I don't know if we're going to have a double-dip recession, but the lack of jobs -- and therefore employer-provided health insurance -- seems to be hurting some medical device companies.
Johnson & Johnson
|da Vinci Systems Sold||104||108||105|
|Year-Over-Year Increase in da Vinci System Sales||58%||42%||22%|
|Year-Over-Year Increase in Procedures||37%||36%||33%|
Source: Company conference calls.
The slowdown in systems sales growth is somewhat misleading, because the first quarter of 2009 was the low point after sales came crashing down during the credit crunch. Systems sales reaccelerated throughout 2009 but have been relatively flat this year, and Intuitive Surgical has yet to match the 110 da Vinci systems sold in the fourth quarter of 2009.
As for the number of procedures, the decrease, albeit quite slight, is a little more troubling because Intuitive Surgical sells instruments and accessories used in the procedures. That category made up 37% of third-quarter revenue and has become a growing part of the revenue base. No growth there would result in a slowdown of revenue growth; it's as simple as that.
Of course, if the issue really is just delaying elective procedures, that may not be a problem for long-term investors; most surgeries can't be delayed forever. And Boston Scientific
Management is guiding for a 35% increase in procedures for the entire year, so it seems to have confidence that the downward trend may be ending sooner rather than later.
On the Motley Fool Rule Breakers discussion boards, subscriber Sarah Goddard had some good advice about the price crash today. "Time to buy or sleep through the pain -- whichever one has the time or cash for."
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