Dive Brief:
- Varian Medical Systems on Monday announced a 2% uptick in second-quarter revenues, to $794.5 million, as the escalation of the coronavirus outbreak delayed oncology procedures and slowed installations of its equipment at hospitals. Net earnings were cut in half, falling to $43.2 million, or 47 cents a share, from $88.6 million, or 96 cents, a year ago.
- New cancer patient treatment starts have been delayed during the pandemic as hospitals canceled elective procedures such as mammograms, prostate cancer screenings and radiological exams, Chris Toth, president of Varian's oncology systems business, said on Monday.
- The company anticipates an even greater impact from COVID-19 in its fiscal third quarter, followed by a catch-up period for radiation therapy for cancer treatment with volumes improving in the fourth quarter, assuming there is not a second wave of coronavirus infections or related lockdowns.
Dive Insight:
Varian warned in early March that COVID-19 would negatively affect its operating results and has now withdrawn its fiscal 2020 guidance due to uncertainty about the severity and length of the pandemic.
The COVID-19 crisis has taken a toll particularly on sales at medtech companies with significant exposure to elective procedure markets. Device makers including orthopaedic specialist Stryker, surgical instruments makers Medtronic, Boston Scientific and Johnson & Johnson, and robotic surgery systems manufacturer Intuitive Surgical have all seen revenues slashed as the pandemic response takes precedence among their healthcare system customers.
CMS and the American College of Surgeons stressed the need to curtail non-essential medical procedures at the beginning of the outbreak. However, by mid-April they were looking ahead to an eventual resumption of elective operations even as the pandemic continued to gain momentum in many areas of the country, following President Donald Trump's announcement of a three-phase plan for reopening the nation.
Still, the chief cancer control officer for the American Cancer Society, Richard Wender, on Friday said the group recommends that no patients visit a healthcare facility for routine cancer screening at this time. "This means if you're due for your screening to detect breast, colon, cervix, or lung cancer, postpone your appointment for the near future," Wendler said in an update on the group's website.
Because cancer treatment is not an elective procedure, Varian said it expects radiation therapy volumes to rebound significantly in the short term as the pandemic stabilizes and cancer screening procedures resume. Cancer treatment "can only be delayed for a short period of time without significant negative consequences to the patient," Toth said on the company's earnings call.
Varian experienced a delay in new orders of about $40 million in the Americas during late March due to COVID-19, according to Toth. "While order activity resumed in April, it is too early to estimate when it will return to pre-pandemic levels," he added.
However, in the China market, Varian is optimistic that a recovery it is seeing in average treatment volumes will be sustainable as the pandemic is contained.
