Medical Device Stocks Report

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Medical Device Stocks Report

Deerfield Beach, FL / Aug 20, 2014 / 2013 was a challenging year for the medical device industry. At the beginning of the year, the industry was levied rather controversially a 2.3% excise tax. The medical device industry vehemently opposed the tax, saying that it will have a negative impact on their business.

Despite the opposition, the tax went into effect last year and remains in place. In 2013, medical device companies paid the U.S. government around $1.4 billion in medical device excise taxes, according to MassDevice. The tax revenue is expected to reach $30 billion over the next decade, according to government estimates. While it will certainly help the U.S. government pay for the Affordable Care Act, it is hurting medical device companies.

Not surprisingly, medical device companies have announced job cuts in order to offset the losses from the tax. A survey from the Advanced Medical Technology Association earlier this year showed that the tax on medical device manufacturers forced companies to layoff or avoid hiring 33,000 workers in 2013.

The tax certainly created a great deal of uncertainty for medical device industry last year. The outlook for the industry though has improved in 2014, according to Cheryl Richer, Director of Corporate Healthcare at ratings agency Standard & Poor’s. The ratings firm expects the industry to register single-digit growth overall in 2014. Here are some interesting medical device companies.

IsoRay Inc. (NYSEMKT: ISR): Based in Richland, Washington, IsoRay is engaged in the development, manufacture and sale of isotope-based medical products and devices for the treatment of cancer and other malignant diseases.

IsoRay’s shares have skyrocketed this year, gaining more than 400% year-to-date. The gains have come as the company continues to make strong progress. Earlier this week, IsoRay announced the publication of the first major peer reviewed study showing superior results using its Cesium-131 seeds in the treatment of metastatic brain cancer.

Cesium-131 offers superior clinical benefits for seed brachytherapy patients. The company received FDA clearance for Cesium-131 in 2003 for the treatment of malignant disease of the head and neck, brain, breast, prostate and other organs. Since the FDA clearance, IsoRay has been focused on increasing the awareness of Cesium-131 in the medical community. The publication of the first major peer reviewed study will certainly help the company in achieving its goals.

Commenting on the publication, Dwight Babcock, CEO of IsoRay, said that the company is extremely excited to have growing evidence that Cesium-131 isotope seeds continue to perform so well against aggressive cancers throughout the body and specifically now metastatic brain cancer. Babcock added that the company believes its marketing efforts will be enhanced by teaming up with medical industry thought leaders as they seek better solutions and outcomes for their patients.

C.R. Bard Inc. (NYSE: BCR): C.R. Bard focuses on the design, manufacture, packaging, distribution and sale of medical, surgical, diagnostic and patient care devices. The Murray Hill, New Jersey-based company sells a range of products to hospitals, individual healthcare professionals, extended care facilities and alternate site facilities on a global basis.

Recently, C.R. Bard released its financial results for the second quarter of 2014, posting a 29.6% increase in adjusted earnings per share to $2.06. On a reported basis, the company registered a loss of $119.4 million for the second quarter, down from a loss of $161.6 million reported for the same period in the previous year.

C.R. Bard’s reported revenue for the second quarter was $827.1 million, representing an increase of 8.8% on a year-over-year basis. Revenue from the company’s core Vascular product category jumped 9.8% on a year-over-year basis. Revenue from the Urology business jumped 8%.

C.R. Bard shares have outperformed the broad market this year, gaining more than 12.80%, compared to a gain of around 4.50% for the S&P 500.

Hologic Inc. (NASDAQ: HOLX): Hologic is a Bedford, Massachusetts-based developer, manufacturer and supplier of diagnostics products, medical imaging systems and surgical products to serving the healthcare needs of women.

Hologic is another medical device stock that has outperformed the broader market this year. Year-to-date, the company’s shares have gained nearly 15%. The gains have mostly come in the last two months.

Hologic, last week, released its financial results for its fiscal third quarter. Stephen MacMillan, President and CEO of Hologic, said that the company’s third-quarter results demonstrate the progress it is making in its turnaround efforts. MacMillan further added that key contributors to the third-quarter results were performance of the company’s 3D mammography business, service associated with its large and growing installed base of digital mammography systems, the molecular diagnostics business lines and the surgical business.

Hologic’s revenue for the fiscal third quarter ended June 28, 2014 rose 1% to $632.6 million, reflecting operational growth of 0.5% and positive currency impact of 0.5%. The company’s non-GAAP net income for the quarter, which excludes one-time gains and losses, was $102.4 million, or $0.37 per diluted share, beating the guidance range of $0.33 per share to $0.34 per share.

Intuitive Surgical Inc. (NASDAQ: ISRG): Intuitive Surgical is engaged in the design, manufacture and marketing of da Vinci Surgical Systems and related instruments and accessories. A di Vinci Surgical System includes surgeon’s console, a patient-side cart and a high performance vision system.

In the second quarter of 2014, the company launched the da Vinci Xi system in the U.S. The company noted that fifty of the ninety six systems it shipped in the second quarter were da Vinci Xi models. The company’s GAAP revenue for the second quarter was $512 million, down 11% on a year-over-year basis. On a GAAP basis, Intuitive Surgical reported net income of $104 million, or $2.77 per diluted share, compared to $159 million, or $3.90 per diluted share reported for the same period in the previous year.
Dr. Gary Guthart, President and CEO of Intuitive Surgical, said that he is encouraged by several trends in the second quarter. Dr. Guthart said that global procedures grew 8% on a sequential basis and 9% year-over-year.

Intuitive Surgical shares have gained more than 17% so far this year.

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