Wall Street analysts are predicting recovery of elective surgery volumes after analyzing a consumer sentiment survey and hospital tracking data, but the forecasts come amid a stark warning from the head of the CDC that rising COVID-19 metrics jeopardizes progress.
Results from two surveys from Needham and Jefferies suggest people are visiting hospitals more and are increasingly comfortable with undergoing elective procedures. If, as Needham analysts predict, the trends translate into a significant increase in procedure volumes, medical device sales could bounce back.
- A major caveat comes with data highlighted by CDC Director Rochelle Walensky, who warned rising COVID-19 cases, hospitalizations and deaths suggest the U.S. is on the same trajectory as European countries that are now contending with third waves. New cases are on the rise, Walensky said, noting data show a 10% rise in new cases over the past week. Deaths are starting to rise, too, close to 3 percent, for an average of 1,000 deaths daily. In some states the spike is much more dramatic, especially in Michigan, which is experiencing a 57% increase in cases after rolling back restrictions.
Over the past year, the volume of elective surgical procedures has ebbed and flowed as societies have opened up and closed down in response to changes in the COVID-19 case count. The surge in cases in the U.S. around the turn of the year suppressed volumes, causing sales to fall at companies including Edwards Lifesciences and Intuitive Surgical. For hospitals, suspending electives caused them to lose out on more than $20 billion at the outset of the pandemic.
COVID-19 cases fell steeply from mid-January onward. Analysts at Jefferies and Needham have gone over different datasets to determine if the improvement in the COVID-19 situation points to a more significant return of elective procedures.
The Needham analysts asked 255 people about their willingness to undergo elective procedures. The March survey showed 56% of people would be comfortable having a procedure done within the next three months, compared to 44% of respondents to the January survey.
"We believe that this survey shows that consumer sentiment towards elective procedures improved significantly from our survey in January, which probably isn't too surprising given decreasing infection rates and increasing vaccinations," the analysts wrote in a note to investors. "Given this, we believe that 2Q21 procedure volumes could be significantly better than 1Q21 procedure volumes and at, or even above, pre-pandemic levels."
Analysts at Jefferies analyzed location data from 40 million mobile devices in the U.S. to provide further evidence that surgical volumes could be set to improve. Foot traffic at hospitals rose 1.5% over the prior seven days in the week of March 21. The analysts said foot traffic is "not a perfect gauge of procedure volumes" but nonetheless suggests "trends are improving from recent lows."
Yet, the timing of the analyses means even that cautious forecast could prove to be overly optimistic. Needham collected its responses on March 17. The Jefferies hospital data covers the week of March 21. After falling for weeks, the seven-day rolling average of daily new U.S. COVID-19 cases bottomed out on March 23. Since then, the trend has reversed. The daily average rose 22% between March 23 and March 29.
Walensky and other top health officials are worried, to put it mildly, by the trend.
"I'm going to lose the script. And I'm going to reflect on the recurring feeling I have of impending doom. We have so much to look forward to, so much promise and potential of where we are, and so much reason for hope, but right now I'm scared," Walensky said.
The fear is underpinned by the similarity between rising COVID-19 cases, hospitalizations and deaths in the U.S. and the situations in European countries such as Germany, Italy and France a few weeks ago. Daily deaths in Italy increased 55% throughout March. Daily cases in France rose 74% over the same period.