By Mrinalika Roy and Amruta Khandekar
– Medtronic Plc on Tuesday raised its profit forecast for financial year 2022, as it expects infections from the Delta variant to peak in the next few weeks, allowing people to go ahead with non-urgent procedures that will boost demand for its devices.
The Dublin-based company, however, said it had seen a pullback in demand for certain devices, especially those related to heart and neurological procedures in the United States, starting from the latter half of July and into August.
Medical device makers have reported a hit to demand with COVID-19 cases in the United States spiking to their highest levels in months as the contagious Delta variant becomes the dominant strain in the country.
Medtronic expects the Delta variant infection rate to peak probably in late-August to early September and hospital capacity to improve a few weeks after that.
“By the time we exit our second quarter, we expect procedures to be back to more normal,” Chief Financial Officer Karen Parkhill said on a post-earnings conference call.
The company said the virus impact was limited to some geographies in the United States and certain other developed countries with lower vaccination rates.
Medtronic said it now expects 2022 adjusted earnings per share in the range of $5.65 to $5.75, compared with prior expectations of between $5.60 and $5.75.
The forecast does not assume that procedures deferred or cancelled due to Delta will be undertaken by the end of the financial year, which leaves room for upside, SVB Leerink analyst Danielle Antalffy said in a note.
Overall, Medtronic saw a rise in demand for its medical devices in the quarter, with sales at its heart devices unit, its biggest revenue generator, rising 19% to $2.89 billion.
Medtronic also said the U.S. Food and Drug Administration had approved Evolut FX, its device used in surgeries to replace diseased valves in the heart.