The medical technology (medtech) earnings season has commenced with third-quarter results from leading companies such as Johnson & Johnson, Abbott, and Intuitive Surgical. These reports are particularly significant as they provide insights into the development of critical markets including pulsed field ablation (PFA), diabetes technology, and surgical robotics throughout the latter part of the year.
Analysts from RBC Capital Markets have observed a stable operating environment in the medtech sector during the third quarter, which is likely to bolster growth. However, they also noted potential disruptions such as Hurricanes Helene and Milton, and a brief strike at U.S. ports, which could have implications for the industry. Hurricane Helene, in particular, resulted in procedure delays and cancellations, though its impact on companies was deemed minor. The port strike was also identified by J.P. Morgan analysts as a potential obstacle.
As the earnings reports unfold, significant attention is on Johnson & Johnson, which is expected to provide updates on its electrophysiology offerings, particularly how it’s being impacted by competitors in the PFA device market. Johnson & Johnson has not yet launched its own PFA device in the U.S., losing some market share to companies like Boston Scientific and Medtronic. Despite this setback, there’s anticipation around the potential FDA approval of its PFA device targeted for late 2024 or early 2025. Analysts are expecting strong performance from Johnson & Johnson’s existing products in the third quarter, which could help offset the slower growth in its medtech segment observed in the previous quarter.
Abbott’s report follows, with a focus on its electrophysiology unit, where it competes directly with Johnson & Johnson. Abbott also does not currently have a PFA device on the U.S. market but expects to gain insight from its fully enrolled pivotal PFA trial. The company’s electrophysiology sales have shown robust growth, driven particularly by its activities in the U.S. Beyond electrophysiology, Abbott has seen significant demand for its Libre 3 continuous glucose monitors. New product launches, including the tricuspid valve repair system Triclip and the pacemaker Aveir, are also expected to contribute to its growth.
Intuitive Surgical is set to close out the week with its earnings, focusing on the launch of its new da Vinci 5 surgical robot. The company’s system placements exceeded expectations in the second quarter, driven by strong demand for both the new da Vinci 5 and the existing da Vinci Xi models. Analysts predict continuing strong placements for the da Vinci 5. However, potential headwinds could include weak demand for bariatric procedures and external pressures such as physician strikes in Korea and anticorruption measures in China. Despite these challenges, analysts remain optimistic about procedure growth, buoyed by stimulus initiatives in China and expected recovery from backlogs caused by the strikes in Korea.
These reports from leading medtech companies are crucial for stakeholders to understand the shifts and developments within specific segments such as PFA devices, diabetes care, and surgical robotics. They not only reflect on the companies’ performances and strategic directions but also on broader industry trends that could impact healthcare delivery globally.
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