During the Cowen Healthcare Broker Conference on March 2, Medtronic CFO Karen Parkhill discussed the company's third-quarter fiscal year 2021 results and offered projections for the rest of the year, according to Seeking Alpha.
Five insights:
1. Future outlook. The global decline in COVID-19 cases, decreasing virus-related hospitalizations and acceleration of the vaccine rollout have provided reason for optimism, with Medtronic hopeful financial results will continue to improve, according to Ms. Parkhill.
2. Capital equipment sales reach pre-COVID levels. In the last quarter, more hospitals invested in capital equipment, with record numbers of Mazor robot sales, and near-record sales of Medtronic's navigation and O-arm imaging systems. "At this stage, our capital sales are, at least last quarter, back up to pre-COVID levels," Ms. Parkhill said. "While we think one quarter is not necessarily a trend yet, we're encouraged by what we saw."
Medtronic has seen an uptick in sales of its capital equipment, particularly toward the end of summer. "That's a leading indicator and a positive sign because customers believe procedure volumes are coming back," Ms. Parkhill said. Despite the uncertainty, the company remains confident about fiscal year fourth-quarter results.
3. Flexible financing. Since the beginning of the pandemic, Medtronic increased flexible financing for hospital customers purchasing capital equipment, but the rising demand is not based on these arrangements. "We saw earlier take-up of those offerings in the summer timeframe, and we've seen less take-up of those flexible options today," Ms. Parkhill said.
4. COVID costs continue to hamper margins. Increased COVID costs, such as rising freight costs because of fewer commercial flights and increased cleaning at manufacturing facilities will continue to affect Medtronic's margins for the foreseeable future, according to Ms. Parkhill.
5. Future strategy. Medtronic is focusing on bolstering its portfolio through tuck-in acquisitions and expanding what it buys. In 2020, the company completed eight tuck-ins that totaled $1.7 billion. "Sometimes those tuck-ins can amount to the low billions of dollars," Ms. Parkhill said. "Our key focus is to use those tuck-ins to help drive our revenue growth even higher."