-
Revenue of $7.3 Billion Grew
12% on a Comparable, Constant Currency Basis Including Extra Week
Benefit; 70% as Reported
-
Non-GAAP Diluted EPS of $1.02;
GAAP Diluted EPS of $0.57
-
U.S. Revenue of $4.1 Billion
Grew 14% on a Comparable Basis Including Extra Week Benefit; 78% as
Reported
-
Company Reiterates FY16 Revenue
Growth Outlook and EPS Guidance
DUBLIN - Sept. 3, 2015 -
Medtronic plc (NYSE: MDT) today announced financial results for its
first quarter of fiscal year 2016, which ended July 31,
2015.
Unless otherwise noted, all revenue growth rates
in this press release are stated on a comparable, constant currency
basis, which includes the benefit of the extra week of sales in the
first quarter of fiscal year 2016, adjusts for the impact of
foreign currency translation, and includes Covidien plc in the
prior year comparison, aligning Covidien's prior year monthly
revenue to Medtronic's fiscal quarters.
The company reported first quarter worldwide
revenue of $7.274 billion, an increase of 12 percent including the
extra week benefit. The extra selling week is a result of the
company's 52-53 week fiscal year calendar, which occurs every six
years. While it is difficult to calculate an exact impact from the
extra week, the company estimates that it benefitted first quarter
comparable, constant currency revenue growth by approximately 6
percentage points. After adjusting for the estimated benefit of the
extra selling week, first quarter worldwide revenue grew at the
upper-end of the mid-single digit range. Foreign currency
translation had a negative $529 million impact on revenue. As
reported, revenue increased 70 percent when compared to the $4.273
billion reported by Medtronic, Inc. in the first quarter of fiscal
year 2015. As detailed in the attached table, first quarter
non-GAAP income and diluted earnings per share were $1.462 billion
and $1.02, an increase of 47 percent and 3 percent, respectively.
As reported, first quarter net income and diluted earnings per
share were $820 million and $0.57, a decrease of 6 percent and 34
percent, respectively.
U.S. revenue of $4.142 billion represented 57
percent of company revenue and increased 14 percent, high-single
digit growth adjusted for the extra week, or 78 percent as
reported. Non-U.S. developed market revenue of $2.197 billion
represented 30 percent of company revenue and increased 10 percent,
mid-single digit growth adjusted for the extra week, or 58 percent
as reported. Emerging market revenue of $935 million represented 13
percent of company revenue and increased 14 percent, high-single
digit growth adjusted for the extra week, or 71 percent as
reported.
"Our first quarter results represent a strong
start to fiscal year 2016, with all four of our groups contributing
to revenue growth that was at the upper end of our goal when
adjusted for the extra week. We are driving solid growth in the
United States and seeing broad acceptance of our innovative
therapies around the world," said Omar Ishrak, Medtronic chairman
and chief executive officer. "We continue to strengthen and
geographically diversify our businesses and remain confident in
both our outlook for the remainder of the year and our long-term
competitive position in the changing healthcare environment."
Cardiac and Vascular
Group
The Cardiac and Vascular Group (CVG) includes the Cardiac Rhythm
& Heart Failure, Coronary & Structural Heart, and Aortic
& Peripheral Vascular divisions. CVG worldwide revenue of
$2.567 billion increased 15 percent, high-single digit growth
adjusted for the extra week, or 14 percent as reported. CVG revenue
performance was driven by strong balanced growth across all three
divisions.
Cardiac Rhythm & Heart Failure (CRHF) revenue
of $1.369 billion grew 17 percent, low-double digits adjusted for
the extra week, or 9 percent as reported. Adjusted for the extra
week, CRHF performance this quarter was driven by high-single digit
growth in High Power, mid-single digit growth in Low Power, strong
above-market growth in the low-thirties in AF Solutions, and a near
doubling of revenue in Services & Solutions, which includes the
company's Cardiocom and Cath Lab Managed Services businesses. High
Power results were driven by low-double digit growth in the U.S.
adjusted for the extra week, as the company gained share on the
strength of its Viva® XT CRT-D with
its AdaptivCRT® algorithm and
Attain®
Performa® Quadripolar
Lead. In Japan, High Power grew in the high-twenties adjusted for
the extra week and the company has gained 20 points of ICD share
since the launch of the Evera MRI® ICD in the
third quarter of last fiscal year. Low Power growth continues to be
driven by the global adoption of the Reveal LINQ®
insertable cardiac monitor and mid-single digit growth in U.S.
pacemakers adjusted for the extra week. AF Solutions results were
driven by the continued robust growth of the Arctic Front
Advance® CryoAblation
System. The division also acquired CardioInsight Technologies and
its ECVUE® non-invasive
cardiac mapping system, in the quarter.
