Dive Brief:
- Procedure volumes increased in the fourth quarter, mostly matching or exceeding the usual seasonal trend, according to Truist Securities’ survey of 50 U.S. hospital administrators.
- The survey suggests procedure volumes rose 2% to 3% over the third quarter, with interventional cardiology experiencing the biggest increase. The analysts wrote companies including Boston Scientific, Edwards Lifesciences and Medtronic would benefit from rising cardiology volumes.
- Truist also saw positive signs for Intuitive Surgical, tracking improvements in the outlook for capital spending and a rebound in weight loss procedures after pressure from obesity drugs.
Dive Insight:
The analysts expect some medtech companies to use this week’s J.P. Morgan Healthcare Conference to share preliminary financial results for the fourth quarter. Ahead of the disclosures, the Truist team sent out a report covering the findings of a hospital administrator survey and views on the implications of the results for medtech earnings in the fourth quarter and beyond.
Truist analysts are encouraged by the main takeaways. The analysts saw a “healthy 4Q sequential pick-up vs. 3Q.” Most respondents (60%) reported a normal seasonal pick-up, and 30% said it was moderately stronger than usual. Respondents who saw a stronger increase said orthopedics, emergency admissions, colonoscopies, interventional radiology and backlogs of delayed procedures drove the trend.
Interventional cardiology experienced the biggest quarter-on-quarter increase. Factors including hospital staffing shortages delayed the recovery from COVID-19 at cardiology specialists such as Edwards, but the sector recovered last year and has the highest growth outlook for the next 12 months in the survey.
Bariatric weight loss surgery volumes improved in the fourth quarter, according to the hospital administrators, which surprised the analysts. The improvement is forecast to continue over the next 12 months, leading the analysts to suggest the impact of GLP-1 weight loss drugs may be “stabilizing.” Intuitive is among the companies that would benefit from an increase in bariatric volumes.
The robotic surgery specialist could also benefit from the capital spending trend seen in the survey. Administrators forecast a 3.5% growth in capital spending for the next 12 months, up from 0.5% from the October survey. The proportion of respondents who predicted capex increases rose, too, climbing from 52% to 60% between the two surveys.
The analysts predicted Intuitive will be one of the companies to pre-announce results this week during the J.P. Morgan conference.
“Our sense is investors are looking for at least 20%+ procedure growth,” the analysts wrote. “Consistent with past years we expect the initial range will prove conservative [with] upside potential moving through the year. Significant focus also remains on timing of a potential nexgen system announcement, but we doubt we will get any concrete updates next week.”