Categories
Fashion

3 trends dragging medtechs: Supply chain constraints, inflation and hospital staffing shortages

Spencer Platt via Getty Images Having weathered 18 months of COVID-19, industry hopes vision for a post-pandemic recovery is being impeded by three major challenges: supply chain, inflation and healthcare staffing shortages.

"One of the things that’s giving a lot of medtech investors pause right is now is just a sheer number of macro issues to think through," from healthcare staffing to supply chain to inflation, Bob Hopkins, an analyst at Bank of America, noted on Boston Scientific’s earnings call .

Hopkins observed those hurdles come before analysts "even start to look at company fundamentals,” while adding that all of these dynamic market conditions are "making it hard for investors to know how to think about modeling for the next 12 months."

Companies throughout the sector have cited the factors in holding back growth.

NuVasive and Zimmer Biomet warned investors about the headwinds created by hospital staffing shortages in September, foreshadowing its emergence as a key theme of the current medtech earnings season. Johnson & Johnson, one of the first companies to report results, identified "reduced medical staffing" as a factor that is "constraining procedure volumes."

The constraints on procedure volumes are slowing growth. Stryker cited healthcare staffing when it cut its full-year growth target last week, reflecting the effect the situation is having on its implant business.

"This primarily impacted our implant-related businesses including hips, knees and spine, which can be, in many cases, deferred for a period of time. However, the disease states that we treat are degenerative and the patients that defer their procedures will eventually return to have those procedures completed,” Preston Wells, vice president of investor relations at Stryker, told investors .

The big question is how long it will take hospitals to get the situation under control and work through the backlog of deferred cases. Wells, while noting some improvements in October, said Stryker expects the recovery will be "partially muted" by continued hospital staffing challenges.

Boston Scientific CEO Mike Mahoney acknowledged that staff shortages will persist but contends hospitals will be able to work through them, arguing that changes like using telehealth to pre-screen patients and utilizing outpatient centers can help. "Hospitals — just like anybody else — they innovate and they find a way," Mahoney told investors. "I think the surges will calm and the staffing shortage will likely linger a bit, but hospitals are pretty resilient in figuring out ways to drive volume." Semiconductor shortage stretches supply chains

Hospitals are contending with staffing shortages while simultaneously dealing with supply chain issues. Intuitive Surgical CFO Marshall Mohr told investors the twin problems "are challenging some hospital capacities and could impact deferrable procedures, including da Vinci procedures, going forward."

Mohr singled out semiconductors, the shortage of which is affecting everything from automobiles to consumer electronics, as a particular supply chain problem. "While to date we’ve been able to secure supply necessary to ensure fulfillment of customer demand, our teams are expending significant time and effort to bridge future supply with demand. Global shortages could result in future supply disruptions […]

Leave a Reply

Your email address will not be published. Required fields are marked *