On August 21, 2018 Medtronic plc (NYSE: MDT) reported financial results for its first quarter of fiscal year 2019, which ended July 27, 2018 (Press release, Medtronic, AUG 21, 2018, View Source;p=RssLanding&cat=news&id=2364225 [SID1234529340]).
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
The company reported first quarter worldwide revenue of $7.384 billion, a decrease of 0.1 percent as reported, or an increase of 6.8 percent on an organic basis, which adjusts for the divestiture of its Patient Care, Deep Vein Thrombosis (Compression), and Nutritional Insufficiency businesses to Cardinal Health that occurred in the second quarter of fiscal year 2018, and a $78 million positive impact from foreign currency. As reported, first quarter GAAP net income and diluted earnings per share (EPS) were $1.075 billion and $0.79, respectively. As detailed in the financial schedules included through the link at the end of this release, first quarter non-GAAP net income and diluted EPS were $1.601 billion and $1.17, respectively, both increases of 4 percent. Adjusting for the divestiture and a positive 5 cent impact from foreign currency, first quarter non-GAAP diluted EPS increased 9 percent.
First quarter U.S. revenue of $3.864 billion represented 52 percent of company revenue and decreased 4.4 percent as reported, while it increased 6.4 percent on a comparable basis, which adjusts for the divestiture. Non-U.S. developed market revenue of $2.406 billion represented 33 percent of company revenue and increased 4.0 percent as reported and 5.5 percent on a comparable, constant currency basis. Emerging market revenue of $1.114 billion represented 15 percent of company revenue and increased 7.6 percent as reported and 11.2 percent on a comparable, constant currency basis.
"We are executing against our plan, growing our markets and driving share gains across multiple businesses and geographies," said Omar Ishrak, Medtronic chairman and chief executive officer. "Our execution is not only on the top line, but also down the P&L, as we delivered margin expansion through our Enterprise Excellence program while increasing our investment in R&D."
Cardiac and Vascular Group
The Cardiac and Vascular Group (CVG) includes the Cardiac Rhythm & Heart Failure (CRHF), Coronary & Structural Heart (CSH), and Aortic, Peripheral & Venous (APV) divisions. CVG worldwide first quarter revenue of $2.811 billion increased 6.2 percent, or 5.0 percent on a constant currency basis. CVG revenue performance was driven by strong, low-double digit growth in CSH, mid-single digit growth in APV, and low-single digit growth in CRHF, all on a constant currency basis.
– CRHF first quarter revenue of $1.426 billion increased 2.6 percent, or 1.4 percent on a constant currency basis. Arrhythmia Management grew in the low-single digits on a constant currency basis, driven by high-teens constant currency growth in AF Solutions and the high-thirties constant currency growth of TYRX in Infection Control. Results were also driven by mid-single digit growth in Pacing, led by the adoption of the Micra Transcatheter Pacing System and the Azure wireless pacemaker.
– CSH first quarter revenue of $917 million increased 12.2 percent, or 10.9 percent on a constant currency basis, led by high-teens constant currency growth in transcatheter aortic valves on the global strength of the CoreValve Evolut PRO. Coronary grew in the high-single digits on a constant currency basis, driven by double digit constant currency growth of drug-eluting stents and guide catheters.
– APV first quarter revenue of $468 million increased 6.6 percent, or 5.2 percent on a constant currency basis, led by mid-teens constant currency growth in endoVenous on strong demand for the VenaSeal(TM) closure system. Peripheral Vascular grew in the mid-single digits on a constant currency basis, driven by strong PTA balloon growth globally and drug-coated balloon growth in international markets. Aortic grew in the low-single digits on a constant currency basis, driven by growth in thoracic stent grafts.
Minimally Invasive Therapies Group
The Minimally Invasive Therapies Group (MITG) includes the Surgical Innovations (SI) and the Respiratory, Gastrointestinal & Renal (RGR) divisions. MITG worldwide first quarter revenue of $2.052 billion decreased 17.5 percent as reported, or increased 4.9 percent on a comparable, constant currency basis. MITG revenue performance included mid-single digit growth in SI and low-single digit growth in RGR, both on a comparable, constant currency basis.
– SI first quarter revenue of $1.397 billion increased 5.8 percent on a comparable, constant currency basis, driven by low-double digit constant currency growth in Advanced Energy on the strength of the LigaSure(TM) vessel sealing instruments with innovative nano-coating. Advanced Stapling grew in the mid-single digits, driven by strong demand for Tri-Staple(TM) 2.0 endo stapling specialty reloads and the Signia(TM) powered stapler.
– RGR first quarter revenue of $655 million increased 2.9 percent on a comparable, constant currency basis. GI grew in the mid-single digits on a comparable, constant currency basis. Respiratory and Patient Monitoring grew in the low-single digits on a comparable, constant currency basis, with high-single digit constant currency growth in capnography and ventilation.
