Companies are just now tallying up the impact of the US shutdown

Health and science companies have been particularly affected, with administrative delays compounding existing cuts to academic research spending under the Trump administration.

While the longest government shutdown in US history is over, the consequences of the 43-day impasse are only just starting to feed through for companies across the US and beyond.

Firms with significant exposure to federal spending, government contracts and regulatory approvals are now tallying up the impact on revenue and profit, with warnings ranging from words of caution to guidance cuts.

Clearfield Inc., a manufacturer of fiber-optic and connectivity products for telecommunications and broadband networks, said industrywide fiber supply constraints and delays in the federal Broadband Equity, Access, and Deployment program, a $42.5 billion initiative to expand broadband access known as BEAD, created uncertainty in the community broadband market.

“The government shutdown did affect bookings and our forecast for a soft first quarter into next year,” Chief Executive Officer Cheri Beranek said during an earnings call. The company expects the delay and the recent government shutdown to pressure investments, both from private and federal funding that would impact its community broadband market early in the year.

Spectral AI Inc., a company that applies artificial intelligence tools to medical diagnostics, lowered its revenue guidance as it anticipates reduced work on a contract with the Biomedical Advanced Research and Development Authority because of the shutdown.

“The shutdown is always a concern for companies, especially when they’re dealing with the FDA for product approvals, or they’re dealing with certain government agencies,” said BTIG analyst Ryan Zimmerman, referring to the Food and Drug Administration. “When these companies are really dependent on that, it can be problematic for them.”

Spectral’s deep assessment tool, known as DeepView, is still in development, and not commercially available in the US, so much of its revenue and development is funded through federal contracts. “For these little companies, when their cash is tight, they don’t want to be running on fumes,” Zimmerman said.

Health and science companies have been particularly affected, with administrative delays compounding existing cuts to academic research spending under the Trump administration.

“The shutdown has an impact on our sales because it impacts an already constrained environment in academia and research, where we know that people were very cautious to spend on capital expenses,” said Thierry Bernard, CEO of molecular diagnostics company Qiagen NV.

It “caused uncertainty within the market, especially for academic, government, hospital customer segments,” Jean-Charles Wirth, the CEO of the life sciences division of Germany’s Merck KGaA, said on an earnings call. He pointed to a slowdown in the division’s order intake in the US, while Chief Financial Officer Helene von Roeder said she expected effects to materialize in the fourth quarter.

US government contractors — based both in the US and further afield — faced a “material” hit to performance, Dominic Pappalardo, chief multi-asset strategist at Morningstar Wealth, said in an interview.

“Were the economic impacts of the shutdown real? Yes. Were they widespread? Yes. Were they temporary enough where the actual earnings result is meaningful? We don’t know that answer yet,” he said. “But I’m very confident that some companies or some sectors definitely had an outsized negative impact from it.”

London-listed advertising agency M&C Saatchi Plc slashed its guidance last month after a revenue drop in the division that provides public relations services to governments. The shutdown “adversely impacted” trading, hampering growth and profitability expectations, the company said in a statement, sending the shares plunging.

Firms that rely on permits and regulatory approvals also got burned. The shutdown prevented the lifting of regulatory restrictions on shipments to the US for Hilton Food Group Plc, a meat and fish packaging company. It issued a profit warning, saying it would be unable to restart production at its Greek smoked salmon facility this year.

Some companies were left dealing with knock-on effects. Hotel operator DiamondRock Hospitality Co. and restaurant chain Red Robin Gourmet Burgers Inc. both blamed the shutdown for reduced foot traffic and subdued consumer sentiment. DiamondRock had to moderate its fourth-quarter expectations.

Markets also had to wait for the end of the impasse. UBS Group AG flagged the shutdown as a “potential headwind” for initial public offerings.

“If the IPO calendar really does get delayed across the Street, it’ll ultimately have an impact on ECM revenues,” CFO Todd Tuckner said on an earnings call. The impact on the bank’s equity capital markets unit won’t be clear until it reports fourth-quarter earnings.

Unilever Plc pushed back the spinoff of Magnum Ice Cream Co., saying the Securities and Exchange Commission was unable to declare effectively the US registration statement required for the company’s shares to be admitted to the New York Stock Exchange.