As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the medical devices & supplies - imaging, diagnostics industry, including Lantheus (NASDAQ:LNTH) and its peers.
The medical devices and supplies industry, particularly those specializing in imaging and diagnostics, operates with a comparatively stable yet capital-intensive business model. Companies in this space benefit from consistent demand driven by the essential nature of diagnostic tools in patient care, as well as recurring revenue streams from consumables, service contracts, and equipment maintenance. However, the industry faces challenges such as significant upfront development costs, stringent regulatory requirements, and pricing pressures from hospitals and healthcare systems, which are increasingly focused on cost containment. Looking ahead, the industry should enjoy tailwinds from advancements in technology, including the integration of artificial intelligence to enhance diagnostic accuracy and workflow efficiency, as well as rising demand for imaging solutions driven by aging populations. On the other hand, headwinds could arise from a rethinking of healthcare costs potentially resulting in reimbursement cuts and slower capital equipment purchasing. Additionally, cybersecurity concerns surrounding connected medical devices could introduce new risks and complexities for manufacturers.
The 4 medical devices & supplies - imaging, diagnostics stocks we track reported a mixed Q2. As a group, revenues along with next quarter’s revenue guidance were in line with analysts’ consensus estimates.
While some medical devices & supplies - imaging, diagnostics stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.1% since the latest earnings results.
Weakest Q2: Lantheus (NASDAQ:LNTH)
Pioneering the "Find, Fight and Follow" approach to disease management, Lantheus Holdings (NASDAQGM:LNTH) develops and commercializes radiopharmaceuticals and other imaging agents that help healthcare professionals detect, diagnose, and treat diseases.
Lantheus reported revenues of $378 million, down 4.1% year on year. This print fell short of analysts’ expectations by 2.5%. Overall, it was a disappointing quarter for the company with full-year revenue guidance missing analysts’ expectations.
“In the second quarter and the month thereafter, we completed the acquisitions of both Evergreen Theragnostics and Life Molecular Imaging – key steps in executing our strategy to expand capabilities across the radiopharmaceutical value chain, diversify revenue, including with Neuraceq, and drive future growth. At the same time, we navigated increased competition in the PSMA PET landscape, which impacted PYLARIFY performance. We are taking actions to reinforce PYLARIFY’s clinical differentiation and support the value of our PSMA PET franchise,” said Brian Markison, CEO.
Lantheus delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 28.1% since reporting and currently trades at $52.20.
Is now the time to buy Lantheus? Access our full analysis of the earnings results here, it’s free.
Best Q2: GE HealthCare (NASDAQ:GEHC)
Spun off from industrial giant General Electric in 2023 after over a century as its healthcare division, GE HealthCare (NASDAQ:GEHC) provides medical imaging equipment, patient monitoring systems, diagnostic pharmaceuticals, and AI-enabled healthcare solutions to hospitals and clinics worldwide.
GE HealthCare reported revenues of $5.01 billion, up 3.5% year on year, outperforming analysts’ expectations by 1%. The business had a very strong quarter with a solid beat of analysts’ full-year EPS guidance estimates.
GE HealthCare scored the fastest revenue growth among its peers. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $77.76.
Is now the time to buy GE HealthCare? Access our full analysis of the earnings results here, it’s free.
QuidelOrtho (NASDAQ:QDEL)
Born from the 2022 merger of Quidel and Ortho Clinical Diagnostics, QuidelOrtho (NASDAQ:QDEL) develops and manufactures diagnostic testing solutions for healthcare providers, from rapid point-of-care tests to complex laboratory instruments and systems.
QuidelOrtho reported revenues of $613.9 million, down 3.6% year on year, in line with analysts’ expectations. It was a slower quarter as it posted a significant miss of analysts’ full-year EPS guidance estimates and a slight miss of analysts’ constant currency revenue estimates.
Interestingly, the stock is up 22% since the results and currently trades at $28.92.
Read our full analysis of QuidelOrtho’s results here.
Hologic (NASDAQ:HOLX)
As a pioneer in 3D mammography technology that has revolutionized breast cancer detection, Hologic (NASDAQ:HOLX) develops and manufactures diagnostic products, medical imaging systems, and surgical devices focused primarily on women's health and wellness.
Hologic reported revenues of $1.02 billion, up 1.2% year on year. This number beat analysts’ expectations by 1.7%. It was a strong quarter as it also logged an impressive beat of analysts’ EPS guidance for next quarter estimates and a narrow beat of analysts’ constant currency revenue estimates.
Hologic achieved the biggest analyst estimates beat and highest full-year guidance raise among its peers. The stock is down 2.2% since reporting and currently trades at $63.55.
Read our full, actionable report on Hologic here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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