Coronary & Structural Heart (CSH) revenue of
$788 million increased 12 percent, mid-single digit growth adjusted
for the extra week, or 3 percent as reported. CSH performance was
driven by high-single digit growth in Structural Heart and
low-single digit growth in Coronary, adjusted for the extra week.
Structural Heart growth was driven by strength in transcatheter
heart valves, which grew in the low-thirties globally and the
high-thirties in the U.S., adjusted for the extra week. The company
launched the CoreValve®
Evolut® R
recapturable system late in the quarter. Coronary benefitted from
low-single digit drug eluting stent (DES) growth adjusted for the
extra week driven by the recent launch of Resolute Onyx(TM) in
Europe and the continued acceptance of Resolute®
Integrity® in the U.S.
Coronary also had high-teens growth in balloons adjusted for the
extra week as a result of the recent launches of the company's
differentiated NC Euphora® and SC
Euphora® balloon
dilatation catheters.
Aortic & Peripheral Vascular (APV) revenue of
$410 million increased 11 percent, mid-single digit growth adjusted
for the extra week, or 77 percent as reported. APV performance was
driven by low-double digit growth in Peripheral Vascular, partially
offset by low-single digit declines in Aortic, adjusted for the
extra week. Growth in the Peripheral Vascular business was driven
by the strong adoption of the IN.PACT®
Admiral® drug-coated
balloon (DCB). The company estimates it continues to have the
leading position in the U.S. DCB market. In addition, the business
acquired Aptus Endosystems and its Heli-FX® technology in
the quarter.
Minimally Invasive Therapies
Group
The Minimally Invasive Therapies Group (MITG) includes the Surgical
Solutions and the Patient Monitoring & Recovery divisions. The
group had worldwide sales in the quarter of $2.456 billion,
representing an increase of 11 percent and mid-single digit growth
adjusted for the extra week. MITG revenue performance was driven by
high-single digit growth in Surgical Solutions and low-single digit
growth in Patient Monitoring & Recovery, adjusted for the extra
week.
Surgical Solutions revenue of $1.352 billion
increased 14 percent and grew in the high-single digits adjusted
for the extra week. Surgical Solutions performance this quarter was
driven by high-single digit growth in Advanced Surgical, low-single
digit growth in General Surgical, as well as low-double digit
growth in Early Technologies, adjusted for the extra week. Advanced
Surgical results were driven by balanced, low-double digit growth
in both Advanced Stapling and Advanced Energy adjusted for the
extra week, with growth being driven by the continued strong market
adoption of the Endo GIA(TM) Reinforced Reload and LigaSure(TM)
Maryland Jaw, respectively. In Early Technologies, results were
driven by low-double digit growth in GI Solutions and
Interventional Lung Solutions, adjusted for the extra week. The
Surgical Solutions division announced an agreement to acquire RF
Surgical and its innovative RF Assure Detection System in the first
quarter, and the transaction was completed recently.
Patient Monitoring & Recovery (PMR) revenue of
$1.104 billion increased 8 percent and grew in the low-single
digits adjusted for the extra week. Respiratory & Patient
Monitoring, Nursing Care, and Patient Care & Safety all grew in
the low-single digits adjusted for the extra week. Respiratory
& Patient Monitoring growth was driven by strong U.S. Patient
Monitoring sales. Nursing Care had solid growth due to strong sales
in enteral feeding.
Restorative Therapies
Group
The Restorative Therapies Group (RTG) includes the Spine,
Neuromodulation, Surgical Technologies, and Neurovascular
divisions. RTG worldwide revenue of $1.806 billion increased 10
percent, mid-single digit growth adjusted for the extra week, or 13
percent as reported. Group revenue performance was driven by
mid-twenties growth in Neurovascular and high-single digit growth
in Surgical Technologies, with low-single digit growth in Spine and
Neuromodulation, adjusted for the extra week.
Spine revenue of $763 million increased 7 percent,
low-single digit growth adjusted for the extra week, or 3 percent
as reported. While BMP grew, Core Spine was flat globally and
declined in the mid-single digits in the U.S., and Interventional
Spine declined in the mid-single digits globally and high-single
digits in the U.S., adjusted for the extra week.
Neuromodulation revenue of $485 million grew 7
percent, low-single digit growth adjusted for the extra week, or 1
percent as reported. Neuromodulation performance was driven by
mid-single digit growth adjusted for the extra week in Gastro/Uro
and Deep Brain Stimulation (DBS). Pain Stim had low-single digit
growth globally and mid-single digit growth in the U.S., adjusted
for the extra week. The U.S. pain stim market is showing signs of
stabilization with mid-single digit growth following three
consecutive quarters of decline.
