DENTSPLY SIRONA to Post Q4 Earnings: What's in Store for the Stock?

As the fourth-quarter earnings season almost comes to an end, this week will be crucial for a few 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 strong demand, operational efficiencies and market expansion. Growth is also likely to have been fueled by increasing demand for healthcare services, product innovation and international market expansion. Cost optimization through strategic restructuring, advancements in medical technology and new product launches might have aided top as well as bottom-line performances further.

Going by the broader Medical sector’s scorecard, 85.2% of the companies in the Medical sector, constituting 97.3% of the sector’s market capitalization, reported earnings till Feb. 19. The bottom line improved 14.2% year over year on 9.4% higher revenues. Of the companies that have already reported, 71.2% beat on both earnings and revenues.

Overall, fourth-quarter earnings of the Medical sector are expected to improve 13.8% on 9.3% growth in revenues. This compares with the third-quarter earnings increase of 7.8% on revenue growth of 10.7%.

The bottom-line expectations for the fourth quarter look promising compared to the third-quarter performance. However, challenges persist, including supply-chain disruptions, regulatory uncertainties and pricing pressures. Raw material shortages and logistics delays are likely to have affected product availability, while evolving reimbursement policies might have created financial unpredictability. Currency fluctuations and volume-based purchasing programs in key international markets must have hurt profitability.

A few industry players like Fresenius Medical FMS, Masimo MASI, Merit Medical Systems MMSI and Inogen INGN are set to report their quarterly results tomorrow.

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

Factors Driving the Q4 Medical Device Earnings Season

The medical device sector is expanding rapidly due to the rising prevalence of chronic diseases, such as diabetes and cancer, as well as an aging population requiring advanced medical interventions. Increased awareness and accessibility to diagnostic and surgical procedures have fueled demand for medical devices, including minimally invasive surgical tools and wearable health monitors.

Additionally, regulatory bodies are fostering innovation by expediting approvals for breakthrough technologies, while substantial R&D investments by medical technology companies continue to enhance product offerings. The FDA granted breakthrough designation to 166 devices in 2024 compared to 145 devices in 2023. The growing number of inpatient admissions and outpatient procedures is further driving the need for advanced medical equipment in both developed and emerging markets.

The demand for diagnostic devices is rising due to the increased prevalence of chronic diseases and the growing emphasis on early detection. Advances in in-vitro diagnostics, imaging technologies and wearable health monitors are driving market growth. Additionally, regulatory approvals and investments in innovative diagnostic solutions are expanding access to faster, more accurate medical testing.

Despite these positive trends, the sector faces several challenges. The high cost of acquiring and maintaining advanced medical devices remains a significant barrier, particularly in emerging markets with limited healthcare budgets. Additionally, reimbursement policies for medical devices are often inadequate, restricting patient access to innovative treatments. Supply-chain disruptions and fluctuating raw material prices further increase financial pressure on manufacturers, affecting production and distribution. While technological advancements have improved efficiency, affordability concerns persist, slowing widespread adoption.

Medical Device Stocks to Watch

Fresenius Medical Care is likely to have maintained its positive trajectory in the fourth quarter, supported by continued operational improvements and transformation initiatives. The company reaffirmed its revenue growth outlook for the full year, while raising its operating income growth guidance toward the upper range of 16% to 18% on its the third-quarter earnings call. However, challenges, such as muted U.S. treatment volume growth, rising costs and expenses from value-based care, and virtual power purchase agreements might have hurt quarterly performance.

In the Care Delivery segment, steady progress is anticipated, with international markets expected to have contributed meaningfully to growth. While U.S. treatment volumes are likely to have been subdued due to elevated mortality rates, FMC's efforts in optimizing admissions processes and reducing missed treatments should have driven incremental gains.

Additionally, pricing improvements and higher reimbursement rates in certain regions are likely to have supported revenue growth. However, ongoing regulatory headwinds and reimbursement volatility might have presented obstacles.

The Care Enablement segment is expected to have maintained its strong momentum, benefiting from cost efficiencies driven by the FME25 savings program. While volume-based procurement in China might have exerted pricing pressure, overall improvements in operational efficiency and portfolio optimization should have contributed to margin expansion.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $5.39 billion, suggesting a 0.3% rise from the year-ago reported figure. The Zacks Consensus Estimate for earnings is pinned at 41 cents per share, indicating a 12.8% decline from the year-ago reported figure.

During the quarter, the company’s shares rose 6.3% against the industry’s 6.7% 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.

