Stream-of-Consciousness-Style Observations from the Top Company Reports

Each year in this issue, we share insights and (publicly available) revelations on the leading (by revenue total) medical device firms in the industry. The comprehensive reports feature highlights of the most recent fiscal year, including M&A activity, product announcements, executive moves, lawsuits, and more. It’s a comprehensive look at what each firm did during their latest 12-month financial period, which hopefully provides clarity on the position they’re in today.

Inevitably, as my colleagues and I write each of the companies in our group of 10 (totaling 30 companies among the three of us), reflections and observations take place. Further revelations materialize during the proofreading period. With this in mind, I tried to keep a running tally of several insights I gleaned during the process this year. The following are some of them in a stream-of-consciousness-style presentation.

The 2023 fiscal year seemed to be akin to the medical device firms following the cliché New Year’s resolution of “new year, new me.” That is, for the most part, they avoided aggressive actions beyond their walls and instead, seemed to focus more on self-reflection and self-improvement. In fact, I’ll even steal a quote from the Baxter report; José (Joe) E. Almeida—the company’s chairman, president, and CEO—said, “In summary, 2023 was a year of rebuilding and renewing our momentum.” Seems other CEOs may have viewed the year much in the same way.

Whether recent FTC oversight played a role in determining this course for the companies is virtually impossible to determine, but with the agency seemingly enhancing its scrutiny of deals and their impact on market dynamics, it wouldn’t surprise me if it made a few organizations rethink an acquisition.

During this year of internal focus, we saw companies evaluating business units and seeking to divest portions that didn’t align with long-term plans. While not all originated in 2023, there have been many examples of this in recent years (and featured within these reports).

GE HealthCare finally gained its independence. With that new-found freedom, it seems to be specifically focused on digital health and smart healthcare solutions. How that continues to take shape will be interesting to watch, but for now, they appear to be one of the leading firms for these types of offerings.

Meanwhile, Baxter can’t quite decide what to do with its kidney care unit, now referred to as Vantive. While early reports had the organization spinning it out to stand alone, it has since considered a sale of the business to private equity or another buyer. Either way, the plan to separate from it seems firm.

Medtronic went through the year (and then some) like a Ross and Rachel debate of will they/won’t they. For the company occupying the #1 spot on the list, the decision concerned shedding its Patient Monitoring and Respiratory Interventions division. Ultimately, this year, we finally found out Medtronic nixed the plan entirely, but would anyone be surprised to find out they put the unit back on the market? Anything’s possible.

Danaher emerged as a dedicated life-sciences company after splitting from Veralto. It can now maintain a laser focus on its diagnostic and other healthcare offerings.

While J&J MedTech is still a portion of the larger entity, it is now only coupled with the pharmaceutical business, making it another company now exclusively focused on healthcare. The organization has slimmed from its previous three-headed approach to now wholly targeting pharma and medtech.

Elsewhere, it was exciting to see the formation of a partnership with Big Tech, a trend that’s been predicted for some time but has only materialized successfully in limited form. This one involved Facebook and EssilorLuxottica in the creation of smart vision. As the eyeglass firm’s report states, the pair must work hard to avoid the fate of Google Glass in its technological quest. If successful, could bring about something truly revolutionary.

Effects from the pandemic were still being felt in FY23 as diagnostic testing providers saw their windfall of related revenue come to an end. Unless I missed one during my review, no one felt the impact as hard as Abbott, whose COVID test business took an 80% revenue hit. In real numbers, this translated into billions of dollars lost year-over-year. Couple this with the firm’s baby formula challenges and Abbott may need another recovery year in 2024.

In other unfortunate news, Dentsply Sirona went through a literal slimming down as it cut 8%-10% of its staff while reorganizing into five global business units.

What observations or conclusions did you make from the enclosed reports? As always, I’d love to hear your thoughts and opinions after your review. 

Sean Fenske, Editor-in-Chief
[email protected]