While certain Medtronic products are in high demand due to COVID-19, an update from the company shows that the vast majority of its businesses have experienced declines during the global pandemic.
Medtronic said it expects COVID-19 to negatively affect its fiscal fourth quarter financial results, which ends Friday. Given the progression of COVID-19 around the worldÂ and the timing of the companyâ€™s fiscal quarter, Medtronicâ€™s fourth quarter includes an additional month of impact compared to companies that operate on a calendar-based fiscal year.
Like many of its peers, including Boston ScientificÂ andÂ Johnson & Johnson, Medtronic’s business has been impacted by procedure deferrals as healthcare systems around the world have deferred most elective procedures to focus on COVID-19. The Dublin, Ireland-based companyÂ said capital equipment purchases, outside of ventilators and patient monitoring equipment, are also being deffered by hospitals during the pandemic.
Medtronic also noted that it expects an incremental negative impact to revenue from a decline in large customer orders that the company typically receives at the end of its fiscal year because customers are prioritizing cash and cutting back on spending, especially for products used inÂ elective procedures.
Medtronic products that are in high demand as a result of COVID-19 include extracorporeal life support products such asÂ extracorporeal membrane oxygenation machines and disposables, ventilators, pulse oximetry devices, capnography products, advanced parameter monitoring products, and diabetes supplies.Â Together, these product lines represented roughlyÂ 10% of Medtronicâ€™s pre-COVID-19 global revenue, the company said.
COVID-19Â business impact by geography
InÂ China, which represented about 7% of Medtronic’s total revenue pre-COVID-19, the pandemic likely impacted revenue for the entire fiscal fourth quarter. On average,Â weekly revenue declined roughly 50% year-over-year through the week of March 9. Since that time, Medtronic’s weekly revenue has declined on average about 20% to 40% year-over-year, as the market is experiencing a slow recovery in China.
InÂ Western Europe, which represented about 20% of Medtronic’sÂ total revenue pre-COVID-19, the company began to see an impact to revenue from COVID-19 the week of March 23. Over the last few weeks, the companyâ€™s weekly revenue has declined about 20% to 30% year-over-year on average, excluding any impact from customer bulk purchases, Medtronic said.
In theÂ United States, which represented about 53% of Medtronic’s total revenue pre-COVID-19, the company began to see an impact to revenue from COVID-19 the week of March 16. Over the last few weeks, the companyâ€™sÂ U.S. weekly revenue has declined about 60% year-over-year on average, excluding any impact from customer bulk purchases, MedtronicÂ said.
In theÂ rest of the world, which represents the remaining 20% of total company revenue, Medtronic said it saw varying degrees of impact, with the last few weeks declining on average about 40% to 50% year-over-year.
As for expenses, Medtronic said it has continued to invest in R&D and its employees, including its sales force, despite the decrease in revenue. The company also noted that it has been running many of its factories at or near full capacity to provide inventory to support the anticipated rebound in procedures during the recovery period.
In general, the company said itÂ continues to make progress with its pipeline and continues to work with regulatory agencies on timelines that do not appear to be currently affected by the pandemic.Â Clinical trials that are currently enrolling patients, however, have generally been placed on temporary pause to allow hospital clinical resources to focus on fighting COVID-19.
Medtronic’s efforts to address ventilator shortages
As MD+DI reported late last month, Medtronic released its Puritan Bennett 560 (PB560) ventilator design specifications publicly, allowing manufacturers around the world the ability to rapidly accelerate ventilator production. The company said it has received more than 100,000 registrations for the design specifications for its PB560 ventilator atÂ Medtronic.com/openventilator. The company noted that progress has been made by three large-scale manufacturers:Â Canada-based Baylis Medical Co. Inc.,Â Taiwan-based Foxconn Technology Group (via its manufacturing facility inÂ Wisconsin), and VinGroup Joint Stock Co. ofÂ Vietnam.
Medtronic also said itÂ is currently in limited market release for a remote management feature on its critical care ventilators at severalÂ U.S.Â hospitals, which may reduce healthcare workersâ€™ exposure to COVID-19 patients by allowing changes to ventilator settings from outside a patientâ€™s room. The Puritan Bennett 980 remote capabilities were accelerated by collaborating with Santa Clara, CA-based Intel Corporation, the company said.
Hawthorne, CA-basedÂ SpaceXÂ is also helping MedtronicÂ manufacture a critical component for its critical care ventilators.
Medtronic is also part of theÂ newly-formed Ventilator Training Alliance aimed at ensuring appropriate ventilator training for healthcare workers. Other ventilator manufacturers involved with that effort include:Â DrÃ¤ger, GE Healthcare, Getinge, Hamilton Medical, Nihon Kohden, Philips, and Vyaire Medical.