What Stryker and Smith & Nephew Implant Growth Can Tell Us About Elective Procedure Trends; Consistent With Earlier HCA Data
11-3-23 (by: Scott Gleason) Stryker and Smith & Nephew both reported their earnings yesterday and are major players in the global orthopedic markets. Interestingly, looking at the data for their hip and knee implants (both elective procedures), there is a stark trend very consistent with data reported earlier on surgeries by major hospital provider HCA Healthcare. Surgeries, and most notably elective surgeries appear to be on the decline after surging in the first half of calendar year 2023. We’ve already seen significant weakening in dental procedures by major technology providers in the space such as Align, Envista, and ZimVie. It appears this trend is also taking hold in orthopedics as well. Typically, there is positive seasonality for elective procedures after back to school and with patients meeting copay and deductible limits towards the end of the year. We will see this trend manifest in other obvious areas such as cosmetic surgery, but also in less obvious places such as genetic testing, elective imaging, and other elective surgeries. Healthcare has become more cyclical as copay and deductible limits increase on health plans, with 55% of individuals on high deductible plans in the United States. Stryker noted strong procedure growth on its call when raising its fourth quarter guidance, however we believe increased caution is appropriate given the data and a deteriorating consumer environment.