Medtronic released an update on how its business has been affected by the COVID-19 pandemic and warned investors to expect a significant hit to earnings, MedTech Dive reported.
Over the last few weeks, the company’s U.S. weekly revenue has declined about 60 percent year over year on average, the company said. The losses are largely due to the fact that hospitals are using fewer devices for elective procedures, according to MedTech Dive.
Amid the COVID-19 pandemic, CMS urged hospitals to limit nonessential surgeries, and some state governors banned hospitals from performing elective surgeries. Most of Medtronic's revenue comes from selling devices to hospitals for use in elective surgeries.
Medtronic has ramped up production of ventilators, patient-monitoring devices and other supplies that have seen spikes in demand due to the COVID-19 pandemic, but that hasn't offset the revenue losses, MedTech Dive reported.
Medtronic was granted a $9.1 million contract with HHS to make ventilators and said it is on track to make more than 1,000 per week by the end of June, five times the amount it was making before the pandemic, according to MedTech Dive.
In its update, the company also said it expects a "decline in typical large, end of Medtronic fiscal year customer orders."
Medtronic's stock price has recovered to close to what it was at the end of February, and it currently has about $11 billion in cash, MedTech Dive reported.
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