Medical Device Aug 2 Earnings Roster: MCK, FMS & GKOS
The Medical sector is seeing a steady rebound in revenues this earnings season, as the demand for medical products and services recover. However, the sector is facing inflationary headwinds, supply-chain challenges and labor shortages that are weighing on margins.
Per the latest Earnings Preview, 17.2% of the companies in the Medical sector, comprising 35.2% of the sector’s market capitalization, reported earnings till Jul 26. Majority (90%) of these companies beat on earnings as well as revenue estimates. While revenues witnessed a significant 12.8% increase, earnings growth was subdued at 3.1%. This scorecard highlights the aforementioned sector’s continued resilience amid an uncertain macroeconomic environment. The companies witnessed a surge in demand for surgery-related procedures in the first half. However, they also faced persistent higher costs globally. Rising costs of raw materials, labor shortages, increased interest payments and supply-chain disruptions adversely impacted the production and distribution process. However, these macro headwinds are likely to have lost their vigor from the first quarter. Meanwhile, an increase in the prices of products and services might have aided the Medical sector.
Overall, second-quarter earnings are expected to decline 31.2%, while sales are anticipated to increase 3.3%. This compares with the first-quarter reported earnings decline of 17.9% and revenue growth of 4%.
Medical Device Quarterly Synopsys
The reopening of economies continues to boost the demand for medical devices such as diagnostic equipment and procedures, leading to robust revenue growth. Companies have also been engaging in mergers and acquisitions to broaden their portfolios and capabilities. Technology breakthroughs such as artificial intelligence and robotics are spurring more innovation and growth in the sector. Companies that can effectively adapt to these changes and keep innovating are expected to maintain their market success.
Yet, Medical Device companies continue to be burdened by the global shortage of semiconductor chips that produce life-saving medical equipment like pacemakers, blood-pressure monitors, insulin pumps and defibrillators. Although this ongoing challenge is expected to have hampered second-quarter performance across several businesses in the Medical Device industry, the impact is likely to have lessened. Moreover, rising cost of capital following multiple hikes in interest rates might have had an adverse impact on the companies’ bottom line.
Overall, the rebound in the base business in the past several months is expected to have been impressive. Medical Device companies like McKesson MCK, Fresenius Medical Care FMS and Glaukos GKOSare likely to have experienced an improvement in revenues, while margins might have been subdued.
Let’s take a look at the Medical Device players scheduled to announce results on Aug 2.
McKesson: The company’s fiscal first-quarter 2024 results are likely to have been boosted by continued demand for its products across all segments. The U.S. Pharmaceutical and Specialty Solutions segment is expected to have been benefited from market growth and higher volumes from retail national account customers. This is likely to have been partially offset by lower COVID-19 vaccine related sales. Growth in the technology services revenues and an increase in prescriptions from third-party logistics might have driven Prescription Technology Solutions’ performance.
The Zacks Consensus Estimate for McKesson’s earnings is pegged at $5.85 per share. The consensus estimate for revenues is pinned at $69.91 billion.
Per our proven model, a stock with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating on estimates.
MCK is likely to post an earnings beat in the upcoming release as it has an Earnings ESP of +1.93% and a Zacks Rank #2 at present. (Read more: McKesson to Report Q1 Earnings: Is a Beat in Store?) You can see the complete list of today’s Zacks #1 Rank stocks here.
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McKesson Corporation Price and EPS Surprise
McKesson Corporation price-eps-surprise | McKesson Corporation Quote
Fresenius Medical Care: Its second-quarter 2023 top line is likely to have been aided by improving treatment volumes, as well as a stabilizing labor environment in the United States. Overall price improvements also supported growth for the Care Enablement segment in the first quarter. This trend is likely to have been continued in the soon-to-be reported quarter. The company’s recently implemented new operating model might have continued to offer operational improvements during the second quarter. However, the bottom line is expected to have been hurt by inflationary cost increases in energy, material and personnel.
The Zacks Consensus Estimate for earnings is pegged at 24 cents per share. The consensus mark for revenues is pinned at $5.19 billion.
FMS has an Earnings ESP of 0.00% and a Zacks Rank of 3 at present.
Fresenius Medical Care AG & Co. KGaA Price and EPS Surprise
Fresenius Medical Care AG & Co. KGaA price-eps-surprise | Fresenius Medical Care AG & Co. KGaA Quote
Glaukos: The continued strong performance across international glaucoma and corneal health franchises is likely to have boosted top-line growth during the second quarter. Moreover, launch of new products like iPrime, iAccess and iStent during the past few quarters is expected to have been the key driver for the company’s revenue growth. Glaukos has successfully submitted a new drug application seeking approval for its advanced pipeline candidate, iDose TR, based on data from a phase III study. A potential approval is expected by the end of 2023. Glaukos is likely to discuss commercial plan for the iDose TR on its second-quarter earnings call. Meanwhile, ongoing clinical studies and launch of new products might have driven operating expenses higher during the soon-to-be-reported quarter.
The bottom-line estimate for the second quarter is pegged at a loss of 57 cents per share. The Zacks Consensus Estimate for revenues is pinned at $74.5 million.
GKOS has an Earnings ESP of 0.00% and a Zacks Rank of 3 at present.
Glaukos Corporation Price and EPS Surprise
Glaukos Corporation price-eps-surprise | Glaukos Corporation Quote
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McKesson Corporation (MCK) : Free Stock Analysis Report
Fresenius Medical Care AG & Co. KGaA (FMS) : Free Stock Analysis Report
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