Medtronic Q2 Better Than Expected Despite Hit from Natural Disasters
Medtronic’s sales and profits shrunk in its second quarter by 4 percent and 7 percent, respectively—a result, the company said Tuesday, largely attributable to natural disasters disrupting its southern U.S. operations.
The medical device giant, which keeps its U.S. operational headquarters in Fridley, said Hurricane Maria by itself had a $55 million to $65 million impact on its sales during the three-month period ending October 27.
Medtronic CEO Omar Ishrak called the hurricane’s impact “significant” given the nearly month-long closure it forced upon its Puerto Rico facilities. The four plants Medtronic runs in Puerto Rico altogether manufacture products for each of the company’s four divisions, according to the Star Tribune.
In regards to the three hurricanes and California wildfires that took place during its second quarter, Ishrak said, “The lives of thousands of our employees were affected by these natural disasters.”
Nevertheless, Medtronic recorded $7.05 billion in revenue in the roughly August-to-October period. The result was just short of Wall Street’s estimate of $7.06 billion, according to Zacks Investment Research.
Its earnings, however, beat analyst expectations. Instead of the 99 cents a share Wall Street predicted, the company posted adjusted earnings of $1.46 billion, or $1.07 a share—amounting to year-over-year decreases of 7 percent and 4 percent, respectively.
Two Medtronic’s divisions—its cardiac and vascular group and its restorative therapies group—posted year-over-year revenue gains. Meanwhile, its minimally invasive therapies group struggled in the quarter as sales dropped 21 percent from last year. Meanwhile, sales from Medtronic’s diabetes group were flat.
“Our second quarter financial results are very encouraging, when considered in the context of the quarter,” Ishrak said in a statement. “Against this backdrop, we delivered a sequential acceleration in our organic revenue growth, as expected.”
Medtronic investors responded favorably to the company’s second quarter performance, sending shares up nearly 5 percent over the prior day’s close.