The world's top 40 medical device companies overall have enjoyed a slight gain in stock price so far this year. But there are exceptions to the rule as well, with reasons ranging from Getinge AB's quality control issues to Terumo Corp.'s unmet expectations.
Here are five of the worst performing medical device companies so far in 2014, along with the year-to-date percent change in their stock price as of March 7.
Getinge AB: –16.9%
After faring poorly in late 2013 owing to decreased demand, Swedish medtech company Getinge AB's stock price has continued to take a beating over issues related to insufficient quality management.
The company—with annual revenue of 24.2 billion Swedish krona ($3.8 billion)—announced March 7 that it will spend 125 million krona ($19.6 million) a quarter for nearly two years to pay for external consultants to enhance quality management systems.
The company's stock price fell 7.2% in a single day, and it was down 16.9% for the year, to 182.8 krona ($28.62) per share, at the close of trading Friday.
The Getinge, Sweden–based provider of surgerical, intensive care, infection control, care ergonomics and wound care technology says the measures are needed because of results of FDA inspections in the second half of 2013.
Terumo Corp.: –9.37%
For Tokyo-based Terumo Corp., the story of its stock price appears to be related to unmet expectations.
While announcing third-quarter financial results last month, Terumo said operating income growth was slower than expected.
There have been distribution systems issues in Europe. The company, which makes and sells a wide range of general hospital products and equipment, also says its blood management business is facing declining blood transfusion use in the U.S. and Europe. The U.S. medical device tax is another issue to contend with.
On the flip side, a weakened yen is helping to boost sales, but currency situations can change.
As of March 7, Terumo's stock was down 9.37% for the year, to 4595 yen ($44.53) per share.
General Electric Co.: –6.78%
So far this year, General Electric stock is down to about $26 per share, after closing 2013 at $28.03 per share. Potential reasons include investor jitters over the health of emerging economies, and how the industrial giant's bottom line might be affected overseas.
It's hard to say how much healthcare really plays a role in the stock decline.
Healthcare pulled in $18.2 billion in sales in 2013, down slightly from 2012, but the revenue made up just 12% of the $146.0 billion-a-year company's sales. GE blamed lower prices and the effects of a stronger U.S. dollar on the slight sales decline in healthcare products. The segment's profit actually increased 4% in 2013 as a result of increased productivity and volume, partially offset by lower prices, the effects of inflation and the stronger U.S. dollar.
GE CEO Jeff Immelt told analysts last month that "healthcare growth markets were still pretty good" during the final months of 2013, according to Seeking Alpha transcripts.
Siemens AG: –6.69%
Siemens' total first quarter profits were 1.8 billion euros ($2.5 billion), up from 1.6 billion euros ($2.2 billion) from the same period a year before. But the German multinational's healthcare sector profits were down to 471 million euros ($653 million) during the final three months of 2013, compared to 503 million euros ($698 million) during the final three months of 2012.
Along with headwinds from the strength of the euro, Siemens blamed weak economic conditions in Europe, uncertainty in the healthcare market, the excise tax on medical devices in the U.S., and slowing growth in China.
Last year was not kind to the firm either. While the company's stock recovered from 2012 lows, the company had a mass layoff that included 300 employees working at a U.S. medical instruments facility. In all, the company announced that it would get rid of 15,000 international jobs.
Find out more about the medical device industry—including its technology, supplier networks, and much more—at BIOMEDevice, March 26-27, 2014 in Boston. Fresenius Medical Care AG & Co. KGAA: –5.31%
Fresenius Medical's stock took a 5.5% dive in price, to $34,28 per share, on February 25, when the German renal dialysis products maker's CEO Rice Powell said: "Looking ahead we are faced with a challenging environment, in particular with structural changes due to growing pressure on reimbursement systems. In order to successfully meet these changes we are concentrating on measures aimed at enhancing our profitability in 2014 and beyond."
As of early March, Fresenius' stock is trading for less than $34 per share.
2013 was not kind to the company either. Early in the year, the company experienced a regulatory setback with FDA FDA related to a production facility in Ogden, Utah. Overall, however, its stock performance throughout much of 2013 was mostly flat. It ticked up in December but early March, seemed to be on a downward trajectory again.
