As the fourth-quarter earnings season progresses, this week will be crucial for many companies in the medical device sector. According to the latest Earnings Preview report, the Medical sector is poised for strong revenue and earnings growth. These gains are likely to have been driven by the sustained demand for medical products and services, along with strategic pricing initiatives, which are expected to have counterbalanced challenges such as global geopolitical uncertainties, supply challenges and healthcare labor shortages.

Going by the broader Medical sector’s scorecard, 72.1% of the companies in the Medical sector, constituting 91.4% of the sector’s market capitalization, reported earnings till Feb. 12. The bottom line improved 16.9% year over year despite 10.1% higher revenues. Of the companies that have already reported, 72.7% beat on both earnings and revenues.

Overall, fourth-quarter earnings of the Medical sector are expected to improve 13.4% on 9.6% growth in revenues. This compares with the third-quarter earnings increase of 7.8% on revenue growth of 10.3%.

The bottom-line expectations for the fourth quarter look promising compared to the third-quarter performance, primarily due to improving demand, healthy capital budgets and rising prices. However, some supply-chain issues arising due to the impact of hurricanes in the United States may impede growth. With a strong dollar, FX headwinds might also have aggravated during the fourth quarter.

A few industry players like Glaukos Corporation GKOS, Integer Holdings ITGR and AMN Healthcare Services AMN are set to report their quarterly results tomorrow.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Factors Driving the Q4 MedTech Earnings Season

The U.S. medical instruments sector demonstrated solid performance in the fourth quarter of 2024, driven by strong revenue growth, technological advancements and a rebound in elective procedures. Major industry players, including Johnson & Johnson and Medtronic, reported mid-single-digit revenue increases, with notable gains in their MedTech and specialized device segments. Johnson & Johnson’s MedTech division saw 6.7% operational growth, while Medtronic’s heart devices and diabetes units posted gains of 6.3% and 10.4%, respectively, reinforcing the sector’s resilience.

Several macroeconomic factors supported this momentum. The rising demand for medical procedures, particularly among an aging population, fueled revenue expansion. Additionally, the integration of AI and robotics in device manufacturing enhanced operational efficiency, boosting profitability.

However, challenges remain. Supply-chain disruptions, including a hurricane-induced IV fluid shortage, temporarily impacted hospital operations, leading to some deferred procedures. Nonetheless, analysts expect these disruptions to be short-lived, with minimal long-term effects on the industry’s overall trajectory.

MedTech Stocks to Watch

Glaukos demonstrated a robust 24% year-over-year sales improvement in the third quarter, driven primarily by the success of its iDose TR product and U.S. glaucoma franchise. This trend is likely to have continued in the soon-to-be-reported quarter.

iDose TR sales are being fueled by strong market adoption, clinical efficacy in sustaining intraocular pressure (IOP) reduction for up to three years, and its ability to improve patient compliance compared to traditional daily eye drops. The product’s successful U.S. launch and positive surgeon feedback have accelerated adoption, and Glaukos continues to invest in next-generation glaucoma therapies, further bolstering its market position.

The company also raised its full-year revenue guidance to $377-$379 million on its last earnings call, reflecting confidence in continued market penetration. With the forthcoming NDA submission for Epioxa, a next-generation corneal cross-linking therapy, GKOS is positioned for sustained growth. The company may provide an update on the progress with the submission on the fourth-quarter earnings call.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $100.8 million, suggesting a 22.3% rise from the year-ago reported figure. The Zacks Consensus Estimate for earnings is pinned at a loss of 43 cents per share, indicating a 31.8% improvement from the year-ago reported loss. 

During the quarter, the company’s shares rose 15.1% against the industry’s 6.6% decline.

Per our proven model, a stock with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating on earnings. However, this is not the case here, as you can see below.

GKOS has an Earnings ESP of 0.00% and a Zacks Rank #2 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Glaukos Corporation Price and EPS Surprise

Glaukos Corporation price-eps-surprise | Glaukos Corporation Quote

Integer Holdings reported a 9% year-over-year revenue increase, with 17% growth in its adjusted operating income. Its year-to-date sales of $1.27 billion highlight its resilience amid macroeconomic pressures. Improved margins and enhanced operational efficiencies have led to revised earnings per share guidance, signaling confidence in sustained profitability.

Margin improvement is likely to have continued in the fourth quarter, driven by strategic cost-cutting initiatives, optimization of manufacturing processes and disciplined pricing strategies. Additionally, Integer is likely to have benefited from automation enhancements and supply-chain efficiencies, which must have helped offset inflationary pressures.

The Zacks Consensus Estimate for revenues is pegged at $446.2 million, suggesting a rise of 8% from the year-ago reported figure. The Zacks Consensus Estimate for EPS of $1.46 indicates a year-over-year improvement of 5%.

During the fourth quarter, the stock rose 1.9% against the industry’s 6.6% decline.

ITGR has an Earnings ESP of 0.00% and a Zacks Rank #3 at present.

Integer Holdings Corporation Price and EPS Surprise

Integer Holdings Corporation price-eps-surprise | Integer Holdings Corporation Quote

AMN Healthcare’s decline in the majority of its segmental revenues during the third quarter was worrying, a trend that is likely to have continued in the fourth quarter. The contraction of both margins is also likely to have persisted. AMN Healthcare expects to register a decline in its overall top line and the majority of its segments for the fourth quarter of 2024.

However, the uptick in the segmental revenues of Physician and Leadership Solutions, locum tenens and Language interpretation services is likely to have offset some of the declines. Management confirmed that AMN Healthcare made progress on its market growth strategy with sequential improvements in the overall sales pipeline, Managed Services Program net wins and internal fill rates. This trend is likely to be reflected in fourth-quarter results as well.

The Zacks Consensus Estimate for AMN Healthcare’s quarterly revenues is pegged at $695.1 million, indicating a decrease of 15.1% from the year-ago reported figure.

The Zacks Consensus Estimate for fourth-quarter EPS suggests a 60.6% decline to 52 cents.

Meanwhile, during the fourth quarter, shares of the company lost 43.6% compared with the industry’s 16.8% decline.

AMN has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell) at present.

AMN Healthcare Services Inc Price and EPS Surprise

AMN Healthcare Services Inc price-eps-surprise | AMN Healthcare Services Inc Quote

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