Medtronic plc (NYSE: MDT) topped earnings expectations for the third quarter of 2020 while revenue fell short of estimates. The stock was down 2.8% in premarket hours on Tuesday.
Total revenue of $7.71 billion rose 2.3% from the same period a year ago but came below forecasts of $7.81 billion. On an organic basis, revenues grew 2.6%.
GAAP net income was $1.91 billion, or $1.42 per share. Adjusted net income grew over 11% to $1.94 billion, or $1.44 per share, beating projections of $1.38.
For fiscal year 2020, adjusted EPS is expected to be $5.63-5.65. For the fourth quarter of 2020, adjusted EPS is expected to be $1.62-1.64.
In the third quarter, revenue in the US inched up 0.5% on a reported basis. Revenues in the non-US developed market rose 0.4% while emerging markets revenue climbed 12%.
Revenues in the Cardiac and Vascular Group increased 1.2% during the quarter but the growth was lower than expected as customers refrained from making purchases ahead of new product launches in the Coronary & Structural Heart division. The company also saw a slower-than-expected recovery in left ventricular assist devices.
Revenues in the Minimally Invasive Therapies Group grew 2.4%, driven by increases in the Surgical Innovations, and Respiratory, Gastrointestinal & Renal divisions. Revenue results in the segment were impacted by an upgrade to its enterprise resource planning system in the US and Canada.
Revenues in the Restorative Therapies Group rose 4.2%, aided by growth in the Brain Therapies, Spine, and Specialty Therapies divisions. The results were slightly offset by a 3.5% decrease in revenue from Pain Therapies. Revenues in the Diabetes Group remained flat.
During the quarter, Medtronic acquired software company Klue, whose behavior-tracking technology is expected to help in diabetes management by automating insulin delivery through the monitoring of patients’ eating habits.
Last month, the company acquired Stimgenics, the pioneer of a novel spinal cord stimulation waveform known as Differential Target Multiplexed Spinal Cord Stimulation, which is considered a unique option to treat patients with chronic pain. Both deals are expected to be neutral to FY2020 EPS.
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