This year is proving to be a pretty good year for many medtech companies. The majority of the largest 40 have seen their stock prices rise by double-digit percentages in 2014, according to a Qmed analysis.
Meanwhile, only eight have seen their stock prices decline since January 1.
Medical device company executive may have plenty of things to complain about: fragile developed world economies, Obamacare putting the squeeze on device prices and utilization, the U.S. medical device tax, and a dearth of new blockbuster products. But investors, obviously see a lot of good in the industry, too.
Here are four companies that have turned things around after facing rough starts in early 2014:
1. Edwards Lifesciences
After struggling in 2013, Edwards Lifesciences saw its fortunes brighten in the first half of this year, especially in the courtroom. The trend is only accelerating.
Edwards stock was up nearly 31% in value during the first six months of 2014. As of mid-September, it was up 53.4%, trading around $101 per share.
The Irvine, CA–based leader in heart valves and hemodynamic monitoring saw its stock shoot up in April, to around $81 per share from a previous $73, when a federal district court issued a preliminary injunction in favor of Edwards in a transcatheter heart valve patent case with Medtronic. The injunction blocked Medtronic from selling its CoreValve System in the United States.
Amid the threat to U.S. CoreValve sales, Medtronic officials apparently decided that spending more than $1 billion over the next eight years was worth it when it comes to ending the patent battle with Edwards.
Medtronic announced in May that it had agreed to pay Edwards a $750 million payment upfront—and between $320 million and $480 million in license royalty payments over the next eight years—to settle all pending cases or appeals in courts and patent offices around the world.
For the six months ended June 30, Edwards Lifesciences earned $607 million, nearly triple the $237 million it earned during the first half of 2013. Sales were up 8.2% to $1.1 billion.
2. Intuitive Surgical
“Rollercoaster” is the word that best describes Intuitive Surgical’s stock price. But the Sunnyvale, CA–based maker of da Vinci surgical robots is now up 23.6% for the year, with its stock trading around $475 per share in mid-September.
The situation was pretty different five months ago. Intuitive Surgical stock fell 11.5% in value on April 23 after a disappointing quarterly earnings report and the FDA raising cancer concerns over how robotic hysterectomies are performed.
Its top executives had already been engaged in damage control in the discourse regarding the safety of Da Vinci robotic surgery.
Intuitive reported that first-quarter earnings were down 76% and revenue was down 24% from a year before.
By early May, Intuitive was announcing an acceleration of its $1 billion share buyback program to prop up its dwindling stock price.
The move appears to have helped. The company also reported some good news with its second quarter results: positive feedback from surgeons over the new da Vinci Xi surgical system, a strengthened direct presence in Japan and Europe, and a growth in U.S. procedures over the first quarter.
The company earned $148 million off $977 million in revenue during the first six months of 2014, but that was down from $348 million in profits off $1.2 billion in sales during the same period in 2013.
Some analysts, including at the Motley Fool, wonder whether tightening hospital budgets and continued questions over the da Vinci’s efficacy will cause more trouble for Intuitive.
3. Essilor International
The French lens and optical equipment maker had a rough 2013 amid a longer-than-expected North American rollout of its Varilux S series of lenses, which boast 50% wider field vision through a design that utilizes both eyes working together.
Essilor’s stock was pretty much unchanged in value during the first half of 2014. But now it is up about 9.5% for the year, trading around 85 euros per share.
Why the improvement? Essilor in early August released a pretty positive earnings report for the first half of 2014. Profits were up 11% year-over-year, to 494 million euros, and sales were up 7.9%, to 2.78 billion euros.
“Our focus on innovation combined with assertive consumer communication campaigns and a new operational organization have started to pay off with independent eyecare professionals and key accounts,” Essilor CEO Hubert Sagnières said in the report.
4. Terumo Corp.
Terumo’s stock was down 10.7% in value during the first six months of 2014, with company officials saying “conditions were generally severe in the global healthcare market as pressure mounted in developed countries to control healthcare costs.”
But as of mid-September, Terumo stock is up more than 1% for the year and trading around 2565 yen per share.
The Tokyo-based company, which makes and sells a wide range of general hospital products and equipment, has been seeking to become a global presence. It received a boost in June amid the Japanese government’s medical device industry deregulation meant to help revitalize the economy, according to a company report.
