Medical device companies facing credit problems

With hospitals and other healthcare providers postponing their investments in medical devices, medical devicemakers are feeling some significant pain as well, according to a new report from Moody's Investors Service.

According to Moody's, the outlook regarding credit conditions for medical products and devices should be negative for the next 12 months. Not only are hospital cutbacks affecting medical devicemakers, but risks related to corporate acquisitions are weighing down companies in this sector, Moody's says.

It's worth noting that the economy isn't going to hit all medical device companies equally, however. Companies focused on elective procedures are likely to be at the most risk, because as anyone who works at a hospital probably knows first hand, strapped consumers are cutting back sharply on any medical costs they can avoid. And companies making high-cost medical equipment, especially imaging systems or hospital beds, are especially vulnerable to hospital cutbacks.

Still, over the long term, the graying of America, increased globalization and product innovation should help medical device players recover nicely, Moody's suggests.

To learn more about this report:
- read this HFMA News piece