coronavirus medtech medical device industry World Health OrganizationMedical device industry earnings will remain flat over the next 12 to 18 months as people hold off on medical procedures amid the COVID-19 pandemic and resulting recession, according to a new report from Moody’s.

Moody’s had previously projected of 2–4% annual growth.

“While underlying positive trends remain, including ongoing innovation and favorable longterm demographics, we expect some consumers will be slow to return to the healthcare system,” the Moody’s analysts said in the report, out June 11.

“While many procedures are already being rescheduled in certain regions, some consumers will be unable to pay for their procedures due to the economic downturn, as well as their unwillingness to engage with the healthcare system while the coronavirus outbreak persists.”

The predictions from Moody’s come at the same time that medtech industry stocks are taking a hit, along with the overall markets, amid investor worries over new COVID-19 outbreaks. MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies saw a –6% decrease last week.

The Moody’s analysts expect medical device industry earnings before interest, taxes, depreciation and amortization (EBITDA) to be in the –1% to 1% range over the next 12-18 months, with significant quarterly volatility.

Moody’s says of the declines will occur in the second quarter — a prediction also made by many medical industry executives in recent earnings calls. The large, investment-grade medical device and life sciences will see EBITDA fall 20–30% and revenue decline around 10% in 2020.

Medtech EBITDA, according to the Moody’s analysts, will recover to 2019 levels in 2021, with more than 30% growth next year.

Moody’s already changed its medical device industry outlook to stable from positive in March.

The more a medical device company relies on making products for elective procedures, the more exposure it has to the downturn, according to Moody’s. Orthopedic device companies such as Zimmer Biomet (NYSE:ZBH) and Stryker (NYSE:SYK) and dental device companies such as Dentsply Sirona (NSDQ:XRAY) will see a greater-than-average impact, according to Moody’s.

Moody’s expected better than average performance for device companies such as Becton Dickinson (NYSE:BDX)  and Abbott (NYSE:ABT)  that make products for acute care settings or serve stable markets such as diabetes care.