Medtronic's weaker-than-expected outlook clouds quarterly results beat

 Medtronic on Thursday beat Wall Street estimates for the fourth-quarter revenue and profit, helped by robust sales of its medical devices, but shares fell 2.5% after its forecast for the ongoing period fell short.

Investor expectations around the financial performance of medical devices makers have grown lately, owing to a resurgence in demand as people, especially older adults, opted for medical procedures deferred during the COVID-19 pandemic.

Medtronic's fiscal 2025 adjusted per-share profit forecast of $5.40 to $5.50 came in line with analysts' expectations, but its first-quarter outlook of $1.19 to $1.21 was below LSEG estimates of $1.25.

BTIG analyst Ryan Zimmerman said the fiscal 2025 guidance was slightly better than feared, but downbeat first-quarter profit outlook is probably a negative to shares.

The Dublin-based company reported total revenue of $8.59 billion, above analysts' average estimate of $8.44 billion.

Sales at the company's neuroscience unit, its second-biggest revenue contributer, rose 5.6% in the quarter ended April 26, while the diabetes unit posted a 10.9% increase.

However, the company's heart devices unit — its biggest revenue driver — reported a 5.2% fall in sales to $3.13 billion, missing analysts' estimate of $3.14 billion, on soft demand for certain devices used for repair and replacement of heart valves.

Medtronic took an adjusted charge of $439 million in the fourth quarter, higher than its previously disclosed estimate of between $350 million and $425 million, related to its prior decision to exit its unprofitable ventilator product line.

Early last year, the company had also flagged an impact to its products portfolio from Chinese government's volume-based procurement (VBP), under which the country buys medical devices in bulk at a sharp discount.

CFO Karen Parkhill said in a post-earnings conference call on Thursday that the impact of VBP in China is largely behind the company.

Medtronic posted adjusted profit of $1.46 per share for the fourth quarter, compared with the $1.45 per share estimated.

https://finance.yahoo.com/news/medtronic-beats-quarterly-profit-estimates-105226224.html