Medtronic still eyeing modest year-over-year growth as fiscal 2023 kicks off with slipping revenues

A year ago, even while grappling with the discontinuation of its HeartWare ventricular assist pump and the onset of the delta variant of the COVID-19 pandemic, Medtronic was still able to open its fiscal year 2022 with a major win: It clocked a revenue increase of nearly 20% compared to the same period the previous year.

This time around, however, despite the waning effects of the pandemic and an intact device portfolio, the medtech giant started another new fiscal year on a slightly sour note.

For the first quarter of its fiscal 2023—which began April 30—Medtronic reported global revenues of just over $7.37 billion. That’s about an 8% drop from the almost $8 billion it took in this time last year, and it’s also 9% lower than the company’s revenues in its last reported period, when it closed out the fourth quarter of fiscal 2022 with $8.1 billion.

The company attributed the decreasing revenue to ongoing supply chain shortages and to the fact that, at this time last year, sales were booming as pandemic restrictions loosened.

Even so, Medtronic said in its earnings report Tuesday that the drop wasn’t quite as steep as expected. It was helped along by the recent acquisition of Intersect ENT, as well as by only minimal decreases in three of its four core businesses.

Cardiovascular—the largest of the company’s segments—and the neuroscience and diabetes portfolios all saw their revenues drop by an average of about 5%. Those blows were softened by strong sales of devices from each business: leadless pacemakers, neurostimulators, hemorrhagic stroke products, continuous glucose monitoring technology and more.

The medical surgical portfolio, however, registered more than single-digit declines. Its $2 billion revenue was 14% lower than a year ago, largely due to supply chain shortages of raw materials for its advanced surgical instruments and plummeting demand for ventilators that ultimately fell below pre-pandemic levels.

Amid all that negative growth, Medtronic is hanging onto its original forecasts for the year. It’s still expecting to see annual revenues soar between 4% and 5% higher than its fiscal year 2022 when it brought in nearly $32 billion.

“The company continues to execute in a challenging environment, delivering organic revenue above our guidance,” CEO Geoff Martha said in Tuesday’s report. “As we look ahead, our supply chain is improving, we have several near-term pipeline catalysts approaching, and we are confident in our ability to accelerate growth.”

To that end, the company is now expecting to see its organic revenue growth progressively improve in each of the remaining quarters of its fiscal year, helped along largely by new product launches.

The diabetes portfolio, for example, is devoting most of its attention this year to achieving U.S. approval of the MiniMed 780G insulin pump and a European nod for its Simplera glucose sensor. In the cardiovascular business, meanwhile, Medtronic recently completed the first close of its acquisition of Acutus Medical’s left-heart access portfolio.