Gilmartin Group Shares 2Q Earnings Takeaways
Managing investor expectations and capital during a crisis can be challenging for companies at all different stages. At the onset of the pandemic in 2020, many companies were faced with concerns about visibility into the upcoming financial information and their ability to “weather the storm” with their existing balance sheets. Many publicly-traded companies initially responded to these concerns by withdrawing their guidance and offering to reinstate guidance when practical to do so. Additionally, multiple small- and mid-cap publicly-traded companies took advantage of any opportunities to raise capital through follow-on offerings in recent months.
Going into 2Q20 the healthcare sector may experience a rocky financial moment despite all the attention the industry is receiving. The Gilmartin Group, a strategic advisory firm, outlined key takeaways around 2Q earnings and what this means for healthcare overall.
- Many companies in Healthcare IT and MedTech delivered earnings “beats” and the Street was more focused on the outlook for 2H and beyond. The second quarter tended to be a stronger quarter in healthcare IT and Medtech than was initially projected at the onset of the pandemic. As the majority of the investor and analyst community tends to be long-term focused by nature, a lot of the emphasis in the Q&A portion of recent earnings calls has been on the outlook for 2H20 and beyond, and read-throughs based on July trends.
- Guidance was provided or reinstated among companies that are more insulated from the pandemic and companies with greater visibility into 2H20. For example, Edwards, Dexcom, Cerner, and TelaDoc have all been providing guidance, or chose to reinstate this quarter. HCIT has been more insulated than MedTech as a whole, given the unknowns on elective procedure deferrals and patient behavior in certain COVID hotpots.
- Smaller consensus changes than expected. Based on Gilmartin’s analysis on consensus following Q2 earnings results, regardless of the magnitude of Q2 beat or cautious / optimistic comments about 2H, the changes to consensus in MedTech have been relatively small, with the exception of some outliers (such as Inspire Medical Systems). Among the companies analyzed, Gilmartin found that on average, consensus increased 3% for 2020 and 2% for 2021.
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