Medtronic lowers full-year forecast, citing drop in procedure growth

Original from: Medtech Dive

Fiscal Q2 insights:

Medtronic CEO Geoff Martha said a slower-than-expected recovery in procedures and lingering supply challenges resulted in a drop in profit and revenue in the quarter. 

Even as other medtech companies have reported a rebound in the number of procedures from lows at the worst of the COVID-19 pandemic, Martha said some markets have been slower to return to normal levels. Those include heart procedures, such as elective percutaneous coronary intervention and transcatheter aortic valve replacement, as well as some GI procedures and spinal cord stimulation. 

While the company resolved some of its problems with packaging last quarter, the improvements happened later than expected, delaying momentum and affecting product availability, Martha said in an earnings call on Tuesday. 

Medtronic’s cardiovascular revenue declined 2% from a year earlier, while medical surgical revenue decreased 10% and diabetes revenue fell 5%. Neuroscience revenue increased 2%, driven in part by growth in robotics and surgical navigation, as well as sales of ear, nose and throat products.

“These changes take time, and we’ve faced setbacks along the way that have slowed us down,” Martha said. “Some are environmental, like COVID recovery rates, raw material shortfalls, and Chinese procurement policy, while other setbacks are of our own doing, like our quality and operational challenges, and the pace of improvement we anticipated. I know we have more work to do here, but we understand the root causes that led to the years of underperformance from this company, and our aggressive transformation agenda is designed to fix these issues.” 

The Minneapolis, Minn.-based company, the largest medtech company by revenue, is in the process of spinning out three of its businesses while cutting costs and making its operating units more nimble.

Source: Medtronic lowers full-year forecast, citing drop in procedure growth