Earnings season is in full swing, offering investors an awesome opportunity for an update on portfolio companies and their competitors. While press releases are chock-full of numbers and details, the carefully worded statements around business trends often leave investors wanting more. That's where earnings calls come in. Though they're also subject to the limitations of canned management speeches, the session of questions and answers at the conclusion of each call can help investors scratch the surface of what's really going on.
This week has been a busy one for the medical technology business, with a variety of large players in the industry reporting results. One area of common ground was macroeconomic weakness -- particularly in Europe -- and its impact on procedural growth and, ultimately, revenue. Below, I walk through some notable earnings call quotes from each company around international business trends, with an emphasis on Europe.
Intuitive Surgical (Nasdaq: ISRG )
- "....procedure growth was challenged by a continuing weakness in Europe."
- "...we expect economic pressure in Europe to persist for the near future."
- "Total procedure growth quarter -- year-over-year was 22%. And then what we said was that the procedure growth outside of the U.S. year-over-year was 9%."
Johnson & Johnson (NYSE: JNJ )
- On the knee replacement market: "Competitive pressures and the softer market affected growth in Europe"
- "In Europe, we do see, in the MD&D [Medical Devices & Diagnostics] businesses, some volume pressures, particularly in Greece, Spain, Portugal and early signs also in Italy.
- "...the Europe business for Johnson & Johnson, we reported 7% operational growth...within the MD&D business, excluding Synthes, it marginally declined in the quarter, but only slightly. So we are seeing some pressure as we expected to see early in the year in the procedural volumes in Europe as well."
Stryker (NYSE: SYK )
- "So we really have a challenge in Europe that we have to address. We normally see September as a month where the sales will pick up. Even in Medical here in the U.S., we didn't see the kind of pickup we were anticipating. And certainly, in Europe, the normal pickup that we would have, that we had factored into our projections did not materialize."
St. Jude Medical (NYSE: STJ )
- "We experienced a negative impact this quarter from European austerity measures, which includes an overall slowdown in cardiovascular procedures in Europe."
- "The best way to characterize our information and our observations here at this point is to say that our markets just generally seemed sluggish."
Boston Scientific (NYSE: BSX )
- "We believe the risks of increasing macroeconomic weakness, particularly in Europe, and softening procedural volumes are real."
- "So, if you look at the midpoint of our guidance from a CRM [Cardiac Rhythm Management] perspective globally, it's down about 5% year-over-year. That's more or less what we're calling the market."
As you can see from the quotes above, the international environment, particularly in Europe, will be a key area to watch for medical devices companies. By paying attention to earnings calls, and learning more about the nuances of a particular industry, investors can make more informed investment decisions going forward. In this case, it would be a safe bet to expect fellow cardiac device player Medtronic (NYSE: MDT ) , and robotic surgery company MAKO Surgical (Nasdaq: MAKO ) , to have faced some of these same headwinds when they report earnings next month.
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