Medtronic was hit hard by changes in medical care because of the coronavirus pandemic, reporting Tuesday that net income for its second quarter was down 64%.
Still, while most of the Minnesota-run medical device company's benchmarks were down year over year, the decreases were not nearly as much as expected. And company officials believe that hospitals, even with high COVID-19 caseloads, are able to manage care for other ailments as well.
Medtronic beat analysts' estimates for earnings per share, revenue and organic growth, said the Ireland-based company with operational headquarters in Fridley.
"We're seeing a faster-than-expected recovery and approaching year-over-year growth," Medtronic CEO Geoff Martha said in a news release. "Our revenue growth is improving, our pipeline is advancing, and we're gaining share in an increasing number of businesses."
Uncertainty remains in the near term because of the pandemic, Martha said in a call with analysts. But the company's long-term prospects are good due to robust product launches and market share gains. The Food and Drug Administration has approved 180 products since the beginning of 2020, Martha said.
Among the company's existing product base, ventilators used to treat COVID-19 patients showed extraordinary sales, increasing nearly fourfold from the second quarter of fiscal 2020. While ventilators sales will decline as the country gains control of the pandemic with vaccines, other medical device sectors could push revenue growth up going forward.
There is, said Chief Financial Office Karen Parkhill, a "sense of recovery." So far sales are up in the third financial quarter, she said.
Despite the positive signs, the company declined to offer future financial guidance. In part, Medtronic's performance over the short haul depends on a renewal of elective surgical procedures that employ its products.
Martha and Parkhill credited a learning curve in the treatment of COVID-19 with hospitals' willingness to perform elective procedures, even during the current spike in cases.
Two situations could "derail" the elective surgery rebound, Martha said. The first would be if hospitals "run out of space" as the number of COVID-19 patients grows because of the spike. The second would be the reimposition of statewide mandates to discontinue elective procedures to preserve hospital capacity, equipment and personnel to treat patients infected with the virus.
Medtronic booked $7.65 billion in revenue in the company's second quarter, down from $7.7 billion in the comparable time period last year but significantly exceeding an expectation of $7.08 billion by Wall Street.
Net income was $489 million, or 36 cents a share, down from $1.4 billion, or $1.01 a share, in the same quarter last year. Adjusted earnings per share, though, was $1.02, ahead of analysts' consensus estimate of 80 cents.
In earlier earnings calls, the company said it expected to return to positive growth by the end of the 2021 fiscal year, which is in May.
Improved "non-U. S. developed" revenue accounted for part of the trend. It accounted for 32% of all revenue and grew 1% year over year. In comparison, U.S. revenue accounted for 53% of the total, but was down 2% year over year.
Martha said a new operating model focuses the company on market share.
Medtronic will move aggressively to establish a strong foothold in the treatment of diabetes, officials said. The company also hopes to turn its cardiac ablation technology into a first line treatment for atrial fibrillation.
The Link LonkNovember 24, 2020 at 08:46PM
https://www.startribune.com/medtronic-results-hit-hard-by-pandemic-but-better-than-wall-street-expected/573177951/
Medtronic results hit hard by pandemic, but better than Wall Street expected - Minneapolis Star Tribune
https://news.google.com/search?q=hard&hl=en-US&gl=US&ceid=US:en
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