What happened

Shares of several medical device makers and medical technology companies beat the market in May, according to data provided by S&P Global Market Intelligence. They included Masimo Corporation (NASDAQ:MASI), up 12.3%, Intuitive Surgical (NASDAQ:ISRG), up 13.5%, and Align Technology (NASDAQ:ALGN), up 14.3%.

All three companies' shares handily beat the S&P 500 index, which rose by only 4.5% for the month. All three are also now in positive territory for the year.

A group of images showing medical technology devices like MRI machines and touchscreens.

Image source: Getty Images.

So what

Although all three of these companies are in the medical technology business, they're very different from one another.

Masimo primarily manufactures noninvasive pulse oximetry devices -- which you may know as those little doohickey things that a nurse clamps onto the end of your finger to measure your heart rate and blood oxygen levels. These are essential medical devices, and have become more important recently because some COVID-19 patients develop "silent hypoxia," or abnormally low blood oxygen without traditional symptoms like gasping for breath. Noninvasive pulse oximeters can detect such a condition very quickly. 

Intuitive Surgical's machines, by contrast, are massive robot-assisted surgery devices currently used for elective surgeries, mostly in the fields of urology and gynecology, although the company plans to branch out into other minimally invasive procedures. Intuitive uses a "razor-and-blade" model for its devices, first selling its very large and very expensive da Vinci system to a hospital and then obtaining recurring revenue for service and replacement of parts. 

Align Technology's products are also elective: The company is best known for its Invisalign clear tooth aligners, an alternative to metal braces for the 60% to 75% of the global population that suffers from malocclusion, or misalignment of teeth. 

Despite their differences, though, the three companies have seen their operations upended by the coronavirus pandemic. Masimo's products were in high demand, but it announced that due to worldwide blood shortages, it would offer free licenses of its rainbow platform, which measures 12 different parameters, to hospitals using rainbow-ready devices. The company also rolled out SafetyNet, a remote patient monitoring program to aid in COVID-19 response efforts.

Align and Intuitive began to be affected by the pandemic in mid-March, when Surgeon General Jerome Adams and the Centers for Medicare and Medicaid Services recommended holding off on elective procedures, including dental procedures, due to the health crisis. By the end of April, more than 30 governors had issued executive orders banning or postponing all elective surgeries in their states. Unsurprisingly, that led to rough Q1 performance for Align and Intuitive.

In May, though, many states began allowing hospitals to resume elective surgeries, which gave investors confidence that Align and Intuitive would recover their lost business. And on April 28, Masimo reported strong Q1 earnings, which powered the stock into May.

Now what

All three of these companies seem to have good long-term prospects. Their cutting-edge medical technology should continue to be in high demand, especially once the COVID-19 crisis has passed.

That said, it's important to remember that the pandemic (not to mention its economic fallout) is still going on. Even though elective surgeries are allowed for now, a second wave of COVID-19 infections could change that. Plus, unemployment is still high, which may affect people's ability to afford elective surgeries, orthodontics (which are often not covered or only partially covered by insurance), or at-home blood oxygen monitoring. Also, as Masimo noted in its Q1 earnings release, there may be supply chain disruptions or future demand disruptions as long as the pandemic continues to affect the global healthcare system. 

Investors who buy into these stocks now will need to look past potential short-term volatility and instead at the long-term prospects of these medical technology titans. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.