5. Hospitals are hurting — and that’s hurting medtech
The financial hit upon hospitals has been clear from the start. The rapid onset of COVID-19 kept out nearly all other patients, cutting deeply into the revenues for providers and OEMs. This loss of revenue has diminished the appetite somewhat for larger capital items, but medtech executives see room for optimism, including the possibility of more federal aid in the form of the CARES Act.
For example, Gary Guthart of Intuitive Surgical (NSDQ:ISRG) says utilization of installed Intuitive robotic surgery systems was down by 27% during the second quarter. The company is seeing a slow of demand, with overall sales down 22%. During Intuitive’s earnings call, analyst Rick Wise of Stiefel noted 40% of the surgeons surveyed by the bank said they were going to hold off on purchases. Guthart thinks hospital’s capital purchases will eventually resume once they’ve refilled existing capacity. Meanwhile, Intuitive will continue to innovate:
“The second thing that can drive capital demand is new features, product that they want access to because they have older technology. And in that case, if they have the attention span to pursue it and the capital or leasing dollars to do something about it, then we can continue to make progress.”