Medtronic updated guidance on how the COVID-19 pandemic is affecting its business and the company's current financial position.
Seven things to know:
1. During the pandemic, Medtronic shifted business to produce and distribute critical products for treating patients with COVID-19, including ventilators. At the same time, operations including its spine business are taking a hit due to the cancellation of elective procedures in many parts of the world.
2. Since many procedures have been canceled, the company has implemented measures to protect field employees from a decrease in incentive pay usually tied to sales. This is typically a "significant percentage" of the employees' regular income.
3. Medtronic expects the coronavirus to have a significant impact on its fourth quarter fiscal year results, according to a report in Seeking Alpha. The Minimally Invasive Therapies Group and Restorative Therapies Group will be negatively impacted due to the drop in surgeries. However, demand for the ventilators and other remote monitoring devices could offset some of the losses.
4. U.S. weekly sales over the past few weeks dropped around 60 percent, according to the report, while sales in the rest of the world were down 40 percent to 50 percent.
5. Medtronic projects the negative sales impact will continue in the coming quarters as customers may decide to reduce inventory and preserve cash.
6. Medtronic is partnering with governments and companies such as GE Healthcare and Philips to ensure hospitals have the ventilators they need, as well as healthcare worker training on the ventilators, to serve COVID-19 patients. It is also partnering with SpaceX to manufacture a component of the ventilators.
7. The Medtronic Foundation is donating $13 million to support health systems and communities worldwide.