Medical Equipment Distributors

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 8,100 medical equipment distributors in the US sell and distribute a broad range of medically related products, principally to hospitals, physician and dental practices, alternative care and rehabilitation facilities, and directly to the home healthcare market. Major categories of products include medical/surgical instruments and equipment, medical and hospital supplies, and dental equipment and supplies.

Growing Industry Consolidation

In recent years, the medical, dental and hospital equipment and supplies distribution industries have undergone consolidation.

Complex Billing and Record Keeping Requirements

Medical equipment distributors are frequently subject to many stringent and complex billing and record-keeping requirements in order to substantiate claims for payment under both government and private insurance healthcare reimbursement programs.

Industry size & Structure

The average medical equipment distributor employs 32-33 workers and generates $16 million in annual revenue.

    • There are about 8,100 distributors with total sales of $129 billion and 263,200 employees.
    • The hospital equipment and supplies market is dominated by the influence of Group Purchasing Organizations.
    • The physician office-based practice market is increasingly being influenced by the growth of Integrated Healthcare Networks, as more independent physician practices merge and consolidate.
    • Dental practices have generally remained small and independent, leaving distributors with unique challenges in servicing a large number of small, scattered customers efficiently and profitably.
    • The three largest medical/dental product distributors are Owens & Minor, Henry Schein, and Patterson Companies.
                                Industry Forecast
                                Medical Equipment Distributors Industry Growth
                                Source: Vertical IQ and Inforum

                                Coronavirus Update

                                Aug 3, 2022 - Long-awaited Semiconductor Legislation Advances To President’s Desk
                                • The US Congress passed the CHIPS and Science Act, a bill aimed at boosting US semiconductor production. The Act, which is expected to be signed into law by President Biden, is a scaled-down version of previous bills. It offers more than $52 billion for US chipmakers as well as tax credits for domestic factories but isn't expected to affect production in the short term. Medical equipment distributors are likely to benefit if the measure boosts product availability, but experts say that it will take companies years to build new factories and otherwise upgrade facilities to tackle chip shortages and increase manufacturing independence.
                                • Supply chain and inflation issues that affected the industry in the first half of 2022 are likely to persist through the rest of the year, according to RBC Capital Markets. Manufacturers, especially smaller firms, likely will curb spending in the second half of the year as they prepare for a potential recession amid rising inflation and as supply chain and staffing woes continue. Macro trends such as supply chain constraints, inflation, and hospital staffing shortages have shaped industry performance since the second half of 2021.
                                • China's zero-Covid policy is affecting availability of medical supplies, and the provision of health care is being affected. Many doctors are prioritizing only the most critical patients and hospitals are rationing supplies of a crucial drug after a covid lockdown in China temporarily closed a GE Healthcare factory that is a vital source for a key ingredient in medical imaging. The shutdown of the facility in Shanghai in April halted production of contrast media, an iodine solution that medical staff inject into blood vessels to allow a device such as a CT scanner or fluoroscope to see inside the body. GE Healthcare said in late May that it expects to have supplies flowing normally again by the end of June. It has shifted production to a plant in Ireland and is flying shipments into the US to speed delivery.
                                • Current medical equipment and supply shortages dwarf the problems experienced in the early days of the coronavirus pandemic, according to Forbes Magazine. Shortages might have been more urgent in early 2020, but today’s problems include a much wider array of items. Shortages can be traced to component scarcities, backlogged ports, transportation glitches, and lockdowns in China to combat the spread of Covid-19. Healthcare logistics firm Owens & Minor says that 45% of the items it handles are in some way supply constrained.
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