Medtronic (NYSE:MDT) announced fourth-quarter results today that were even worse than expected, but the world’s largest medical device company is still upping its dividend and investing in future growth.
The Fridley, Minn.–based medtech giant reported profits of $646 million, or $0.48 per share, on sales of $6.0 billion for the three months ended April 24, 2020, for a bottom-line slide of 46% on a sales decline of 26% compared with Q4 2019.
Adjusted to exclude one-time items, earnings per share were 58¢, 48¢ behind The Street, where analysts were looking EPS of $1.06 on sales of $7.02 billion.
Because Medtronic’s previous quarter unlike many other medical device companies finished at the end of April versus the end of March, the results out today are some of the first to truly reflect the economic devastation wrought by the COVID-19 pandemic. Medtronic had already warned that its weekly revenue was down 60% in April as hospitals ended elective procedures and focused on treating people infected with the virus.
Even as Medtronic faces a host of challenges related to the coronavirus, it is also an important provider of crucial equipment in the pandemic fight, including ventilators.
“It is important to acknowledge the incredible heroism, resolve and sacrifice of the frontline healthcare workers fighting the COVID-19 pandemic, as well as our employees who are supporting them,” Medtronic’s new CEO Geoff Martha said in a news release.
“This pandemic presented the world with an unprecedented challenge, which required an unprecedented response, including by our team at Medtronic. I’m extremely proud of the way our employees have risen to the occasion to help healthcare systems and workers, governments and NGOs, and for the way that they’ve continued to support their communities and families through this time.”
Because of the uncertainty surrounding the pandemic, Medtronic is not providing financial guidance for the new quarter and fiscal year. But Medtronic officials still signaled confidence in the future by boosting the company’s quarterly dividend to 58¢ per ordinary share — a move that would translate into an annual dividend of $2.32 per share, up from $2.16 the prior year. Medtronic has boosted its annual dividend payment to shareholders for 43 consecutive years.
“Our financial position remains strong, and we’re differentially using our balance sheet during the pandemic. Today, we announced a significant increase in our dividend, and we are purposely investing to drive not only a strong recovery but also consistent, long-term growth,” Martha said. “As we emerge, the investments that we’ve made will be evident in our attraction and retention of top talent, and in the new, innovative products and solutions that we’ll offer physicians, patients, and healthcare systems.”
Investors reacted by sending MDT shares down -2.2% to $95.88 apiece today in morning trading. MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — was down -0.3%.