Medtronic posts downbeat results on supply chain issues, China restrictions
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MEDTRONIC’S quarterly revenue and profit missed market estimates on Thursday (May 26) as supply-chain challenges and Covid-19 restrictions in China weighed on sales of some medical devices, sending its shares down 3 per cent in premarket trade.
Medtronic said the challenges primarily impacted its surgical instruments (SI) unit, which sells stapling and vessel sealing devices.
Medical device makers have also been facing higher raw material, labour and transportation costs, with peers Boston Scientific and Stryker offering cautious profit forecasts during their latest results, citing uncertainties stemming from inflationary and supply-chain challenges.
Revenue at Medtronic’s SI unit fell 5 per cent, with sales of surgical instruments in China declining in the mid-teens.
Factories and businesses in China have been bruised by disruptions caused by lockdowns as the Chinese government refuses to loosen its zero-Covid policy.
Revenue from China, which accounts for over 40 per cent of the company’s emerging markets revenue, declined 10 per cent, Medtronic said.
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The company said it expects adjusted earnings for financial year 2023 of US$5.53 per share to US$5.65 per share, below analysts’ estimates of US$5.82 per share.
“Supply chain, inflation, and foreign exchange are expected to create near-term pressure,” Medtronic chief financial officer Karen Parkhill said.
Separately, Medtronic intends to form a new, independent kidney care-focused medical device company along with DaVita, the companies said.
The new entity would include Medtronic’s entire kidney products business and would focus on developing a range of new products to treat kidney ailments.
The company reported revenue of US$8.09 billion in the fourth quarter, missing estimates of US$8.43 billion, Refinitiv IBES data showed.
Medtronic posted an adjusted profit of $1.52 per share in the quarter. Analysts had expected a profit of $1.56 per share. REUTERS
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