FTSE 350: Healthcare readies for post-Covid changes

Effects across the wider healthcare sector varied depending on product groupings, although providers of surgical equipment and post-operative supplies suffered disproportionately. You get some idea of this through Smith & Nephew’s (SN.) 11.2 per cent decline in revenue through 2020, leading to a 37 per cent fall in adjusted earnings. The negative impact of the pandemic was felt most acutely in the med-tech group’s orthopaedics and sports medicine & ENT franchises, although at least the group maintained its annual dividend rate due to its relatively unburdened balance sheet.

Naturally, healthcare providers were unable to clear the clinical backlog overnight as pandemic-linked restrictions eased. So it’s safe to assume that the FTSE 350 constituents will benefit from enhanced visibility on the sales front. It is also held that the pandemic could accelerate the adoption of tech-enabled practices in healthcare, with some services expected to move increasingly to a virtual setting or consumers' homes. The latter point is particularly relevant for anyone considering investments in the sector. Another point worth considering is the anticipated growth of the acute care facilities segment, a reflection of both demographic change and accelerated digital adoption.

The broader healthcare sector is viewed by BlackRock as a “defensive growth” sector, with demand underpinned by demographics and less vulnerable to cyclical global impacts, ergo “the strongest performer in late cycle and recessionary periods”. That’s worth taking into consideration given unfolding circumstances.