Medtronic (MDT) saw share prices fall sharply Tuesday morning after it reported worse-than-expected earnings for the second quarter of 2017, thanks to slow revenue growth.
The medical technology, services and solutions company reported earnings per share of $1.12, as compared to street estimates of $1.11. Despite slightly outperforming expectations on earnings, Medtronic missed revenue estimates. The company posted revenues of $7.345 billion, compared to estimates of $7.46 billion.
"Q2 revenue was disappointing and did not meet our expectations," said Omar Ishrak, CEO of Medtronic, in a statement. "We faced issues that affected our growth, including slower than expected revenue as we await new product introductions, particularly in CVG and diabetes."
Medtronic fell 8.2% Tuesday on the news, hitting $73.94 per share and continuing to trend downward. Ishrak noted that the company sees its revenue struggles as "temporary" and "short term," and that he has faith Medtronic can restore revenue growth later in the year.
During its second quarter, Medtronic launched products in its cardiology and diabetes pipelines, but patients are waiting for new products rather than re-upping the ones they're currently using.
Because the second quarter was disappointing, Medtronic cut guidance for the full year. The company said it now expects mid-single digit growth, rather than the upper half of the mid-single digit the company previously forecast. Medtronic also expects earnings for 2017 to land between $4.55 to $4.60, down from previously guided $4.60 to $4.70.
Medtronic also provided some guidance on its plans for M&A in the back half of the year.
"To some degree we've executed well on the M&A - both small and midsize tuck-in acquisitions," Ishrak said during the company's earnings call held on Tuesday morning.
He added that the company will continue to look at different opportunities for capital allocation, and that the tuck-in deals Medtronic engaged in during calendar year 2016 were the best use of the company's cash.
Medtronic has done several deals in 2016. In February, it acquired Bellco Societa Unipersonale a r.l. from Charme Capital Partners SGR SpA for an undisclosed sum.
Later in the year, in May, Medtronic acquired gynecology unit from Smith & Nephew plc for $350 million in cash. And most recently, Medtronic purchased HeartWare International Inc. for $1.1 billion in cash in a deal that closed in August.
Medtronic was seen as a potential buyer for LDR Holding Corp., per reporting by TheStreet's sister publication, The Deal. Medtronic did not provide any further guidance on potential targets, including LDR.
Medtronic has a market cap of $102.1 billion. Medtronic is expected to hold its third quarter earnings call on Feb. 21, 2017.