When Medtronic’s 2022 fiscal year kicked off last May, it appeared to be full of nothing but forward momentum. Despite discontinuing its HeartWare ventricular assist pump and grappling with the early rise of the delta variant of the COVID-19 pandemic, it was able to put up a 20% year-over-year increase in its first quarter revenue and seemed poised to continue at least modest growth throughout the year.
Instead, as the year has gone on, the medtech giant has been set back by ever more variants of the virus, global supply chain and manufacturing issues and, most recently, a growing shortage of healthcare workers.
Those factors sent its second-quarter gains down to just about 3% and, now, have more than flattened revenues during the company's third fiscal quarter ended Jan. 28.
For the latest three-month period, Medtronic raked in $7.76 billion, about 1% lower than the previous quarter’s haul and 0.2% below its earnings for the same period in 2021.
The company attributed the virtual standstill to the negative impact of the continued pandemic and the healthcare labor shortage to the number of medical device procedures that are taking place, with the U.S. taking the hardest hit.
Still, Medtronic expressed confidence that revenues will soon start to rebound as the latest widespread COVID variant, omicron, passes its peak around the world.
“The impact of the COVID-19 resurgence on healthcare procedure volumes, particularly in the United States, peaked in the final weeks of our quarter in January, causing our revenue to fall short of our expectations,” CEO Geoff Martha said in a statement. “We expect healthcare procedures to reaccelerate post-omicron, and our commitment to durable and higher growth remains steadfast.”
In fact, according to Karen Parkhill, Medtronic’s chief financial officer, procedure volume has already begun to creep upwards, leading the company to forecast an almost total recovery through the next few months.
“By the time we exit the fourth quarter, we expect procedure volumes in most of our markets to be back to pre-COVID levels,” Parkhill said.
RELATED: Medtronic's surgery robot rollout hits supply chain speed bumps
Medtronic’s diabetes segment took the hardest hit during the quarter, with a 7% year-over-year decrease to $584 million in revenue. The drop was even higher in the U.S., but that nearly 17% decline was offset by solid international growth driven largely by low-double digit growth in sales of continuous glucose monitoring technologies.
Elsewhere, the company’s other three core businesses—cardiovascular, medical surgical and neuroscience—saw their earnings go all but flat. The cardiovascular and neuroscience segments each reported 1% annual growth—to $2.75 billion and $2.14 billion, respectively—while Medtronic’s medical surgical portfolio dropped 1%, to $2.29 billion.