Medtronic (MDT) reported fiscal third-quarter revenue below analyst projections as some distributors lowered their surgical inventory levels, weighing on the division's performance.

Revenue rose to $8.29 billion for the three months ended Jan. 24 from $8.09 billion the year earlier, but was shy of the $8.33 billion average analyst estimate in a FactSet poll. Adjusted earnings per share advanced to $1.39 from $1.30 year over year and topped the $1.36 consensus.

The medical device maker's shares fell 7.2% in Tuesday afternoon trade.

"A couple of our larger distributors" stepped down their surgical inventory levels below normal, Chief Executive Geoff Martha told analysts on a conference call, according to a FactSet transcript.

That change in US distributor buying patterns drove a negative impact of "a couple of hundred" basis points on the medical surgical division, Martha said on the call. The segment's sales dropped 1.9% to $2.07 billion.

"We do expect these dynamics to resolve as we enter (the first quarter), when these distributors reach their target inventory levels," he added.

In Medtronic's cardiovascular division, revenue climbed 3.7% to $3.04 billion on increased demand for its cardiac rhythm management solutions. Sales rose 4.4% to $2.46 billion in neuroscience.

Medtronic continues to expect fiscal 2025 year-over-year organic revenue growth of 4.75% to 5%. It now sees reported revenue rising 3.4% to 3.8%, lowering the top-end of its prior guidance from 3.9%. In fiscal 2024, the company reported revenue of $32.36 billion. The Street is modeling for $33.57 billion in the ongoing year.

Management reiterated a non-GAAP EPS guidance of $5.44 to $5.50, compared with $5.20 it reported last year. The market view is for adjusted EPS of $5.45 for fiscal 2025.

Medtronic expects to accelerate both top- and bottom-line growth in the fiscal fourth quarter, resulting in high-single-digit adjusted EPS growth in the second-half of the year, Gary Corona, Medtronic's interim chief financial officer, said in a statement.