How device manufacturers are mitigating high-risk exposure to hospital budgets

Surgical robotics systems are among the most expensive hospital purchases. [Photo via Adobe Stock]

Medical device manufacturers face volatile equipment orders from hospitals in the next couple of years, with some more exposed to capital budget risk than others.

A new report from Moody’s Investors Service identified eight medtech companies with exposure to changes in hospital capital budgets and examined how well they mitigated that risk with recurring or noncapital sales.

This balance is an important consideration for medtech developers of all sizes as hospitals continue to face staffing and budget challenges with no relief in sight. The report also highlights the importance of innovation in overcoming macroeconomic challenges.

“With a potential recession and inflationary pressures driving up hospitals’ cost of labor, utilities and other expenses, medical device original equipmen…

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Moody’s warns of cybersecurity, antitrust and supplier risks for medical device companies

[Image via Blogtrepreneur on Flickr, per Creative Commons 2.0 license]

Medical device companies face heightened cybersecurity burdens, antitrust enforcement and supplier risks, according to a new report out of Moody’s.

The research firm’s previous quarterly report in February called attention to continued supply chain and labor problems for medtech.

Below are the key highlights for medical device companies from the latest report.

Medical device cybersecurity

The report flagged legislative proposals for new rules and regulations on medical device developers and manufacturers, including new cybsecurity rules.

“The industry is ripe for increased oversight of cyber risks,” the analysts wrote in their report. “We have identified the sector as having a medium high exposure to cyber risk. And our survey of rated healthcare issuers indicates that medical de…

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Moody’s warns of continued supply chain and labor problems for medtech

As the latest COVID-19 wave recedes, testing demand will likely follow. [Image courtesy of Amazon]

Moody’s warned investors that supply chain disruptions and healthcare worker shortages will continue to pressure medical product and device companies in 2022.

The good news from the Moody’s Healthcare Quarterly report? The supply chain issues are manageable, with Moody’s estimating that transportation costs average less than 3% of revenue for most large, rated device companies, which won’t eat up too much of those companies’ 20% profit margins.

The bad news: Healthcare labor shortages show no sign of improvement, with nearly a quarter of U.S. hospitals reporting critical staffing shortages in early January due to the omicron COVID-19 variant, according to the U.S. Department of Health and Human Services.

“Large numbers of nurses and other skilled workers will conti…

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Moody’s lowers its medical device industry earnings forecast

Medical device industry earnings will remain flat over the next 12 to 18 months as people hold off on medical procedures amid the COVID-19 pandemic and resulting recession, according to a new report from Moody’s.

Moody’s had previously projected of 2–4% annual growth.

“While underlying positive trends remain, including ongoing innovation and favorable longterm demographics, we expect some consumers will be slow to return to the healthcare system,” the Moody’s analysts said in the report, out June 11.

“While many procedures are already being rescheduled in certain regions, some consumers will be unable to pay for their procedures due to the economic downturn, as well as their unwillingness to engage with the healthcare system while the coronavirus outbreak persists.”

The predictions from Moody’s come at the same time that medtech industry stocks are taking a hit, along with the overall markets, amid i…

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