Medtronic downsizes, but not sizeably
Anyone hoping Medtronic would make substantial changes to its business to cut away the dead wood will doubtless be disappointed by the one partial divestment it announced along with its fiscal 2022 results today. It is to form a joint venture with the dialysis player Davita, into which Medtronic will transfer its sluggish renal care business. This is a relatively tiny part of the world’s biggest medtech: Medtronic’s respiratory, gastrointestinal & renal unit brought in just over $3bn last year, down 7% – and of course renal care is only a fraction of this. Overall the group had a poor year. Its fiscal 2022 sales of $31.7bn grew 5%, but fell short of consensus forecasts of $32.4bn, as compiled by Evaluate Medtech. Chief executive Geoff Martha said that 75% of the miss was due to supply chain issues, particularly in the surgical division, with the recent lockdown in China and currency headwinds also contributing. Mr Martha insisted that the group was doing all it could to right the ship, particularly remaking its supply chain, which he said had been “set up for a different era”. The stock is down 5% so far today.