Medtronic began "significant cost reductions" in recent months, driven by macroeconomic challenges such as inflation and currency exchange rates that many companies are facing.
"We're working through it right now. We haven't disclosed an amount," said Karen Parkhill, Medtronic's chief financial officer, in an interview with the Star Tribune. "It's important that we look across our full cost structure and reduce spending everywhere that we can."
The company disclosed the cost reductions during a conference call with stock analysts to discuss the company's third quarter fiscal results, released Tuesday morning. The company's net profit of $1.2 billion was down 17.3% compared with the same period a year ago.
Medtronic CEO Geoff Martha said after the call that cutting sales and marketing costs in China is one example of where expenses are being trimmed for the medical device company.
The efforts to cut costs will continue for the rest of the company's fourth quarter and into the next fiscal year, Parkhill said.
Spokeswoman Erika Winkels declined to specify if any layoffs have already taken place. "Reducing the number of employees is a last option," she said.
Medtronic reported earnings per share of 92 cents for the quarter ended Jan. 27, down 16.4%. Investors focused on the company's adjusted earnings per share of $1.30, which topped analysts' expectations by 3 cents.
Looking ahead to fiscal 2024, the company faces similar challenges.
"We have said that this will be a tougher year on the bottom line," Parkhill said on the call with analysts.
The company's stock closed up 0.8% for the day while overall markets were down. The Dow Jones Industrial Average dropped nearly 700 points on concerns about interest rates.
The company announced that completing creation of its new joint venture with DaVita Inc. will close by the end of April. Medtronic is spinning off its renal care business into the venture.
Outpatient dialysis provider DaVita, based in Denver, and Medtronic announced in May that each company would invest $200 million into the joint venture.
Medtronic's Twin Cities renal care employees will remain based here.
"We don't have any intention of moving those people," Martha said. "The Medtronic contribution is a lot of engineers."
As far as Medtronic's warning letter from the U.S. Food and Drug Administration in December 2021 that demanded the company's diabetes unit improve how it handles complaints and recalls, Martha said the company has completed its commitments.
The company is now waiting for the FDA to inspect its practices again.
"The diabetes branch of the FDA has been particularly busy," said Martha. "We anticipate the inspection happening in the very near future."
Medtronic also is expecting FDA approval of its MiniMed 780G insulin pump during its next fiscal year. The warning letter must be lifted before the FDA can approve the new pump. The 780G has been available in Europe since June 2020 and has seen solid growth there.
Medtronic's overall third-quarter sales of $7.7 billion were essentially flat, down 0.5% from a year ago.