Feb 14, 2019

A slice of the health care industry is disappointing Wall Street

Illustration: Aïda Amer/Axios

Medical device and equipment makers are nearly 5 times more likely to have lowered profit expectations for this year than the rest of the S&P 500.

By the numbers: Of the 26 health care device and equipment makers in the S&P 500, 11 missed Wall Street's expectations for 2019 guidance, according to FactSet.

  • The sector only accounts for 5% of the S&P 500, yet they represent 20% of all companies that gave downbeat forecasts — second only to tech.

The big picture: Many of these companies, which sell products that help keep people alive like heart valves, IV bags and dental equipment, make sizable portions of their revenues abroad.

  • Six of the 11 companies that missed on guidance make at least 50% of their revenue abroad.
  • For example, Waters, which makes laboratory software and equipment, booked 80% of last year's sales outside of the U.S.

What they're saying: As fears of an earnings recession this year stir, these executives are blaming the strong U.S. dollar for less-than-expected profits in upcoming quarters.

  • "I know the world worries about the volatility of [emerging] markets and the reliability of those markets, and in particular, currency. And we're all going to live with currency if we're a multinational company, and I don't think we're any different." — Miles White, Abbott Labs CEO
  • "As you see the dollar continue to strengthen, not only against the euro ... But it's pretty much against every other currency around the world. And so that's a little bit worse." — Chris Reidy, CFO of BD

Be smart: A guide-down of one quarter's worth of earnings doesn't change the necessity, market power or overall profitability of these companies. It reflects some of the volatility that comes with selling medical products in other, more regulated health care systems overseas.

Go deeper

How to understand the scale of American job decimation

Data: U.S. Bureau of Labor Statistics via St. Louis Fed; Chart: Andrew Witherspoon/Axios

Sentence from a nightmare: 6.6 million Americans filed for unemployment last week, a decline from the previous week's 6.9 million.

The big picture: Over the past three weeks, 1 in 10 working-age adults filed for unemployment, Axios' Courtenay Brown notes.

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 4:30 p.m. ET: 1,579,690 — Total deaths: 94,567 — Total recoveries: 346,780Map.
  2. U.S.: Total confirmed cases as of 4:30 p.m. ET: 452,582 — Total deaths: 16,129 — Total recoveries: 24,790Map.
  3. Public health latest: U.S. has expelled thousands of migrants under coronavirus public health orderDr. Anthony Fauci said social distancing could reduce the U.S. death toll to 60,000.
  4. Business latest: The Fed will lend up to $2.3 trillion for businesses, state and city governments — Another 6.6 million jobless claims were filed last week.
  5. World latest: Boris Johnson is moved out of ICU but remains in hospital with coronavirus.
  6. In Congress: Senate in stalemate over additional funding for small business relief program.
  7. What should I do? Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Biden rolls out new policies in effort to court Sanders supporters

Photo: Scott Olson/Getty Images

The Biden campaign announced two new policies on Thursday on health care and student debt that are squarely aimed at appealing to supporters of Bernie Sanders, who ended his campaign for the Democratic nomination on Wednesday.

Why it matters: The policies don't go as far as Sanders' platform, but they signal that Biden is serious about incorporating elements of his former rival's agenda in an effort to help unify the Democratic Party and defeat President Trump in the general election.