Medtronic (NYSE:MDT) yesterday released its preliminary second quarter earnings, estimating the impact of Hurricane Maria at approximately $55 to $65 million, or 3¢ on its second quarter non-GAAP earnings per share.
The Fridley, Minn.-based company said it expects to post sales of $7.05 billion, which is down 4% from the same quarter the prior year but still ahead of the $6.87 billion consensus on Wall Street. Medtronic said the decline was mainly driven by its divestiture of multiple business to Cardinal Health earlier this year.
Medtronic said it was able to limit the impact of Hurricane Maria against its original expectations provided last month due to “the performance and resilience of its employees driving a faster-than-anticipated recovery of its operations in Puerto Rico.”
The company said the largest impact was to its minimally invasive and restorative therapies groups in the US.
Operations are now ongoing and sustained in Puerto Rico, Medtronic said, after the company took steps to add on-site and redundant power generator systems, alternate telecom and data connectivity systems and other changes to buffer against the impact of Maria.
“The creativity, dedication, and persistence of our employees – both on and off the island – in dealing with the aftermath of Hurricane Maria was simply incredible. In particular, our employees in Puerto Rico made countless selfless contributions, despite extensive impact to their personal lives, coming to work every day to ensure customers and patients worldwide received our products. Through the efforts of our team, along with help from the local government and the U.S. FDA, we were able to achieve extraordinary results with our Puerto Rico operations over the month of October, well exceeding our initial expectations. I am extremely proud of our passionate employees whose tireless dedication was critical in restoring our operations,” chair & CEO Omar Ishrak said in a press release.
The company also reiterated its second quarter adjusted EPS guidance, expecting to see it flat or slightly up from last year’s $1.04.
The news is good, but doesn’t eliminate woes on the horizon for the medical device giant, according to a Leerink Partners letter to investors.
“While this is positive, MDT does still face ramping headwind in FY2017, notably: (1) A CRM replacement cycle headwind; (2) competitive MRI safe CRM product launches; (3) ongoing competitive pressures in SCS (spinal cord stimulation) with MDT’s Intel’s launch bearing the brunt of it as supply heading into the launch was seemingly limited; and (4) a competitive transcatheter heart valve launch in the U.S.,” Leerink Partner Danielle Antalffy wrote.
Medtronic shares are up 2.9% so far today, at $80.04 as of 9:59 a.m. EST.