By Bhanvi Satija
(Reuters) -Medtronic on Tuesday raised its annual profit forecast as the return of surgery volumes to pre-pandemic levels boosted demand for its medical devices, sending its shares up 3% in morning trading.
Medtronic, which makes pacemakers, catheters and other tools used in heart and gastrointestinal surgeries, joins rivals, including Abbott Laboratories, Stryker and Boston Scientific, on benefiting from a rise in non-urgent surgeries.
CEO Geoff Martha said trends pointed to a recovery in surgical volumes as some procedures returned to stronger than pre-pandemic levels.
"It's been a steady flow versus like a pent-up demand. So I think that's good news for the industry," Martha said.
The Dublin-based medical device maker now expects profit to be between $5.08 per share and $5.16 per share for the fiscal year 2024, compared with the range of $5 to $5.10 per share previously expected.
Sales at Medtronic's heart devices unit, its biggest revenue driver, came in at $2.85 billion for the first quarter ended July 28, topping analysts' estimates of $2.78 billion, according to Refinitiv IBES data.
Whereas, revenue from its medical surgical unit rose 5.5% to $2.04 billion.
Its quarterly adjusted profit of $1.20 per share beat estimates of $1.11 per share.
Analysts said the company's results were also boosted by its cost-saving measures, such as job cuts and the ongoing process of offloading some smaller businesses, that helped soften a hit from rising raw material costs.
The internal changes at Medtronic are starting to "shine through", said Edward Jones analyst John Boylan, adding that these changes will become more apparent in subsequent quarters.
Medtronic also said that it was expecting to split its patient monitoring and respiratory interventions businesses in the first half of fiscal 2025.
(Reporting by Bhanvi Satija and Christy Santhosh in Bengaluru; Editing by Shweta Agarwal)
