COVID-19 upends medtech’s financial outlook

The uncertain times brought on by the COVID-19 pandemic have affected businesses worldwide, and several sectors of medtech industry are projecting hits to their bottom lines.
A number of companies have announced decisions to withdraw financial guidance, cut hours and/or staff, among other major business decisions. Initial impacts of the global pandemic on Wall Street showed struggles for a lot of these companies, and many can’t forecast improvements yet.
In recent days, even more companies have been forced to make wide-ranging decisions, both positive and negative, in direct response to the effect that coronavirus has had on the medical space and global economics as a whole. You can track the top 100 medtech companies’ performance in the Medical Design & Outsourcing Medtech 100 Index.

Hologic (NSDQ:HOLX)

Hologic developed the Panther Fusion SARS-CoV-2 assay that was among the earlier COVID-19 diagnostic tests to gain emergency use authorization from the FDA last month after winning government funding to develop it. However, the company announced today that it is withdrawing its 2020 guidance due to the uncertainty brought on by COVID-19.
The Marlborough, Mass.-based company said the coronavirus hit its business hard in late March. Sales of breast health products were weaker because of restricted access to facilities, while sales of GYN surgical and diagnostic products dipped as a result of the deferral of elective procedures and office visits.
In reporting its first-quarter financial results on Jan. 29, Hologic said it expected to log adjusted EPS of $2.63–$2.67 this year with sales expected to be between $3.238–$3.268 billion. However, with COVID-19 expected to continue to negatively impact future revenue, the company is withdrawing those numbers and can’t quantify the net effect of the virus.
Hologic also withdrew its second-quarter guidance ahead of reporting its full results for the three months on April 29. The company now expects to report total revenues of $756.1 million, a decrease of -7.6% compared to the prior-year period.
“Our second quarter revenue results reflect the strong underlying momentum that has been building at Hologic over the last few years, and give us confidence that we will emerge from the current COVID-19 pandemic as a stronger company,” Hologic chairman, president & CEO Steve MacMillan said in a news release. “Disruptions caused by COVID-19 had a significant negative impact on sales in late March, as elective procedures and appointments were deferred, and our customers focused on responding to the pandemic. It has become clear that a lynchpin of that response is increasing diagnostic testing for the virus, and we are proud to be playing a leading role in this effort.”

Myomo (NYSE:MYO)

Myomo announced that it is expecting revenue delays because of COVID-19 and, as a result, it is suspending its guidance for 2020.
The Cambridge, Mass.-based company offers custom-fabricated devices with required in-person contact and delivery that are both being impacted by coronavirus restrictions. In addition, the company anticipates a delay in the launch of its MyoPal product later this year because of the concern over in-person interactions.
“With COVID-19 affecting our U.S. and European markets, our primary concern is for the health of our employees and the patients seeking a MyoPro,” CEO Paul Gudonis said in a news release. “As a result, revenues for the second quarter and possibly the third quarter of 2020 are expected to be negatively impacted.”
Myomo said it ended the first quarter with approximately $13.7 million in cash and equivalents with preliminary cash burn at approximately $2.4 million.
“We believe that Myomo is well-positioned to continue building the patient pipeline and authorization backlog through direct-to-patient online advertising, while conducting patient evaluations via telehealth video conferencing,” Gudonis said. “Importantly, we have sufficient inventory in our supply chain and expect to have the requisite fabrication capacity available to manufacture and deliver devices to patients quickly when public heath restrictions are eased.”

Endologix (NSDQ:ELGX)

Aortic disorder treatment developer Endologix announced yesterday that it is withdrawing its financial guidance for 2020 in the wake of COVID-19.
The Irvine, Calif.-based company anticipates that the virus will continue to have a negative impact on its business. Last month, it saw deferrals of abdominal aortic aneurysm procedures as hospitals’ focus shifted toward treating COVID-19 patients.
Endologix believes the majority patients whose procedures have been deferred will require treatment once hospitals regain their capacity, but in the meantime, the company said it has to closely monitor its balance sheet with an eye on improving liquidity.

Livongo Health (NSDQ:LVGO)

Diabetes treatment developer Livongo announced an increase in its projected first-quarter revenue guidance as it continues to monitor the situation regarding COVID-19.
The Mountain View, Calif.-based company’s new expected revenue is in the range of $62 million to $64 million, compared to prior guidance of $60 million to $62 million.
CEO Zane Burke said in a news release that Livongo is in the unique position of assisting vulnerable populations amid the coronavirus crisis, given that people with pre-existing chronic conditions such as diabetes are considered more vulnerable to the virus.