The first-quarter 2025 earnings season is underway for the Medical sector (one of the 16 broad Zacks sectors within the Zacks Industry classification), with several MedTech companies already releasing their quarterly results. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Per the latest Earnings Preview, the Medical sector is one of the nine sectors whose first-quarter earnings are expected to be above the year-earlier period. It is also one of the sectors that is likely to witness double-digit earnings growth in 2025. This is likely to result from strong product revenues on growing demand across all industries, offsetting the shortcomings caused by worldwide geopolitical issues and policy changes. A stronger U.S. dollar may also have created headwinds for domestic medical device companies by making their products costlier overseas.
MedTech companies like Fresenius Medical Care AG FMS, Masimo Corporation MASI and Clover Health Investments, Corp. CLOV are likely to have been positively impacted by these tailwinds despite encountering turbulence on the macroeconomic front.
The latest Earnings Preview indicates that 45% of the companies in the Medical sector, constituting nearly 57.9% of the sector’s market capitalization, reported earnings until April 30. Of these, 66.7% beat earnings and revenue estimates. Earnings increased 85.2% year over year on the back of 70.4% higher revenues.
Overall, first-quarter 2025 earnings of the Medical sector are expected to improve 40% on the back of an 8.3% sales increase. This compares with fourth-quarter 2024 earnings growth of 13.4% and 9.4% reported revenue growth. Per the latest trends, the Medical sector is one of the nine sectors whose first-quarter 2025 earnings are expected to be above the year-earlier level.
MedTech Quarterly Synopsis
The continued adoption of generative Artificial Intelligence, or genAI, and digital therapies is helping to provide more efficient and patient-friendly services. Rising innovation and investment in this space are being driven by an aging population, growing healthcare awareness and increasing access to better health options. Many MedTech players are likely to have tapped into the growing demand for patient-centric healthcare solutions, generating new revenue opportunities. Market experts believe these trends will be a major driving force behind the current earnings season.
Although the scorecard so far reflects encouraging results, the sector may have faced challenges in the first quarter due to ongoing macroeconomic uncertainties stemming from the geopolitical environment, supply-chain disruptions driving up costs for labor and raw materials, and a shortage of freight and healthcare workers. Changes in U.S. trade policies, tariffs and the reaction of other countries are likely to have weighed heavily on MedTech companies, creating profitability pressures in the first quarter.
Overall, the January-March months were marked by strength in product portfolios and solid customer adoption of products. Let’s observe the status of the three MedTech players who are scheduled to announce results on May 6.
MedTech Stocks to Watch
Fresenius Medical Care: Fresenius Medical Care’s first-quarter 2025 revenues are likely to have been aided by the continued execution of the FME25 transformation program, which has already delivered EUR 567 million in cumulative savings, well ahead of schedule. These efficiencies, spanning back-office functions, manufacturing, and supply chain, are helping to cushion the impact of persistent headwinds such as elevated U.S. dialysis patient mortality and portfolio divestitures. However, elevated mortality rates in the U.S. dialysis market have persisted, affecting treatment volumes and overall growth. Additionally, labor cost inflation is expected to result in a net labor headwind of EUR 150 million to EUR 200 million in 2025, primarily due to wage increases. (Read more: Should You Buy, Sell, or Hold FMS Stock Before Q1 Earnings?)
Fresenius Medical Care AG & Co. KGaA Price and EPS Surprise
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
The Zacks Consensus Estimate for first-quarter 2025 earnings per share (EPS) is pegged at 43 cents. Revenues are expected to be $5.25 billion.
Fresenius Medical Care does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) — which increases the odds of an earnings beat. FMS has an Earnings ESP of -9.94% and a Zacks Rank #1. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Masimo: Masimo’s first-quarter 2025 results might have been favored by strength across its major product platforms, with pulse oximetry, CO-Oximetry and hemodynamics, capnography and gas and brain monitoring. During the last reported quarter, the company continued to realize the benefits of manufacturing its high-volume sensors in Malaysia. This is likely to have aided the company in the to-be-reported quarter as well, thereby driving up Masimo’s revenues.
The Zacks Consensus Estimate for first-quarter EPS is pegged at $1.24. Revenues are expected to be $367.3 million.
MASI has an Earnings ESP of 0.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Clover Health: Clover Health’s first-quarter 2025 revenues are likely to have been driven by sustained strong member retention and cohort management. Per management, the last reported quarter was a pivotal quarter that marked a significant turning point with adjusted EBITDA profitability and strong membership growth. It reported a 27% year-over-year increase in Medicare Advantage membership and a 95% retention rate, which are clear indicators of its competitive benefits and improved star ratings. Despite these positives, challenges include Clover Health’s rapid expansion, which will likely pressure near-term margins, as new members typically have higher loss ratios before cost efficiencies materialize.
Clover Health Investments, Corp. Price and EPS Surprise
Clover Health Investments, Corp. Price and EPS Surprise
Clover Health Investments, Corp. price-eps-surprise | Clover Health Investments, Corp. Quote
The Zacks Consensus Estimate for first-quarter loss per share is pegged at 7 cents. Revenues are expected to be $476.9 million.
CLOV has an Earnings ESP of 0.00% and a Zacks Rank #3.
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