FMS has an Earnings ESP of -3.70% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Fresenius Medical Care AG & Co. KGaA Price and EPS Surprise

Fresenius Medical Care AG & Co. KGaA price-eps-surprise | Fresenius Medical Care AG & Co. KGaA Quote

Masimo is expected to have delivered a stable performance in the fourth quarter of 2024, driven by strong growth in its healthcare segment. The company projects healthcare revenues to be between $363 million and $373 million for full-year 2024, reflecting 7% to 10% growth. Expansion in consumables and service revenues is expected to have offset declines in capital equipment sales. Operational efficiencies, including the transition of sensor manufacturing to Malaysia, are likely to have contributed to higher margins and improved cost structure.

The non-healthcare segment, however, is likely to have faced ongoing headwinds, with revenue projected between $218 million and $238 million. Weak consumer demand for luxury products and slow housing market activity are likely to have contributed to this decline. Despite a challenging environment, Masimo’s fourth-quarter results are likely to reflect incremental improvements as the segment stabilizes. Additionally, strategic cost-cutting measures, including reductions in marketing expenses and corporate overhead, should have aided profitability.

The Zacks Consensus Estimate for revenues is pegged at $596.1 million, suggesting a rise of 8.6% from the year-ago reported figure. The Zacks Consensus Estimate for EPS of $1.49 indicates a year-over-year improvement of 19.2%.

During the fourth quarter, the stock rose 24% against the industry’s 6.7% decline.

MASI has an Earnings ESP of 0.00% and a Zacks Rank #2 at present.

Masimo Corporation Price and EPS Surprise

Masimo Corporation price-eps-surprise | Masimo Corporation Quote

Merit Medical Systems is likely to have maintained steady growth in the fourth quarter of 2024, with total revenues projected to increase 5.5-8.2% on a reported basis and 6.1%-8.8% on a constant currency basis. The Cardiovascular segment’s full-year revenues are anticipated to see moderate growth of 5-6%, driven by strong performance in peripheral intervention and custom procedural solutions despite supply-chain headwinds affecting OEM sales.

The Endoscopy segment is forecasted to deliver robust revenue growth of approximately 49% to 52% for the full year. This can be attributed to the acquisition of EndoGastric Solutions and increased adoption of new product offerings. However, foreign exchange fluctuations are expected to have created a minor revenue headwind of about $7 million. Additionally, ongoing volume-based procurement in China might have continued to exert pricing pressure on international sales.

The Zacks Consensus Estimate for Merit Medical’s quarterly revenues is pegged at $349.4 million, indicating an increase of 7.7% from the year-ago reported figure. The Zacks Consensus Estimate for EPS suggests a 2.5% improvement to 83 cents.

Meanwhile, during the fourth quarter, shares of the company lost 2.1% against the industry’s 0.2% increase.

MMSI has an Earnings ESP of +2.62% and a Zacks Rank #2 at present.

Merit Medical Systems, Inc. Price and EPS Surprise

Merit Medical Systems, Inc. price-eps-surprise | Merit Medical Systems, Inc. Quote

Inogen is likely to have continued on its path to improved financial performance in the fourth quarter, supported by growth in its business-to-business (B2B) segment. The company saw strong demand in both domestic and international B2B sales during the third quarter, driving overall revenue expansion. However, direct-to-consumer (DTC) sales remained under pressure due to a downsized sales force, though profitability in this segment is improving through better cost management. The trend is likely to have continued in the fourth quarter.

Gross margins are projected to remain in the low-to-mid 40% range, likely benefiting from cost optimizations such as second-sourcing raw materials and improved production efficiencies. While rental revenues are likely to have been impacted by shifts toward private payer reimbursement, operational streamlining should have enhanced long-term profitability.

Additionally, Inogen's recent product innovation, including the launch of the Rove 4 portable oxygen concentrator, is likely to have brought additional revenues in the soon-to-be-reported quarter. The company expects its full-year 2024 revenues to be in the range of $329-$331 million, implying 4-5% year-over-year growth.

The loss per share estimate is pinned at 57 cents, marking an improvement from the year-ago quarter's reported loss.

Meanwhile, during the fourth quarter, shares of the company lost 5.4% compared with the industry’s 6.7% decline.

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

Inogen, Inc Price and EPS Surprise

Inogen, Inc price-eps-surprise | Inogen, Inc Quote

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Maravai Lifesciences Holdings said Monday that it completed the acquisition of Officinae Bio's DNA and RNA business.

The company said the deal combines Officinae Bio's AI-driven mRNA design platforms with Maravai's and TriLink BioTechnologies' expertise in drug substance manufacturing, offering customers advanced technologies designed to achieve efficient progression from mRNA sequence optimization to clinical testing and commercial manufacturing.

Davide De Lucrezia, chief executive officer of Officinae Bio, will continue to lead the Officinae Bio team, now part of Maravai's Nucleic Acid Production segment, it added.