(Bloomberg) -- The spread of Covid-19 across the U.S. is leading to increased numbers of patients delaying or canceling elective surgical procedures, a Jefferies survey of doctors shows.
Almost a quarter of surgeons, cardiologists and anesthesiologists surveyed by Jefferies reported an increase in deferrals or cancellations, with more than half expecting the trend to increase. The results confirm some concerns on Wall Street that the virus’s spread could hurt medical device companies.
“COVID is impacting procedure volumes in the U.S.; however, so far it is minimal: 3-4% across orthopedics and interventional cardiology in our survey,” analysts led by David Steinberg wrote. “Most procedures are likely to be shifted out as opposed to canceled outright.”
Jefferies called for investors to look at medical device companies with less exposure to elective surgeries, such as Edwards Lifesciences Corp., DexCom Inc., Penumbra Inc., and Novocure Ltd. Companies have highlighted large declines in elective procedures in China, Jefferies said.
The $4.5 billion iShares U.S. Medical Devices ETF (ticker IHI) has fallen 15% from mid-February, compared to a 17% decline for the S&P 500 Index. Despite the slide, the fund remains 4% higher in the past year, roughly quadruple the broader market’s return.
Of course the unknown trajectory of the spread makes modeling difficult for analysts and investors. But any deferral or cancellation of these expensive and elective procedures through the first half of the year would benefit managed care companies like Humana Inc., UnitedHealth Group Inc., and Centene Corp, the analysts wrote.
For managed care companies, these benefits could be offset by growing test volumes for the virus as well as free coverage of telemedicine and treatment for those infected.
©2020 Bloomberg L.P.
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