Medtronic, Stryker & more — key financial notes on 4 big spine companies

Alan Condon -   Print  |

Medical device companies are seeing a significant reduction in first quarter revenues due to the COVID-19 pandemic, with several device-makers in the spine field expecting to feel a financial pinch into the second quarter and beyond.

Here are key financial notes on four big spine companies:

Medtronic anticipates COVID-19 to have a significant impact on its fourth quarter fiscal year results, which ended April 24, 2020. The company's spine business has suffered a big hit due to the cessation of elective surgeries. U.S. weekly sales dropped around 60 percent since the pandemic, while sales in the rest of the world were down 40 percent to 50 percent. The negative sales impact is expected to continue in the coming quarters as customers may decide to reduce inventory and preserve cash.

Johnson & Johnson noted a 7.5 percent drop in orthopedic sales during the first quarter, while U.S. orthopedic sales were down 5.2 percent to $1.2 billion. Meanwhile, global spine, sports and other sales took a 10.7 percent hit for the quarter, down to $702 million. U.S. sales decreased 8.9 percent and international sales were down 13.3 percent. According to Chris DelOrefice, vice president of investor relations, COVID-19 affected Zimmer Biomet's spine sales by around 750 basis points.

Stryker withdrew its first quarter and full-year 2020 financial projections at the end of March, citing a "a significant negative impact" on operations and financial results due to the pandemic. Barclays analyst Kristen Stewart lowered her rating on Stryker to "underperform", setting a company price target at $155 with a 15 percent downside risk. The company will provide additional financial information at its next earnings call on April 30.

Zimmer Biomet is anticipating first-quarter revenues to drop  9.5 percent to 10.5 percent, and is expecting COVID-19 to negatively affect its second quarter revenues. To maintain liquidity, CEO Bryan Hanson is temporarily eliminating his salary, with several other executives having their compensation reduced. The company issued $1.5 billion of notes in two tranches due in 2026 and 2030, and used the net proceeds to repay $1.5 billion in outstanding notes due on April 1. First quarter financial results will be announced in May.

More articles on devices:
AAOS publishes clinical considerations for return to elective surgery
97% of medical practices suffer COVID-19 financial hit: 5 observations for orthopedics
Investor pays $49M for Arizona spine, orthopedic hospital property

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