Medtronic attributes lower than expected quarterly revenue to fading demand in its heart devices unit

Medtronic recently joined the list of businesses that anticipate a significant hit ascribed to the recent outbreak of Coronavirus in China. In its third-quarter earnings report on Tuesday, the company failed to hit the estimate for revenue. Medtronic says it saw a fading demand in its heart device unit in the recent quarter that led to poor than expected results. The biggest global standalone medical device manufacturer also highlighted that a range of new products is about to be launched in the upcoming weeks. In premarket trading on Tuesday, Medtronic was reported trading 2% down at $114.70 per share in the stock market that marked almost the same level at which it opened in January 2020. Medtronic’s performance in the stock market last year, however, remained largely upbeat. The company recorded an annual gain of around 25% in 2019.

Medtronic Was Previously Estimated To Generate 7% Of Its Revenue From China In 2020

Coronavirus has so far resulted in 1,900 casualties in China. Considering the health crisis, Medtronic highlighted that it is rather hard at this stage to quantify the extent to which the virus will affect the company’s performance and for how long will the operations remain under pressure. In a previous estimate, analysts had expected around 7% of Medtronic’s revenue to be attributed to China in 2020, where it has several research and production facilities that currently employ as many as 7,000 people. Medtronic’s largest unit that manufactures pacemakers and heart valves saw a 1.2% increase in sales in the third quarter. At $2.82 billion, it accounted for 36.5% of the overall revenue that the company generated in the recent quarter. According to Refinitiv, analysts had forecast a higher $2.86 billion in sales for Medtronic in Q3.

Medtronic Acquired Mazor Robotics For $1.68 Billion In 2018

Medtronic acquired Mazor Robotics for $1.64 billion in 2018. The unit, as per the earnings report, helped fuel profit in its spinal robotics and restorative therapies segment. The aforementioned segment printed $2.11 billion in revenue in the third quarter versus a marginally higher $2.12 billion estimate. Medtronic’s net income in the recent quarter was registered at $1.92 billion that translated to a massive 51% increase. Excluding items, Medtronic made $1.44 of earnings per share in the third quarter that was noted significantly higher than the $1.38 per share estimate, according to Refinitiv. Lastly, the medical device company boasted $7.72 billion of net sales in Q3 that was reported considerably lower than the analysts’ estimate of $7.81 billion.