By Christy Santhosh and Vaibhav Sadhamta
(Reuters) -Medical device maker Medtronic (NYSE:MDT) raised annual profit forecast for the third time this fiscal year, after beating third-quarter expectations on Tuesday, helped by higher demand for its heart and diabetes devices.
Demand for medical devices has picked up pace as non-urgent procedures, which were deferred during the pandemic, recovered in the past year with easing hospital staff shortages and people becoming regular with check-ups.
Shares of Medtronic were up nearly 2% in morning trade.
The company also said it has decided to exit its unprofitable ventilator product line within its patient monitoring and respiratory interventions (PMRI) business.
It would retain and combine the remaining businesses within the PMRI operating units into a single unit called acute care and monitoring.
CEO Geoff Martha had said in November the company was working on the separation of its PMRI business — a part of its medical surgical portfolio.
Evercore analyst Vijay Kumar said the decision is a "big positive" as it removes the "40-cent dilution from PMRI divestiture thesis".
Medtronic expects an adjusted charge of between $350 million and $425 million in the fourth quarter related to the restructuring.
The company said these operational changes would eliminate the position of executive vice president and president of medical surgical portfolio, currently held by Robert White, who would leave effective April 26.
Net sales at Medtronic's medical surgical unit for fiscal 2023 were $8.43 billion, down 7.7% from the year earlier, as demand for ventilators cooled off from the levels seen during the COVID-19 pandemic.
It expects adjusted profit for fiscal 2024 to be between $5.19 and $5.21 per share, compared with its previous range of $5.13 and $5.19 per share.
Revenue for the third quarter rose 4.7% to $8.09 billion, compared with LSEG estimates of $7.95 billion.
Its adjusted profit also topped estimates by 4 cents.