Medical Giant Remains Upbeat Even As Sales, Earnings Topple

As expected, Medtronic (MDT) reported summer-quarter declines on Tuesday, though reiterated its guidance in the face of continued macro struggles. Still, MDT stock tumbled.

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The trend of supply chain and exchange-rate challenges that plagued other medical technology firms in the June quarter reverberated for Medtronic in its quarter ended July 29. Both sales and adjusted earnings declined on a strict, as-reported basis. But those metrics narrowly beat forecasts.

Edward Jones analyst John Boylan says it was a “better quarter than met the eye.”

“Ongoing external issues, such as negative foreign-currency impacts, cost inflation, labor shortages and supply-chain snarls had an impact, but Medtronic did a solid job controlling the things that it can, such as its sales and costs, which is encouraging,” he said in a report to clients.

But in morning trades on the stock market today, MDT stock skidded 3.1% near 90.20.

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MDT Stock: Businesswide Declines

Fiscal first-quarter sales tumbled 8% on a reported basis to $7.37 billion and adjusted profit slumped 17% to $1.13 per share. But both measures topped MDT stock analysts’ forecast for $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 the sales of ventilators for Covid patients and grew 9% organically. Excluding ventilators, sales toppled 7% organically.

Meanwhile, cardiovascular and neuroscience revenue tumbled a respective 6% and 4%. Both divisions posted 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 kept its guidance for the year. It expects sales to grow 4%-5% organically and adjusted earnings of $5.53-$5.65 per share. If current exchange rates hold, full-year sales will feel a $1.4 billion to $1.5 billion negative impact. Exchange rates will also have a 17-22 cent dip.

MDT stock analysts predicted $5.55 in adjusted earnings per share and $31.93 billion in sales.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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