Getinge Earnings: Small Steps Mark the Beginning of Expected Recovery

Getinge’s second-quarter results were hurt by ongoing regulatory and quality issues in the acute care therapies segment, but on the whole, quarterly revenue shortfalls weren’t as bad as we’d been expecting, while the impact on profitability was greater than we’d estimated. As a result, we’re leaving our fair value estimate unchanged after moderating the anticipated decline in acute care revenue for the full year, which was offset by steeper-than-expected margin declines. Despite all the near-term disruption, we see little that threatens Getinge’s narrow economic moat, which really stems from the switching costs associated with the sterilization business.