Medical device manufacturer Medtronic (MDT.N) has revised its annual profit forecast upwards for the third time this fiscal year following a surpassing of third-quarter expectations on Tuesday, bolstered by increased demand for its heart and diabetes devices.
The surge in demand for medical devices comes as non-urgent procedures, deferred during the pandemic, have resumed over the past year, aided by the alleviation of hospital staff shortages and a resurgence in regular check-ups.
Medtronic’s shares rose by nearly 2% in morning trading.
The company has also announced its decision to discontinue its unprofitable ventilator product line within its patient monitoring and respiratory interventions (PMRI) business.
It plans to amalgamate the remaining PMRI operating units into a unified entity named acute care and monitoring.
CEO Geoff Martha previously indicated in November that the company was contemplating the separation of its PMRI business, a segment of its medical surgical portfolio.
Analyst Vijay Kumar from Evercore described the decision as a “significant positive,” highlighting the elimination of the “40-cent dilution from PMRI divestiture thesis.”
Medtronic anticipates an adjusted charge of between $350 million and $425 million in the fourth quarter related to the restructuring.
As part of these operational changes, the position of executive vice president and president of the medical surgical portfolio, currently held by Robert White, will be eliminated, with White departing effective April 26.
Net sales at Medtronic’s medical surgical unit for fiscal 2023 amounted to $8.43 billion, marking a 7.7% decrease from the previous year, reflecting a decline in demand for ventilators following the peak levels observed during the COVID-19 pandemic.
For fiscal 2024, Medtronic expects adjusted profits to range between $5.19 and $5.21 per share, up from the previous range of $5.13 to $5.19 per share.
Third-quarter revenue increased by 4.7% to $8.09 billion, surpassing LSEG estimates of $7.95 billion, while adjusted profits also exceeded estimates by 4 cents.