The semiconductor shortage dented Medtronic's sales last quarter but the company is optimistic such supply-chain disruptions will ease later this year.
"Acute supply-chain disruptions impacted our performance [in the first quarter]," Medtronic CEO Geoff Martha told analysts Tuesday morning. "We're expecting these chip shortages to linger throughout our fiscal year."
Medtronic's nearly 8% decline in revenue for the quarter, which ended July 29, also reflects a tough comparison the company faced against a strong quarter a year ago when it saw strong ventilator sales.
Additionally, executives said its medical device sales are still restrained by hospital staffing shortages, which are limiting some procedures that use its equipment.
"The quarter played out largely as expected," said Martha.
The medical device company edged Wall Street expectations by delivering earnings per share of $1.13, a penny ahead of the consensus estimate. Its first quarter revenue of $7.4 billion topped estimates by $150 million.
Medtronic's stock closed down 3% Tuesday.
Medtronic posted net income of $929 million for the quarter, a 21.8% increase compared to a year ago when the company took one-time charges for withdrawing the HeartWare device from the market.
The company reaffirmed its guidance for the fiscal year, projecting organic revenue growth in the range of 4 to 5%.
"This was a better quarter than met the eye. ... Medtronic did a solid job controlling the things that it can, such as its sales and costs, which is encouraging," said John Boylan, senior equity analyst with Edward Jones, in a research note on the results.
Macroeconomic pressures are expected to wane as the year progresses, Boylan noted.
Medtronic, which has its operational headquarters in Fridley, saw quarterly sales declines in nearly all of its business lines. The medical surgical group took the biggest hit with a 13.8% drop in sales.
Specialty therapies within the neuroscience group posted a 4.1% increase in sales, the only business line to see an overall gain. The specialty therapies category includes pelvic health; neurovascular; and ear, nose and throat.
