Getinge Earnings: Strong Start Puts Firm on Track Toward Upper End of Guidance

Narrow-moat Getinge GETI B posted solid first-quarter results. Management reiterated its full-year guidance provided in the fourth quarter of 2%-5% organic top-line growth. Based on the strong start to the year, the firm looks likely to push toward the top of that guidance range, in line with our forecast. We maintain our fair value estimate of $260 per share.

Net sales rose by 7.5% organically year over year. This was against a fairly normal comparable quarter which was no longer obscured by pandemic-driven ventilator demand. On an organic basis, acute care therapies grew by 7% due to fulfillment of ventilators in China. Life science saw a 10% drop in sales due to reduced demand for vaccine-related consumables, and surgical workflows posted 20% organic growth across its portfolio. Order intake grew by 2.9%, a somewhat milder change due to reduction in capital goods demand following COVID-19.

Supply chain issues were partially resolved for the firm over the quarter. The surgical workflows segment showed strong backlog recovery thanks to better component availability. Currently only intra-aortic balloon pumps and products for ecmo therapy have notable order backlogs. Salary inflation was present as well.

The firm’s strong performance this quarter, particularly in the surgical segment, is consistent with rebounding device demand we’ve seen due to the resumption of healthcare utilization in the quarter. We think there is a strong path for further growth in the near term given improvements in labor challenges at hospitals that open the door to increased utilization.