Hospital Capital Expenditures Continue to Improve (HealthPointCapital)
Hospital Capital Expenditures Continue to Improve
by Sander Duncan @ HealthPointCapital
Hospital capital expenditures are a leading indicator of hospital profitability, financial health and overall purchasing ability. During tough times, hospitals scale back on equipment purchases and facilities expansion -- sometimes dramatically. During the 2008 liquidity crisis, draconian capital expenditure reductions were implemented as hospital profit margins were eviscerated and institutions scrambled to preserve cash. As conditions improve, operating income margins return to health as hospitals recommence investing. Recent public company earnings announcements present clear evidence that this is happening today. Stryker and GE’s Healthcare division, major providers of hospital equipment, both recently reported significant hospital capital expenditure growth. Stryker’s MedSurg division in particular posted a 15.4% Y/Y increase in 4Q:10, with roughly 60% of its sales tied to hospital capital expenditure. GE Healthcare, meanwhile, saw its hospital equipment sales jump 11% Y/Y in 4Q:10.
These sales increases from major playe...
