What happened
A recent trend in the healthcare industry that was spoken of Tuesday by a major healthcare company's executives goosed the share prices of medical device makers on Wednesday. Two notable companies in the segment, Medtronic (MDT 0.56%) and Shockwave Medical (SWAV), both gained, with the former up 2.5% on the day and the latter rising by slightly more than 1%. The S&P 500 index ended the session essentially flat.
So what
At an industry conference Tuesday, executives of UnitedHealth (UNH -0.26%) described that trend in detail. CFO John Rex said that the healthcare and insurance giant has seen "strong outpatient care activity" from April until now. The bulk of this activity consists of Medicare recipients getting knee and hip replacements, as well as people undergoing heart procedures.
The driver of this trend is simple. Many patients put off elective surgeries during the earlier phases of the coronavirus pandemic. Some had no choice, as hospitals and medical facilities put elective procedures on pause at various points to preserve their capacity to treat COVID-19 patients and other people with acute conditions. Others postponed out of fear they would put themselves at higher risk of contracting the disease in a medical environment.
The resurgence in demand for these types of procedures is likely to persist in the medium term, at least. The average age of the U.S. population has been trending upward, and Medicare enrollments are high. Many older people were considered to be in at-risk categories for the coronavirus, and they protected themselves by staying at home and avoiding potential contagion situations more than other demographics.
Now what
More procedures like hip replacements mean more utilization of medical instruments -- hence the bumps in the share prices of Medtronic and Shockwave on Wednesday. It's probably early days for this trend, however, and we'll have to wait and see how it ultimately plays out. For now, though, it looks as if the medical device segment will experience notably higher demand in at least the next few months.