Surgical Technologies revenue of $420 million grew
15 percent, high-single digits adjusted for the extra week, or 10
percent as reported. Surgical Technologies' performance was driven
by mid-teens growth in Advanced Energy, high-single digit growth in
Neurosurgery, and mid-single digit growth in ENT, adjusted for the
extra week. Advanced Energy had strong growth contributions from
both the Aquamantys® System and
PEAK PlasmaBlade® System.
Neurosurgery results were driven by sales of the O-arm®
Surgical Imaging System and Visualase® MRI-guided
laser ablation. ENT growth reflected continued strong
StraightShot® M5
Microdebrider and NuVent® sinus balloon
sales, offset partially by the divestiture of the business's manual
instruments product line, including MicroFrance instruments, which
occurred in the third quarter of fiscal year 2015.
Neurovascular revenue of $138 million increased 31
percent, or in the mid-twenties adjusted for the extra week, driven
by strong double-digit growth in Flow Diversion and Stents. Flow
Diversion sales were driven by strong customer adoption of the
Pipeline(TM) Flex device for the treatment of intracranial
aneurysms. Robust growth in Stents was driven by the Solitaire(TM)
FR revascularization device for stent thrombectomy following the
publication of several positive clinical studies in the New England
Journal of Medicine, including SWIFT PRIME, earlier this year. Use
of the Solitaire(TM) FR and Pipeline(TM) Flex devices also resulted
in increased sales of neurovascular access products.
Diabetes Group
The Diabetes Group includes the Intensive Insulin Management (IIM),
Non-Intensive Diabetes Therapies (NDT), and Diabetes Services &
Solutions (DSS) divisions. Worldwide Group revenue in the quarter
of $445 million increased 15 percent, high-single digits growth
adjusted for the extra week, or 7 percent as reported.
IIM, which focuses on patients with Type 1
diabetes, posted low-double digit revenue growth, adjusted for the
extra week, driven by the continued strong adoption in the U.S. of
the MiniMed® 530G System
with Enlite® CGM sensor
and its proprietary Threshold Suspend technology. Growth was also
driven by the ongoing international launch of the next-generation
MiniMed® 640G System
with a new insulin pump design, user interface, the Enhanced
Enlite® CGM sensor,
and SmartGuardTM technology,
a proprietary algorithm that can automatically suspend insulin
delivery when sensor glucose levels are predicted to approach a low
limit and resume insulin delivery once sensor glucose levels
recover. Medtronic Diabetes also received U.S. FDA approval in the
first quarter for the MiniMed® Connect,
which allows users to view their insulin pump and CGM data on a
smartphone and provides remote monitoring and text message
notifications for their care teams. The product is expected to
launch in the company's second quarter.
The NDT division, which focuses on Type 2
diabetes, grew revenue in the high-sixties, adjusted for the extra
week, and continued its global expansion and now has dedicated
resources to distribute the iPro®2 professional
CGM and the i-Port Advance® injection
port in the Americas, EMEA, and Asia Pacific.
The DSS division, which focuses on offering people
with diabetes access to therapy, insights and services, grew
revenue in the high-single digits, adjusted for the extra week,
reflecting strong consumable sales in the U.S. and continued
integration of the recently acquired Diabeter business in the
Netherlands. Medtronic and Diabeter are combining the strengths of
both companies to create a strong local and international platform
to improve outcomes for people with diabetes by further developing
and expanding Diabeter's model of care.
The group also announced several additional
partnerships in the quarter, including Samsung Electronics and
Becton, Dickinson and Company to collaborate on innovative diabetes
technology, and with Glooko to improve access to meaningful
diabetes health data in a safe and secure way. In addition, the
company's partnership with IBM Watson Health announced earlier this
year continues to make progress. Together with IBM, the group has
signed an agreement with its first health system to bring Medtronic
and IBM's collective capabilities to drive care solutions that are
expected to improve outcomes and lower costs for this health
system.
Revenue Outlook and Earnings per
Share Guidance
The company today reiterated its fiscal year 2016 revenue outlook
and non-GAAP earnings per share (EPS) guidance. In fiscal year
2016, the company continues to expect full-year revenue growth in
the range of 4 to 6 percent on a comparable, constant currency
basis, which excludes the estimated incremental 1.5 percent benefit
on full-year revenue growth due to the extra selling week in the
first quarter of fiscal year 2016, as well as an estimated $1.3 to
$1.5 billion negative foreign currency impact based on [current]
exchange rates. The company also expects diluted non-GAAP EPS in
the range of $4.30 to $4.40, which includes an expected $0.40 to
$0.50 negative foreign currency impact based on [current] exchange
rates.
