiratory mask that the BBC cited as “more effective” than an ordinary surgical or medical mask — has only seen its stock decline -8.2% over the past two weeks.

Still, medical device makers also rely on functioning supply chains — and those supply chains are experiencing a decent amount of disruption. During earnings calls with analysts last month, a number of major medtech companies each pegged coronavirus losses in the tens of millions of dollars, and their warnings came before the deadly virus spread around the globe.

Varian Medical Systems said today that the outbreak in the Asia-Pacific region is already delaying hardware and software installations and acceptance as health providers focus on managing the outbreak. The maker of cancer care technologies cut its 2020 revenue growth projection to 7–9%, from a previous 9–12%. The company said revenues for its second quarter ended in March would be $800 million to $825 million, below the Wall Street consensus of $871.75 million.

Diagnostics and life sciences company PerkinElmer (NYSE:PKI) reported today that it is seeing a significant deterioration in demand in China.

Even as medical device companies face major disruptions to their business, they’re finding ways to donate products and funds to fight the outbreak. As of last February, at least 31 members of trade group AdvaMed had donated medical products worth roughly $26.8 million and made cash donations worth $4.1 million to help treat and contain the virus in China.

Updated stock decline percentages after closing bell. 

Filed Under: Business/Financial News, Featured, Wall Street Beat Tagged With: 3m, Abbott, Alcon, Baxter, Becton Dickonson, Boston Scientific, Cardinal Health, coronavirus, Danaher Corp., Henry Schein Inc., Hologic, Intuitive Surgical, Johnson & Johnson, Medtronic, Steris Corp., Stryker, Varian Medical Systems, Zimmer Biomet

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About Chris Newmarker

Chris Newmarker is the executive editor of WTWH Media life science's news websites and publications including MassDevice, Medical Design & Outsourcing and more. A professional journalist of 18 years, he is a veteran of UBM (now Informa) and The Associated Press whose career has taken him from Ohio to Virginia, New Jersey and, most recently, Minnesota. He’s covered a wide variety of subjects, but his focus over the past decade has been business and technology. He holds bachelor’s degrees in journalism and political science from Ohio State University. Connect with him on LinkedIn or email at [email protected].

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