Medtronic Plc , the world's No. 1 standalone medical device maker, posted weaker-than-expected quarterly revenue due to slowing growth in its diabetes and heart product units, and the company cut its adjusted earnings forecast for fiscal 2017.
Medtronic's shares were down nearly 8 percent in premarket trading on Tuesday.
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Sales in its cardiac and vascular unit, where Medtronic sells defibrillators, pacemakers, heart valves and stents, were $2.58 billion in the second quarter ended Oct. 28, below analysts' average estimate of $2.64 billion, compiled by Evercore ISI.
Revenue at Medtronic's diabetes group rose 3 percent to $462 million in the quarter.
The company said growth in its diabetes unit was slower in the quarter, hurt by the timing between approval and shipments for its MiniMed 630G device, and the early approval of its "artificial pancreas" device called MiniMed 670G.
MiniMed 670G was approved by the U.S. Food and Drug Administration in September and is expected to be launched in spring 2017. It is the first device that allows a glucose sensor to communicate with an insulin pump and automatically regulate insulin flow.
Improvement in the back half of the year is essential particularly in the setting of potential Obamacare turbulence. We remain optimistic that Medtronic can rebound from the deceleration but our outlook has been tempered, Cowen & Co analysts said in a client note.
Medtronic's revenue rose 4 percent to $7.35 billion, missing the average analysts' estimate of $7.46 billion, according to Thomson Reuters I/B/E/S.
"We faced issues that affected our growth, including slower-than-expected revenue as we await new product introductions, particularly in cardiac and vascular group and diabetes," CEO Omar Ishrak said.
"Q2 revenue was disappointing and did not meet our expectations."
Medtronic cut its adjusted earnings forecast to a range of $4.55-$4.60 per share from $4.60-$4.70 for the fiscal year ending April 28, 2017.
The company's net income rose to $1.11 billion, or 80 cents per share, in the quarter, from $520 million, or 36 cents per share, a year earlier. (http://bit.ly/2gFRNT8)
Excluding items, Medtronic earned $1.12 per share, above analysts' average estimate of $1.11 per share.
(Reporting by Akankshita Mukhopadhyay in Bengaluru; Editing by Anil D'Silva and Martina D'Couto)