Summary
Medtronic plc (MDT) has announced a voluntary global recall of its Valiant Navion™ Thoracic Stent Graft System. While the company has booked a $19 million reserve for scrapped inventory, it does not anticipate a material impact on its overall financials. The revenue generated by the Valiant Navion™ system represented less than 0.5% of total company revenue prior to the recall. To mitigate the disruption, Medtronic is increasing production of its previous generation product, the Valiant Captivia™ Thoracic Stent Graft System, with global availability expected in late March or early April and full production capacity anticipated by September. The company has provided revenue impact estimates, projecting a negative effect of approximately $40 million on its Aortic, Peripheral and Venous (APV) division revenue in the fourth quarter of fiscal year 2021, and an estimated $25 to $35 million per quarter in fiscal year 2022, decreasing over the year.
Key Highlights
- 1Voluntary global recall of the Valiant Navion™ Thoracic Stent Graft System initiated.
- 2Recall is not expected to have a material impact on total company financials.
- 3Valiant Navion™ revenue was less than 0.5% of total company revenue.
- 4Medtronic is ramping up production of the Valiant Captivia™ Thoracic Stent Graft System as a replacement.
- 5Valiant Captivia™ expected to be available globally in late March/early April, with full production by September.
- 6A $19 million reserve has been set aside for inventory write-offs.
- 7Estimated Q4 FY21 APV division revenue impact of approximately $40 million, with FY22 impact of $25-$35 million per quarter.