In an earnings call, Medtronic announced that it has decided to exit its ventilator product line and retain and combine the remaining patient monitoring and respiratory interventions businesses into one business unit called Acute Care and Monitoring (ACM).
Metronic characterized its ventilator product line as “increasingly unprofitable” and said that combining the remaining businesses will allow for increased investment in ACM with a focus on profitable growth.
By exiting the ventilator market and with increased investment and an improved competitive landscape, the company said it was setting itself up for durable category leadership in the newly combined business. In the earnings call, the company reported that its respiratory interventions results had declined, with low-single digit growth in airways offset by declines in ventilator sales.
Medtronic will continue to honor existing ventilator contracts to serve the needs of its customers and their patients, and expects that existing manufacturers, who today account for the majority of the market, can meet customer demand for new ventilators moving forward.
“In addition to delivering durable sales growth, we also drove improvements to our margins, as our cost efficiency programs helped to offset the impact of inflation, tax, and currency, contributing to our EPS and cash flow performance in the quarter,” said Karen Parkhill, Medtronic EVP and chief financial officer. “We remain focused on restoring our earnings power and creating value for our shareholders.”
In 2020 During the global pandemic, Medtronic ramped up its ventilator production by more than 40%, more than doubling its capacity to manufacture and supply ventilators.
