No one could have predicted the events of 2020. However, given the strength and evolution of the healthcare and biotech industry over the past 12 months, the team at Westwicke has some ideas about how the upcoming year may unfold. Below, we provide insight into what the new year may bring.
1. Continued Evolution in Virtual Communications
In response to the coronavirus pandemic, companies were forced to quickly replace face-to-face meetings with virtual communications. While there’s potential for some travel and business to return to normal in the coming year, it’s likely that virtual communication, in some form, is here to stay. In fact, companies should be looking to improve upon the tools they implemented in 2020.
Robert Uhl, Managing Director
“In 2020, virtual communications with investors became the norm. Companies should be prepared to up their capabilities in this communications realm in the coming year. Audio-only webcasts will likely become the bare minimum and least preferred method, and the coming year will see a shift to more sophisticated video capability from speakers in multiple locations, along with fully integrated presenter-controlled slides and chat box Q&A. We sense that investors are moving their expectations higher and want a more robust presentation from IR events. Getting the Street’s full attention in the coming year will demand it.”
2. Prudent Expense Management
The past year challenged businesses in all industries to adapt their operations in order to survive — and while there’s hope of recovery on the horizon, companies will need to continue to be financially cautious to weather the upcoming year.
Mike Piccinino, Managing Director
“Continued uncertainty regarding the pace and timing of recovery will force companies to remain focused on prudent expense management. Expect companies to continue to look for ways to leverage virtual options to engage with customers and prospects to execute their commercial strategies despite the ongoing challenges/business-related disruption as a result of COVID-19.”
3. Reinstatement of Formal Guidance
In 2020, many companies changed they way they provided guidance — or didn’t provide guidance at all. Expectations will shift in the coming year, and companies will resume the practice of providing formal guidance.
Mike Vallie, Vice President
“For medical technology companies, positioning your story to Wall Street in 2021 will present interesting challenges for multiple reasons. While there is a light at the end of the tunnel currently being deployed in the form of a vaccine, many companies have been caught up in the “COVID trade” or “contra-COVID trade,” where their values in the equity markets have been either positively or negatively correlated to the severity of the pandemic.”
“Management teams will need to pay close attention to how they position their medium term story to make sure Wall Street has the information needed to effectively assess what the company looks like in a post-COVID world. Along those lines, providing effective guidance during 2021 will be critical. Given the significant impact on performance during 2020 cause by COVID, using 2020 as a “comp” might cause some confusion, both on a quarterly and yearly basis. It will be important to select the right benchmark to peg performance to during 2021.”
Jack Powell, Vice President
“While many healthcare companies withdrew their formal financial guidance following the onset of the COVID pandemic in early 2020, more and more have begun to reinstate some degree of formal guidance during the second and third calendar quarters of this past year. Despite the recent surge of U.S. COVID cases, I believe the majority of healthcare companies will resume (or continue) their practice of providing formal financial guidance on their fourth quarter earnings calls. However, it remains to be seen whether companies will favor providing quarterly guidance in lieu of giving annual guidance for 2021. We will be watching the Q4 pre-announcement activity of companies closely to assess the trends.”
4. Continued Opportunity for Healthcare Companies
In 2020, the coronavirus pandemic ground most business to a halt, especially during the first half of the year. Healthcare and biotech innovation, however, continued in full force, and many companies even moved forward with successful IPOs. In 2021, we expect to see more opportunity for healthcare companies as businesses adapt to the continued effects of the coronavirus pandemic.
Mark Corbae, Senior Vice President
“In 2021, I expect to see the continued rise of telemedicine, which unsurprisingly has seen a dramatic increase in usage during the COVID-19 pandemic. There is now a greater awareness of its effectiveness, and the infrastructure to support it is in place. For these reasons, it should remain an attractive option for many Americans post-pandemic, especially among the elderly and younger generations.”
Where there is still uncertainty around how the world will continue to change in light of the coronavirus pandemic, there is incredible opportunity for healthcare, biotech, and life sciences companies to thrive. If your company is considering an IPO in the new year, make sure to download the eBook, Westwicke Insider’s Guide to Going Public. And for a deeper conversation about what 2021 will bring and how to best prepare, please reach out.