As the Q3 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the medical devices & supplies - specialty industry, including STAAR Surgical (NASDAQ:STAA) and its peers.
The medical devices industry operates a business model that balances steady demand with significant investments in innovation and regulatory compliance. The industry benefits from recurring revenue streams tied to consumables, maintenance services, and incremental upgrades to the latest technologies, although specialty devices are more niche. The capital-intensive nature of product development, coupled with lengthy regulatory pathways and the need for clinical validation, can weigh on profitability and timelines. In addition, there are constant pricing pressures from healthcare systems and insurers maximizing cost efficiency. Over the next several years, one tailwind is demographic–aging populations means rising chronic disease rates that drive greater demand for medical interventions and monitoring solutions. Advances in digital health, such as remote patient monitoring and smart devices, are also expected to unlock new demand by shortening upgrade cycles. On the other hand, the industry faces headwinds from pricing and reimbursement pressures as healthcare providers increasingly adopt value-based care models. Additionally, the integration of cybersecurity for connected devices adds further risk and complexity for device manufacturers.
The 7 medical devices & supplies - specialty stocks we track reported a satisfactory Q3. As a group, revenues beat analysts’ consensus estimates by 0.9%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 21.4% since the latest earnings results.
STAAR Surgical (NASDAQ:STAA)
With over 2.5 million implants performed worldwide, STAAR Surgical (NASDAQ:STAA) designs and manufactures implantable lenses that correct vision problems without removing the eye's natural lens.
STAAR Surgical reported revenues of $88.59 million, up 10.3% year on year. This print exceeded analysts’ expectations by 1.6%. Overall, it was a strong quarter for the company with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ constant currency revenue estimates.
“In the third quarter, we achieved double-digit sales growth against a macroeconomic environment that softened in the second half of the quarter, particularly in China,” said Tom Frinzi, President and CEO of STAAR Surgical.
The stock is down 40.7% since reporting and currently trades at $17.48.
Offering an alternative for the millions who struggle with traditional CPAP machines, Inspire Medical Systems (NYSE:INSP) develops and sells an implantable neurostimulation device that treats obstructive sleep apnea by stimulating nerves to keep airways open during sleep.
Inspire Medical Systems reported revenues of $239.7 million, up 24.5% year on year, outperforming analysts’ expectations by 0.9%. The business had a very strong quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ full-year EPS guidance estimates.
Inspire Medical Systems scored the fastest revenue growth among its peers. The stock is down 16.6% since reporting. It currently trades at $150.85.
With roots dating back to 1971 and a mission to improve blood-related healthcare, Haemonetics (NYSE:HAE) provides specialized medical devices and software for blood collection, processing, and management across plasma centers, blood banks, and hospitals.
Haemonetics reported revenues of $348.5 million, up 3.7% year on year, falling short of analysts’ expectations by 1.3%. It was a slower quarter as it posted organic revenue in line with analysts’ estimates.
Haemonetics delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 16.4% since the results and currently trades at $59.54.
With operations spanning 64 countries and a portfolio of over 10 new products launched in 2023 alone, Globus Medical (NYSE:GMED) develops and sells implantable devices, surgical instruments, and technology solutions for spine, orthopedic, and neurosurgical procedures.
Globus Medical reported revenues of $657.3 million, up 6.6% year on year. This number beat analysts’ expectations by 1.9%. It was a strong quarter as it also put up an impressive beat of analysts’ EPS estimates and a narrow beat of analysts’ constant currency revenue estimates.
Globus Medical delivered the biggest analyst estimates beat among its peers. The stock is down 8.1% since reporting and currently trades at $77.25.
With its name reflecting the mathematical term for "whole" or "complete," Integer Holdings (NYSE:ITGR) is a medical device outsource manufacturer that produces components and systems for cardiac, vascular, neurological, and other medical applications.
Integer Holdings reported revenues of $449.5 million, up 11.1% year on year. This print topped analysts’ expectations by 0.6%. Zooming out, it was a mixed quarter as it also logged full-year revenue guidance slightly topping analysts’ expectations but a miss of analysts’ EPS estimates.
Integer Holdings pulled off the highest full-year guidance raise among its peers. The stock is down 19% since reporting and currently trades at $116.19.
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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