Recovery curve of procedure volume softer than consensus expectations

UBS Evidence Lab surveyed 40 hospital managers in the US. This is the 8th time. Executives pointed to a 10% decline in US surgical procedures in October, modestly better than down 12% in September but with an 11% decline expected in November. Volume outlook remains softer in 3 recent surveys, with surgical volume in Dec-quarter and 2021 expected to be down 9% and 5% respectively over 2019 (pre-COVID), which is softer than consensus expectations of flat to incrementally positive WW revenue growth by Dec-quarter. Survey data continues to indicate that hospital outpatient volumes remain more negatively impacted than inpatient, with outpatient down 9% in Oct and expectedly down 11% in Nov; inpatient down 6% in Oct and down 5% in Nov, leading to some downside in surgical volume. Colonoscopy is being deferred more in Nov than in Oct, but not as much as seen in April to May.

Possible downside to procedurally-driven Japanese players

While consensus expectations will likely come down near-term, we believe stock impact would be limited as vaccine development progresses. Nonetheless, we continue to believe that companies without new product launches could miss consensus expectations for recovery momentum.

Sentiment for capital spending mixed amid low expectations among investors

For capital expenditure, with much postponed investment, 30% of hospitals prioritize purchase of patient monitors, up from 23% in last month survey. As for the resume timing n capital spending, 18% of respondents chose within 2020 (unchanged from last month), while less chose early 2021 (5%) and more chose late 2021 (48%).

Japan? Sharp recovery in surgical vol in Sept while sluggish patient vol

We newly analyse data from AJHA (All Japan Hospital Association) for Sept-quarter (released on November 12).

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