Fridley, Minn.-based Medtronic posted profits of $1.12 billion, or 80¢ per share, on sales of $7.35 billion for the 3 months ended Oct. 28, for bottom-line growth of 114.4% on sales growth of 4.1% compared with Q2 2015.
Adjusted to exclude 1-time items, earnings per share were $1.18, 6¢ ahead of the forecast on The Street. But analysts there were looking for sales of $7.46 billion; investors reacted by pushing MDT shares down -4.4% to $77 even in pre-market activity today.
“Q2 revenue was disappointing and did not meet our expectations. We faced issues that affected our growth, including slower-than-expected revenue as we await new product introductions, particularly in CVG and Diabetes,” chairman & CEO Omar Ishrak said in prepared remarks. “Despite this revenue shortfall, we produced a strong improvement in operating margins and double digit constant currency earnings per share growth.”
Medtronic cut its sales and earnings outlook for fiscal 2017, saying it now expects to report adjusted EPS of $4.55 to $4.60, down from prior guidance of $4.60 to $4.70. Full-year sales growth is now pegged for the mid-single-digit range on a constant-currency basis, compared with prior guidance for the upper half of that range.
“While some of the challenges that affected revenue in Q2 could persist in the near term, we remain confident in our ability to deliver mid-single-digit constant-currency revenue growth and double-digit constant currency EPS growth, not only in our current fiscal year, but on a sustained basis into the future,” Ishrak said. “As always, we remain committed to applying our medical technology and solutions to help address the universal healthcare needs of improving clinical outcomes, expanding access to care, and optimizing cost and efficiency, which combined represent a perpetual source of opportunity in healthcare.”
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