As expected, Medtronic (MDT) reported summer quarter declines on Tuesday, although it reiterated its guidance in the face of continued macro struggles. Still, MDT shares tumbled.
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The supply chain trend and exchange rate challenges that plagued other medtech firms in the June quarter resonated for Medtronic in the quarter ended July 29. Both sales and adjusted earnings fell sharply as reported. But these indicators slightly exceeded the forecasts.
Edward Jones analyst John Boylan said it was “a better quarter than meets the eye.”
“Continuing external issues such as negative foreign exchange impacts, cost inflation, labor shortages and supply chain snarls have had an impact, but Medtronic has done a solid job controlling the things it can, such as its sales and costs, which is encouraging ” he said in a report to clients.
But in the morning deals of the stock market todayMDT shares fell 3.1% near 90.20.
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MDT Stock: Declines Across the Business
Sales for the fiscal first quarter fell 8% on a reported basis to $7.37 billion, and adjusted earnings fell 17% to $1.13 a share. But both measures beat MDT analysts’ forecast of $7.22 billion in sales and earnings of $1.12 per share. Organically, sales grew 4%.
On a segment basis, the steepest decline came from Medtronic’s medical-surgical portfolio. Sales fell 14% on a reported basis to $2 billion. But that business benefited from sales of ventilators for Covid patients and grew 9% organically. Excluding fans, sales fell 7% organically.
Meanwhile, cardiovascular and neuroscience revenue fell 6% and 4%, respectively. Both divisions saw small increases in organic sales. Medtronic’s diabetes unit, which includes wearable glucose monitors and insulin pumps, fell 5% on a reported basis.
But Medtronic maintained its guidance for the year. Sales are expected to grow 4%-5% organically and adjusted earnings of $5.53-$5.65 per share. If current exchange rates hold, full-year sales will be negatively impacted by $1.4 billion to $1.5 billion. Exchange rates will also see a drop of 17-22 cents.
MDT stock analysts forecast $5.55 in adjusted earnings per share and $31.93 billion in sales.
Follow Alison Gatlin on Twitter at @IBD_AGatlin.
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