Medical technology company Medtronic has announced an increase in its annual earnings forecast, alleviating concerns about the impact of new diabetes and weight-loss drugs on the long-term growth of the industry. This news comes as the company reports strong sales in its surgical and diabetes units, prompting a nearly 4% rise in its shares during morning trade.
Medtronic, along with other manufacturers of medical products used in bariatric surgery and glucose-monitoring devices, has been addressing investor worries about the potential decrease in demand due to the growing popularity of new GLP-1 drugs like Novo Nordisk’s Ozempic and Eli Lilly’s Mounjaro. However, Medtronic’s CEO Geoffrey Martha believes that the impact of these drugs on the bariatric surgery market will be modest and temporary.
Martha asserts that bariatric surgery will continue to be the preferred method for addressing obesity, as many patients who try GLP-1 drugs ultimately discontinue their use within a year due to concerns about costs and side effects. Analysts also predict that while the use of GLP-1 drugs may delay healthcare costs, they will not eliminate them, ultimately limiting the impact on medical-device companies.
In addition to the positive sales figures in its diabetes unit, Medtronic is actively working on a separation of its respiratory and patient-monitoring units. CEO Geoffrey Martha confirmed that the separation is expected to be completed by the first half of the next fiscal year.
With these positive developments, Medtronic has raised its profit per share estimates for the fiscal year ending in April 2024, now forecasting a range of $5.13 to $5.19 per share, up from the previous range of $5.08 to $5.16 per share. The company demonstrated its strength by beating adjusted profit estimates by 7 cents for the quarter ended October 27.
Throughout these recent advancements, Medtronic remains confident in the ability of its diabetes devices to drive the company’s sales growth in the second half of the fiscal year, further reinforcing its position as a leader in the medical technology industry.
Frequently Asked Questions (FAQ)
- What is the impact of GLP-1 drugs on the bariatric surgery market?
Medtronic’s CEO Geoffrey Martha believes that the impact will be modest and temporary, with bariatric surgery remaining the preferred method for addressing obesity. - Will the use of GLP-1 drugs eliminate healthcare costs?
Analysts suggest that while GLP-1 drugs may delay healthcare costs, they will not eliminate them, thereby limiting the impact on medical-device companies. - When will Medtronic complete the separation of its respiratory and patient-monitoring units?
Medtronic expects the separation to be completed by the first half of the next fiscal year. - How has Medtronic adjusted its profit per share estimates?
Medtronic has raised its profit per share estimates for the fiscal year ending in April 2024, now forecasting a range of $5.13 to $5.19 per share, up from the previous range of $5.08 to $5.16 per share.