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Geoff Martha, Medtronic CEO and Yahoo Finance’s Anjalee Khemlani joins the Yahoo Finance Live panel to discuss Medtronic’s latest earnings.
AKIKO FUJITA: Let's turn our attention to shares of Medtronic now, getting a big pop in this session, up nearly 3% on the back of their earnings report. The COVID-19 pandemic, though, continues to create a drag for Medtronic. The world's largest medical device maker did beat Wall Street estimates, reporting revenue of $7.8 billion on $1.8 billion income. But that was still down 10% from the previous year.
Let's bring in Geoff Martha. He is the CEO of Medtronic. We've also got our very own Anjalee Khemlani joining in on the conversation. Geoff, it's good to talk to you today. There's a dip in procedure volumes, no question, have led to a drag on the business. You've been very transparent about that. As we see the case counts drop for COVID-19 and hospitals, elective procedures pick up again, to what extent have we seen it return to where things were prior to the pandemic?
ANJALEE KHEMLANI: Well, first, look, we're really pleased with the performance we had this quarter, as you pointed out. As we're-- as Medtronic, quarter over quarter, is getting closer, making progress in our quest to get back to pre-pandemic growth, both top line and bottom line. And clearly, the markets-- or the elective procedure pullback over the last couple of weeks has, you know, had an impact on that.
But we are seeing, we are optimistic here that the worst is behind us. And what we're seeing is, obviously, the case count's slower, as you pointed out. Hospitalizations are lower. And I've had a lot of conversations with hospital CEOs and around the world, particularly here in the US in the last week. And they're looking for what I'll call a snapback in cases.
And we're seeing that even in our numbers in terms of leading indicators, like hospitals buying capital equipment that's directly tied to procedures, surgical procedures of different types, whether that be energy consoles, the power of the instruments, or navigation systems or imaging systems tied to procedures. So we're seeing those get purchased by hospitals at record numbers at this point in time. So I that's telling where hospitals are thinking about here for the next couple of months.
ANJALEE KHEMLANI: Geoff, Anjalee here. Looking at the way that the pandemic has really disrupted healthcare in so many ways, of course, you saw that hit from the reduction of elective procedures. But going forward, I think what a lot of focus has been on remote and on technology. And I know this was brought up in the earnings call. What are you thinking about in terms of how to respond to that new demand when it comes to remote monitoring devices, or just sort of remote ways to do certain things?
GEOFF MARTHA: Look, it's a big trend. And I think it's a trend here to stay. I think it's going to be a sustainable change in healthcare. And internally, we had an initiative called remote everything. And we're seeing remote patient management, remote programming of our devices at implant, so programming those devices outside of the operating room during an implant, and remote device management.
So for example, patients that have, like, an implantable defibrillator or a pacemaker traditionally had to go back to the hospital every couple of months for what they call a device check to make sure everything's working OK. And now we're doing that remotely. Every time a patient would need an MRI machine-- or MRI, rather, scan-- we would have to-- our reps would have to go to the hospital and manually reprogram the device with their programmer.
Now that's being done remotely. And so, that's not only is that more efficient for the-- it's better patient care. It's more efficient for the hospitals. It's more efficient for Medtronic. So I think this remote capabilities are a big boost to not just outcomes, but also efficiency.
ANJALEE KHEMLANI: One of the things that you have is that you interact very closely with these hospitals and these institutions. And you have some competitors in the market that have more of a consumer base. Have you thought about that as it relates to remote monitoring? And as we see sort of this push for telehealth and wearables, is there scope for that for Medtronic?
GEOFF MARTHA: There is. You know, look, like you said, we're primarily calling on specialist physicians and hospitals. But we do have technology that is really just monitoring technology that's not-- I wouldn't call it implanted. It's inserted just under the skin. It's always on. It's got a 4 and 1/2 year battery life. And it passively monitors all kinds of parameters.
And we use this for the detection of things like atrial fibrillation and onset of stroke. And it's a very powerful technology. And it's much more sensitive and specific, right, than what you get from wearables. And it's something that has a lot of data behind it and credibility with physicians. So there's all kinds of opportunities there. That's already a big business for us, $700, $800 million. But it could be 10x that over time. And we could use that technology in conjunction with wearables, so there's all kinds of options for that.
But between miniaturization of the technology, the low energy Bluetooth connectivity to your phone, the batteries that we have, the rechargeable batteries or the battery life that we have that's like I said, and that device 4 and 1/2, 5 years, you know, the possibilities are-- there's a lot of possibilities in front of us here to, like I said, improve patient outcomes, just make healthcare more efficient, more accessible.
ZACK GUZMAN: Yeah, Geoff, the other thing, too, I mean, we've seen a lot of companies like yours want to stay away from formal guidance due to the pandemic. When it comes to maybe the largest swing factor that you see on the horizon, you say that you think the worst is behind you and that you could get back to pre-COVID levels. But what's that thing out there that's preventing you from wanting to initiate that guidance again and really, I guess, kind of the biggest swing factor you're afraid of?
GEOFF MARTHA: Well, look, on our call this morning, we do provide a lot of color commentary around-- and we're getting close to actual guidance here. I think it's just-- there's still a little bit of volatility. Like, for example, this latest spike in COVID, it did, with the variance and everything, it did impact more than maybe we would have thought earlier. I mean, we were able to manage that, but it lasted a little longer. And so there's still a few unknowns, but we're getting really close, I think, to providing-- like, going back to more formal guidance.
AKIKO FUJITA: Geoff, another issue we've been watching closely, the global chip shortage. Medtronic certainly not immune to that. In fact, your company among a number of businesses that signed that letter to President Biden recently, calling for federal funding to be able to build up factories here in the US. Where are the bottlenecks that you're seeing in the supply chain right now? And what are you having to tweak in order to make up for the shortage?
GEOFF MARTHA: Well, look, we learned our-- short answer on the supply chain issues, they haven't been that bad for us today. I mean, I think our concern is going forward. But up to now, they have not been an issue for us. We learned a couple of years ago. It was after Hurricane Maria. We had some issues there in business continuity. We know we have now business continuity measures in place and dual manufacturing in different parts of the world. And our suppliers are now more dispersed as well.
So, right now, as we sit here, we don't have real supply chain constraints, but we are looking forward with the increased demand, and just want to make sure that we do have the appropriate supply of many component parts, including the electronics that you highlight.
ZACK GUZMAN: All right, the CEO of Medtronic, Geoff Martha, I appreciate you coming on here today, chatting with us, alongside Yahoo Finance's Anjalee Khemlani as well. Thanks again.