"We are confident that our three growth strategies
- therapy innovation, globalization, and economic value - will
further strengthen the market-leading competitive position of our
combined organization," said Ishrak. "Our strong innovation
pipeline and focus on value-based healthcare initiatives are aimed
at ensuring Medtronic remains the partner of choice for hospitals,
payers and governments around the world."
Webcast Information
Medtronic will host a webcast today, September 3, 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 Investors link on the Medtronic home
page at www.medtronic.com and this earnings release will be
archived at www.medtronic.com/newsroom. 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 through the Investors
section of the Medtronic website.
Financial Schedules
To view the first quarter financial schedules, click here or visit
www.medtronic.com/newsroom.
About Medtronic
Medtronic plc, headquartered in Dublin, Ireland, is the global
leader in medical technology - alleviating pain, restoring health,
and extending life for millions of people around the world.
This press release contains
forward-looking statements related to product growth drivers,
market position, strategies for growth, benefits from
collaborations and acquisitions, product launches, and Medtronic's
future results of operations, which are subject to risks and
uncertainties, such as competitive factors, difficulties and delays
inherent in the development, manufacturing, marketing and sale of
medical products, government regulation and general economic
conditions and other risks and uncertainties described in
Medtronic's periodic reports on file with the U.S. Securities and
Exchange Commission (the "SEC"). Actual results may differ
materially from anticipated results. Medtronic does not
undertake to update its forward-looking statements or any of the
information contained in this press release. Certain information in
this press release includes calculations or figures that have been
prepared internally and have not been reviewed or audited by our
independent registered public accounting firm, including but not
limited to, certain information in the financial schedules
accompanying this press release. Use of different methods for
preparing, calculating or presenting information may lead to
differences and such differences may be material.
Unless otherwise noted, all
revenue amounts given in this news release are on a GAAP basis, and
all comparisons and growth rates made in this news release are
stated on a "comparable, constant currency basis" and not an as
reported basis. "Comparable, constant currency basis" includes
Covidien plc in the prior year comparison, aligning Covidien's
prior year monthly revenue to Medtronic's fiscal quarters. Aligning
historic Covidien revenue to Medtronic's fiscal quarters is
different than the pro forma revenue information previously
included within certain SEC filings, which combined revenues from
the closest historical reported quarters of both companies.
Management believes that referring to comparable, constant currency
revenue growth rates is a more useful way to evaluate the
underlying performance of Medtronic's revenue. For additional
revenue detail and the reconciliation of these revenue amounts and
growth rates to the most directly comparable GAAP financial
measures, please refer to the link at the end of this
release.
References to quarterly figures
increasing or decreasing are in comparison to the first quarter of
fiscal year 2015.
NON-GAAP FINANCIAL
MEASURES
This press release contains
financial measures and guidance, including revenue on a comparable,
constant currency basis and comparable, constant currency growth
rates, net income, and diluted EPS, which are considered "non-GAAP"
financial measures under applicable SEC rules and
regulations.
These non-GAAP financial measures
should be considered supplemental to and not a substitute for
financial information prepared in accordance with generally
accepted accounting principles (GAAP). The company's definition of
these non-GAAP measures may not be the same or similar to measures
presented by other companies.
Medtronic management believes
that in order to properly understand its short-term and long-term
financial trends, investors may find it useful to consider the
impact of aligning historical Covidien revenues to Medtronic's
fiscal calendar and excluding specified items that can be highly
variable or difficult to predict. The company generally uses these
non-GAAP financial measures to facilitate management's review of
the operational performance of the company and as a basis for
strategic planning. Management believes that the resulting non-GAAP
financial measures provide useful information to investors
regarding the underlying business trends and performance of the
company's ongoing operations and is useful for period over period
comparisons of such operations. These non-GAAP financial measures
reflect an additional way of viewing aspects of the company's
operations that, when viewed with GAAP results and the
reconciliations to corresponding GAAP financial measures, may
provide a more complete understanding of factors and trends
affecting Medtronic's business.
Because non-GAAP financial
measures exclude the effect of items that will increase or decrease
the company's reported results of operations, management strongly
encourages investors to review the company's consolidated financial
statements and publicly filed reports in their entirety.
Reconciliations of the non-GAAP financial measures to the most
directly comparable GAAP financial measures are included in the
financial schedules accompanying this press release.
-end-
View FY16 First Quarter Financial Schedules
Contacts:
Cindy Resman
Public Relations
+1-763-505-0291
Ryan Weispfenning
Investor Relations
+1-763-505-4626
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Medtronic plc via Globenewswire
HUG#1949418
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