While we view medtech names somewhat immune to economic cycles and having low correlation to GDP growth, this time has been different, with names down 30-40%.
There are 2 reasons for this:
· Hospitals shifting their focus on treating coronavirus patients rather than performing elective surgeries. Two states in the US have specifically asked their hospitals to stop elective procedures (NY and MA). We could see more states following the same path.
· Patients also are choosing to delay their surgery out of caution.
This has also happened in China and Italy: at a conference, Zimmer Biomet noted a 85-90% decline in elective procedures in China during January and February.
While this is not great news, the long term thesis on our medtech holdings is not broken and we do not recommend to sell them.
Julie S. Praline
Director, Equity Analyst
Direct: 617.226.0025
Fax: 617.523.8118
Crestwood Advisors
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Suite 500
Boston, MA 02109