COVID-19 Creating Near-Term Turbulence For Hillrom, But The Transformation Is Intact

It can take a very long time for perceptions to change, and that’s not a great thing for Hillrom (HRC) (the older “Hill-Rom” is still used in some situations), as the company continues to try to put its legacy as a slow-growing hospital bed manufacturer behind it. Two management teams have been quite aggressive in using M&A to transform the business, and while I see Hillrom today as kind of a “hodgepodge” of businesses, I do like the leverage to new communications technologies and the opportunities in areas like vision and respiratory care.

In the short term, COVID-19 is going to create some turbulence, as the company saw a meaningful increase in orders for products like ICU beds and monitoring equipment that won’t reoccur next year, and as capital budgets remain in chaos for 2021, though some of the more procedure-driven segments should recover. Longer term, I see a company leveraged to technologies to improve hospital workflows and with upside exposure to growing ex-US sales and further margin leverage

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COVID-19 Creating Near-Term Turbulence For Hillrom, But The Transformation Is Intact