Medtronic (NYSE:MDT) shares are down today on fourth-quarter results that missed the consensus forecast.
Shares of MDT were down more than 4% to $100.56 apiece in morning trading today. MassDevice‘s MedTech 100 Index, which includes stocks of the world’s largest medical device companies, was up slightly.
The Fridley, Minnesota-based medtech giant posted profits of $1.5 billion, or $1.10 per share, on sales of $8.1 billion for the three months ended April 29, 2022, for a 9.1% bottom-line gain on a sales decline of 1.2%.
Adjusted to exclude one-time items, earnings per share were $1.52, 4¢ behind Wall Street, where analysts were looking for sales of $8.4 billion.
Medtronic attributed negative revenue impacts to global supply chain issues, particularly in surgical innovations, plus recent COVID-19 lockdowns in China.
The company’s cardiovascular business (1.8%) and neuroscience (0.2%) both experienced revenue growth over the quarter, while medical surgical (within which surgical innovations operates) sales dropped by 4.6% and diabetes fared even worse, dipping by 7.7%. Diabetes performance was attributed to a decline in U.S. revenue given the absence of new product approvals.
“Global supply chain and COVID-19 controls in China created acute impacts to our results in the fourth quarter. We understand the root causes, we’re addressing them, and we expect them to resolve over the near-term,” Medtronic CEO Geoff Martha said in a news release. “We remain keenly focused on delivering innovation-driven growth with a robust pipeline of technologies in fast-growing markets, and we’re committed to creating strong shareholder value through strategic capital allocation and active portfolio management.”
Also today, Medtronic joined the list of large medical device companies spinning off businesses, announcing that it would spin off its renal care solutions business, rolling it into a new kidney care medtech company that it is jointly creating with DaVita.
Medtronic set its 2023 guidance for revenue growth between 4% and 5%. The company expects that, should recent foreign currency exchange rates hold, 2023 revenues will be negatively affected by approximately $1 billion to $1.1 billion.
The company expects adjusted EPS to range between $5.53 and $5.65 in 2023. That includes an estimated 20¢ to 25¢ negative impact from foreign currency translation.
“We expect recent and upcoming product launches to make a difference across our businesses this coming fiscal year,” Medtronic CFO Karen Parkhill said. “Supply chain, inflation, and foreign exchange are expected to create near-term pressure. Yet, we remain focused on driving our R&D investments to accelerate our growth and create large, long-term returns for our shareholders.”
Medtronic also announced an increase in its cash dividend for the first quarter of 2023, effective May 25, 2022. The dividend increase raises the quarterly amount to 68¢ per ordinary share, translating to an annual amount of $2.72 per ordinary share, reflecting an 8% increase from the previous amount. It marks the 45th consecutive year in which the dividend payment increased, the company said.