Medtronic posts 4Q contraction as supply chain issues hurt topline

May 26, 2022 7:16 AM ETMedtronic plc (MDT)By: Dulan Lokuwithana, SA News Editor3 Comments

Medtronic headquarters in Silicon Valley

Sundry Photography/iStock Editorial via Getty Images

Medtronic (NYSE:MDT) is trading lower in the pre-market Thursday after the medical device maker reported lower than expected financials for 4Q fiscal 2022 and set its FY23 guidance below the consensus as supply chain constraints weighed on the revenue growth.

The global revenue for the quarter dropped ~1% YoY on a reported basis to ~$8.1B, including a $215M negative impact from foreign currency translation.

The company attributed the underperformance to temporary factors impacting the supply chain, particularly in Surgical Innovations and recent COVID-related lockdowns in China.

“We understand the root causes, we're addressing them, and we expect them to resolve over the near-term," Chief Executive Geoff Martha said ahead of the earnings call at 8:00 a.m. EST Thursday.

The U.S. revenue fell ~2% YoY to $4.1B, making up ~51% of the topline, while Emerging Markets revenue, which contributed ~17% of the revenue, climbed ~7% YoY even as revenue from China crashed ~10% YoY due to COVID lockdowns.

Meanwhile, compared to ~4% YoY in FY21, the full-year revenue for FY22 rose ~5% YoY as the negative impact of foreign currency translation amounted to only $75M.

The revenue from Medical-Surgical Portfolio dropped ~5% YoY to $2.2B while Surgical Innovations 4Q revenue slipped ~3% YoY amid issues affecting raw material supply.

Diabetes segment generated $597M revenue with an ~8% YoY decline as U.S. revenue slumped in the high twenties with no new product approvals, Medtronic (MDT) said.

Cardiovascular Portfolio brought ~$3.0B with ~2% YoY growth, while Neuroscience Portfolio added ~$2.3B, unchanged from last year.

Full-year and quarterly earnings rose ~26% YoY and ~2% YoY on an adjusted basis to $5.55 and $1.52 per share, respectively.

For fiscal 2023, Medtronic (MDT) forecasts organic revenue growth of 4% – 5% YoY and non-GAAP EPS of $5.53 – $5.65, compared to the current consensus estimate for the year at $5.75 earnings per share.

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