4Q 2020 Review: Late-Year COVID Surge Cancels Surgeries
by Mike Evers, Orthoworld
Content republished with permission from ORTHOWORLD® Inc., www.orthoworld.com
The orthopedic market’s sharp recovery on the strength of backlogged procedures lost momentum in the latter part of the third quarter. This deceleration gave way to a dramatic surge in the pandemic that further depressed surgical volumes in the fourth quarter. Early earnings previews from companies reinforce Orthoworld’s belief that the orthopedic market will decline around -10% in 2020. Below they preview some positives from the fourth quarter and the most recent COVID and U.S. jobs data, as well as some early thoughts for 2021.
4Q Bright Spots: Robotics and Mid-Tier Spine Companies
However, robotic sales remained surprisingly resilient for some players throughout 2020. Orthopedic robots are concentrated in the knee and spine segments that account for hospitals’ most profitable surgeries. Stryker, for instance, continued its run of success with its Mako system. The company described its second-quarter robot sales as a pleasant surprise, and then Mako passed the 1,000-placement milestone in 3Q20. Stryker expected a “record-setting” fourth quarter for Mako.
Exhibit 1: Daily Average U.S. COVID Hospitalization Metrics by Month
Exhibit 2: Adjusted US Unemployment Percentage by Month
Several mid-tier and smaller companies in the spine segment far outperformed the market in the third quarter. For example, Globus Medical grew +10.1% year over year in the third quarter, while ATEC grew +41%. Preliminary 4Q earnings indicate that trend will continue. ATEC’s 4Q growth topped +35%. Amid Medtronic’s significant organizational changes and NuVasive’s Pulse delays, ATEC expects to grow another +25% in 2021. Company CEO Patrick Miles said, “Our 2020 performance gives me great confidence in our ability to continue to earn market share.”
Larger players like Orthofix and Smith+Nephew reported 4Q declines in the single digits, with full-year decreases in the low double digits. Orthoworld believes that these results are more reflective of the overall market for the fourth quarter.
For more information on Fourth Quarter COVID, Jobs Data Orthopedic Market Outlook for Early 2021 see: https://www.orthoworld.com/orthopedic-market-top-takeaways-and-projections-for-2020/
