Medtronic MDT -5.30%
Shares of PLC fell 5.3 percent after the medical device maker reported a drop in quarterly sales and earnings, citing supply chain challenges and a slower-than-expected recovery in medical procedure volumes that pre-covid- 19 were postponed during the pandemic.
The Dublin-based company cut its forecast for full-year results, citing supply and procedural challenges as well as negative foreign exchange rates.
“Many of our businesses are back, most of them back to pre-Covid levels,” Chief Executive Jeffrey Martha said on an earnings conference call with analysts. “But there are some that aren’t. We just overestimated what the market recovery would be.
Shares of Medtronic fell 5.3% to $77.93 at the close on Tuesday.
Medical device companies have recently struggled to meet a surge in demand for knee replacements and other products that were put on hold during the pandemic. The trend has been bouncing back, helping some companies post higher sales in the latest quarter.
But inflation and supply shortages are driving up costs for device makers, squeezing their profit margins, and limiting their ability to meet demand. And some types of medical procedures are not being replicated as quickly as others because of challenges such as hospital staffing shortages.
Medtronic said revenue for its fiscal second quarter ended Oct. 28 fell 3% to $7.59 billion from a year earlier, beating the 7.7 percent expected by analysts surveyed by FactSet. Less than a billion dollars.
Currency fluctuations reduced revenue by $457 million, the company said.
Medtronic’s quarterly net income fell to $427 million, or 32 cents a share, from $1.31 billion, or 97 cents a share. Excluding certain items, earnings were $1.30 per share, ahead of FactSet’s average estimate of $1.28 per share.
The most recent quarter included a $764 million income tax reserve adjustment that was a direct result of a U.S. Tax Court opinion issued in the quarter.
The company said its earnings decline also reflects the continued macroeconomic impact of inflation on materials, labor, freight and utilities.
Analysts said sales of Medtronic’s cardiovascular and surgical devices fell short of expectations, while sales of its neuroscience and diabetes products beat expectations.
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