Restorative Therapies Group
The Restorative Therapies Group (RTG) includes the Spine, Brain Therapies, Specialty Therapies, and Pain Therapies divisions. RTG worldwide first quarter revenue of $1.949 billion increased 7.7 percent, or 6.8 percent on a constant currency basis. Group results were driven by mid-teens growth in Brain Therapies and Pain Therapies, with low-single digit growth in Specialty Therapies and flat results in Spine, all on a constant currency basis.
– Spine first quarter revenue of $652 million increased 0.5 percent, or decreased 0.3 percent on a constant currency basis. When combined with the company’s sales of enabling technology used in spine surgeries, which is recognized in the Brain Therapies division, global Spine revenue increased in the mid-single digits on a constant currency basis, driven by the success of the company’s Surgical Synergy strategy.
– Brain Therapies first quarter revenue of $599 million increased 14.8 percent, or 13.6 percent on a constant currency basis, driven by high-teens constant currency growth in Neurovascular and Neurosurgery. Neurovascular had strong growth in stents, flow diversion, and access products. Neurosurgery growth was led by strong capital equipment sales of the O-arm2 surgical imaging system, StealthStation S8 surgical navigation system, Mazor X(TM) robotic guidance system, and Visualase MRI-guided laser ablation system.
– Specialty Therapies first quarter revenue of $384 million increased 4.1 percent, or 3.3 percent on a constant currency basis. Results were led by mid-single digit constant currency growth in ENT.
– Pain Therapies first quarter revenue of $314 million increased 16.7 percent, or 15.6 percent on a constant currency basis. The division had strong, low-twenties growth in Pain Stimulation on the strength of the recently launched Intellis(TM) platform for spinal cord stimulation, as well as low-double digit growth in Targeted Drug Delivery and high-single digit growth in Interventional Pain, all on a constant currency basis.
Diabetes Group
The Diabetes Group is now organized into the Advanced Insulin Management (AIM) and Emerging Technologies divisions. Diabetes Group worldwide first quarter revenue of $572 million increased 27.4 percent, or 26.3 percent on a constant currency basis. The group is experiencing strong global demand for its new sensor-augmented insulin pump systems.
– AIM first quarter revenue grew in the mid-twenties on a constant currency basis, driven by the ongoing U.S. launch of the MiniMed 670G hybrid closed loop insulin pump system with the Guardian sensor 3 continuous glucose monitor (CGM). In international markets, AIM delivered high-teens constant currency growth on the continued strength of the MiniMed 640G system.
– Emerging Technologies first quarter revenue grew in the high-sixties on a constant currency basis, driven by the U.S. launch of the Guardian Connect CGM system with Sugar.IQ(TM) personal diabetes assistant.
Guidance
The company today updated its fiscal year 2019 revenue growth and EPS guidance.
For fiscal year 2019, the company is increasing its organic revenue growth guidance from a range of 4.0 to 4.5 percent to a range of 4.5 to 5.0 percent. If recent exchange rates hold for the remainder of the fiscal year, the company’s fiscal year 2019 revenue would be negatively affected by approximately $420 million to $520 million.
For fiscal year 2019, the company is increasing its implied constant currency non-GAAP diluted EPS growth forecast from a range of 8 to 9 percent to a range of 9 to 10 percent. At recent rates, foreign exchange is expected to be neutral to fiscal year 2019 EPS versus a 5 cent benefit prior. As such, despite the increased constant currency EPS growth outlook, the company is maintaining its diluted non-GAAP EPS guidance in the range of $5.10 to $5.15.
"We are excited about the growth opportunities in our end markets, and we are bullish about our competitive position," said Ishrak. "Our pipeline of innovation, invention, and disruption has never been stronger. We are also putting the pieces in place to improve free cash flow conversion, creating additional capital that can be returned to shareholders and reinvested to drive future growth, all with a goal of creating long-term shareholder value."
Webcast Information
Medtronic will host a webcast today, August 21, at 8:00 a.m. EDT (7:00 a.m. CDT) to provide information about its businesses for the public, analysts, and news media. This quarterly webcast can be accessed by clicking on the Investor Events link at investorrelations.medtronic.com and this earnings release will be archived at newsroom.medtronic.com. Medtronic will be live tweeting during the webcast on our Newsroom Twitter account, @Medtronic. Within 24 hours of the webcast, a replay of the webcast and transcript of the company’s prepared remarks will be available by clicking on the Investor Events link at investorrelations.medtronic.com.
Financial Schedules
To view the first quarter financial schedules and non-GAAP reconciliations, click here. To view the first quarter earnings presentation, click here. Both documents can also be accessed by visiting newsroom.medtronic.com.