Growth in diabetes products lags, but Medtronic earnings solid
Medtronic could be making a lot more money from its diabetes business right now, but executives are confident they can ramp up manufacturing to address a supply shortfall for the Minnesota-run companys glucose sensors in the coming months.
Insulin pumps and sensors make up the smallest stand-alone product group at Medtronic, with less than $500 million in revenue, but the diabetes division had been expected to increase sales by as much as 12 percent this year.
Instead, as the company announced better than expected fiscal first quarter earnings on Tuesday, it pared diabetes guidance to 1-to-4 percent growth for its fiscal year ending in April 2018.
Demand for Medtronics latest body-worn blood-glucose sensors has more than doubled in two years, which has temporarily outstripped our production capacity, chief executive Omar Ishrak said during a quarterly earnings call Tuesday. We accelerated plans to increase sensor production capacity last year, but these lines are not expected to be ready for commercial production until our fourth quarter, which ends in April.
Until then, the company is prioritizing its supply of sensors for customers who already have a Medtronic insulin pump that works with the sensor, which cuts into the supply of sensors available for high-revenue sales to new patients.
Growth in the diabetes division was slower than expected in the quarter, noted Edward Jones research analyst John Boylan. But once they can match supply with demand, which we think they will do over time, this will be long-forgotten, he said.
Medtronic shares dipped about 2 percent Continue reading