Medtronic: Sales recovering faster than expected

Global medical device company says the ENT business is gaining market share.


  • By Mark Basch
  • | 5:10 a.m. December 3, 2020
  • | 5 Free Articles Remaining!
Medtronic CEO Geoff Martha
Medtronic CEO Geoff Martha
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Medtronic plc last week reported a sharp decline in quarterly sales at its Jacksonville division, which makes surgical instruments for ear, nose and throat physicians.

However, the global medical device company said the ENT business is gaining market share, helped by a recent acquisition, as the company continues to recover from the COVID-19 pandemic.

The pandemic has affected sales in businesses like ENT because those surgical procedures often are elective and are being put off during the health care crisis.

Medtronic does not report specific data for the ENT business but said sales declined by a high single-digit percentage in the second quarter ended Oct. 30.

Medtronic’s total sales in the second quarter fell 1.5%, adjusted for currency fluctuations, to $7.6 billion.

But in Medtronic’s quarterly conference call, CEO Geoff Martha expressed optimism about sales trends, according to a transcript posted by the company.

“Our recovery from the depths of the pandemic has been faster than expected and we’re now approaching year-over-year growth,” he said.

“While we continue to monitor COVID resurgence around the globe, health care systems are by and large better prepared, and patients are more willing to seek the care they need.”

Martha said the ENT business is gaining market share with the launch of new products. It expanded the business in October by acquiring a company called Ai Biomed Corp., which added products to the portfolio.

“Going forward, we expect these launches to continue to drive share gains and market growth,” Martha said.

The ENT division is part of Medtronic’s specialty therapies group, which increased total revenue by an adjusted 0.3% to $581 million in the second quarter. The increase came from a sales jump in pelvic health products.

Medtronic reported adjusted earnings of $1.02 per share for the quarter, down from $1.31 a year earlier. The earnings were 24 cents a share higher than the consensus forecast of analysts, according to Zacks Investment Research.

Cannae continues CoreLogic push

Cannae Holdings Inc. and Senator Investment Group LP are continuing their push to get CoreLogic Inc. sold off.

Cannae, the investment firm spun off by Jacksonville-based Fidelity National Financial Inc., and Senator have been pressuring CoreLogic’s board of directors since their unsolicited buyout bid in June was rejected.

Cannae and Senator nominated candidates to replace nine of the 12 directors on CoreLogic’s board but only three were elected at a special shareholders meeting two weeks ago.

In a Securities and Exchange Commission filing last week, CoreLogic posted the vote totals from that special meeting showing more shareholders voted to remove all nine directors than to keep them.

Because of a large number of abstentions, there weren’t enough votes to replace six board members of the housing data firm.

In a statement last week, Cannae and Senator called the vote a “clear mandate” for CoreLogic’s board to consider buyout offers. CoreLogic has said other parties have expressed interest at a higher price than Cannae and Senator offered, and the two investment firms said they would support a buyout from another party at the higher price.

However, Cannae and Senator said they will solicit written consents to replace six directors “if there continue to be unexplainable delays in the process or if we learn the Board is not acting in the best interests of shareholders.”

In response, CoreLogic issued a statement saying the board is working on a “robust sale process” that will maximize value for shareholders.

“We are pursuing a process that is designed to achieve a successful outcome, and we expect to receive definitive proposals in early 2021,” it said.

Duos Technologies gets Nasdaq notice

Duos Technologies Group Inc. took a big step forward in February by getting its stock listed on the Nasdaq Capital Market.

However, the Jacksonville-based technology company said in an SEC filing last week it received a letter from Nasdaq on Nov. 19 saying it faces a possible delisting because it does not meet the market’s minimum requirement of $2.5 million in stockholders’ equity.

After a third-quarter loss, the company’s stockholders’ equity fell from $4.7 million as of June 30 to $2.2 million as of Sept. 30.

Duos, which provides intelligent security analytical technology with a focus on railroad industry applications, has had a disappointing year as the pandemic delayed some of its contracts.

The SEC filing said Duos has until Jan. 3 to submit a plan to Nasdaq to regain compliance and if the plan is accepted, it would have 180 days from Nov. 19 to implement the plan.

“The Company intends to take all reasonable measures available to regain compliance under the Nasdaq Listing Rules and remain listed on the Nasdaq. The Company is currently evaluating its available options to resolve the deficiency and regain compliance with the Nasdaq minimum stockholder equity requirement,” the filing said.

Analysts differ on Adecco outlook

Two analysts in the past week offered diverging ratings on Adecco Group, the global staffing company that has its North American headquarters in Jacksonville.

Morgan Stanley analyst Anvesh Agrawal downgraded the Switzerland-based company from “overweight” to “equal weight” Nov. 27, but Credit Suisse analyst Andy Grobler upgraded his rating from “underperform” to “outperform” Nov. 30.

“We expect the combination of improving end markets through 2021, rising demand for outsourcing, earnings momentum driven by positive operational leverage, robust balance sheets and valuation that is not reflecting the rate of recovery will support positive re-rating,” Grobler said in his research report.

Agrawal also expects markets to improve.

“We remain bullish on staffers and continue to bake in a 2021 recovery,” Agrawal said in his report.

“To be clear, we are not calling for downside for Adecco shares,” he said.

“However, with a lot of positive news priced in, we prefer to hedge our staffers’ positioning and take profits. If the news flow continues to remain positive and visibility on a 2021 recovery improves, we will reassess closer to the Q4 update.”

Grobler thinks “technology-led disruption” will limit Adecco’s earnings growth for the long term but the company handled the economic upheaval of 2020 well.

“Through 2020 Adecco has proved more resilient than initially feared as costs were managed, counter cyclical outplacement activities grew and core temp markets recovered from the April lows,” he said.

 

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