Medtronic plc (NYSE:MDT) today announced financial results
for its second quarter of fiscal year 2020, which ended October 25,
2019.
The company reported second quarter
worldwide revenue of $7.706 billion, an increase of 3.0
percent as reported or 4.1 percent on an organic basis, which
adjusts for a $97 million negative impact from foreign
currency and a $16 million contribution from the company’s
acquisition of Titan Spine, which is reported in the Spine division
in the Restorative Therapies Group. As reported, second quarter
GAAP net income and diluted earnings per share (EPS)
were $1.364 billion and $1.01, respectively. As detailed in
the financial schedules included through the link at the end of
this release, second quarter non-GAAP net income and non-GAAP
diluted EPS were $1.777 billion and $1.31, respectively, increases
of 7.0 percent and 7.4 percent, respectively. Adjusting for a
negative 2 cent impact from foreign currency, second quarter
non-GAAP diluted EPS increased 9.0 percent.
Second quarter U.S. revenue of $4.129 billion
represented 54 percent of company revenue and increased
2.1 percent as reported. Non-U.S. developed market revenue of
$2.315 billion represented 30 percent of company revenue
and increased 1.4 percent as reported and 4.6 percent on a
constant currency basis. Emerging Markets revenue of $1.262
billion represented 16 percent of company revenue
and increased 9.4 percent as reported and 11.6 percent on a
constant currency basis.
“We reported another quarter of solid results,
reflecting our continued focus on executing to our commitments
across Medtronic,” said Omar Ishrak, Medtronic chairman and chief
executive officer. “Our broad-based performance this quarter
demonstrates the consistency of our execution, the strength of our
innovation, and the benefit of our business and geographic
diversification.”
Cardiac and Vascular GroupThe Cardiac and
Vascular Group (CVG) includes the Cardiac Rhythm & Heart
Failure (CRHF), Coronary & Structural Heart (CSH), and Aortic,
Peripheral & Venous (APV) divisions. CVG second quarter revenue
of $2.855 billion decreased 0.1 percent as reported and
increased 1.3 percent on a constant currency basis. CVG’s
revenue performance was driven by high-single digit growth in CSH,
offset by flat results in APV and low-single digit declines in
CRHF, all on a constant currency basis.
- Cardiac Rhythm & Heart Failure second quarter
revenue of $1.426 billion decreased 3.1 percent as reported or 1.9
percent on a constant currency basis. Arrhythmia Management grew in
the low-single digits, driven by mid-single digit growth in
Pacemakers on continued strength of the Micra™ transcatheter pacing
system, as well as low-double digit growth in AF Solutions, all on
a constant currency basis. Arrhythmia Management growth was offset
by low-double digit declines in Heart Failure, including
high-thirties declines in sales of left ventricular assist devices
(LVADs), both on a constant currency basis.
- Coronary & Structural Heart second quarter
revenue of $955 million increased 5.4 percent as reported or 7.2
percent on a constant currency basis, led by low-twenties constant
currency growth in sales of transcatheter aortic valves, reflecting
expansion into the low risk patient population. Transcatheter
aortic valve growth was offset by mid-single digit declines in
drug-eluting stents.
- Aortic, Peripheral & Venous second quarter
revenue of $474 million decreased 1.3 percent as reported or 0.2
percent on a constant currency basis. Aortic grew in the mid-single
digits on a constant currency basis, driven by low-twenties
constant currency growth in thoracic aortic stent grafts reflecting
strong demand for the Valiant Navion™. Aortic growth was offset by
high-single digit constant currency declines in Peripheral, driven
by low-thirties constant currency declines in drug-coated
balloons.
Minimally Invasive Therapies GroupThe
Minimally Invasive Therapies Group (MITG) includes the Surgical
Innovations (SI) and the Respiratory, Gastrointestinal & Renal
(RGR) divisions. MITG second quarter revenue of $2.142 billion
increased 4.6 percent as reported or 6.1 percent on
a constant currency basis. MITG’s revenue performance was
driven by balanced growth across both divisions, with mid-single
digit constant currency growth in both SI and RGR.
- Surgical Innovations second quarter revenue of
$1.454 billion increased 4.4 percent as reported or 6.0 percent on
a constant currency basis, driven by strong contributions from
Advanced Energy and Advanced Stapling. Advanced Energy grew in the
mid-single digits on a constant currency basis on continued
strength in sales of LigaSure™ vessel sealing instruments,
including the Ligasure™ Exact dissector. Advanced Stapling grew in
the mid-single digits on a constant currency basis, driven by
strong demand for Tri-Staple™ 2.0 endo stapling specialty reloads
and the EEA™ circular stapler with Tri-Staple™ technology for
colorectal procedures.
- Respiratory, Gastrointestinal & Renal second
quarter revenue of $688 million increased 5.2 percent as reported
or 6.1 percent on a constant currency basis, with strength in
Respiratory & Patient Monitoring, as well as GI Solutions.
Respiratory & Patient Monitoring grew in the high-single digits
on a constant currency basis on strong sales of Nellcor™ pulse
oximetry, increased adoption of advanced parameters including
Microstream™ capnography and BIS™ brain monitoring, as well as
Puritan Bennett™ 980 ventilators, and McGRATH™ MAC video
laryngoscopes. GI Solutions grew in the high-single digits on a
constant currency basis, with solid growth in Bravo™
calibration-free reflux testing systems, EndoFLIP™ imaging systems,
and PillCam™ capsule endoscopy systems.
Restorative Therapies GroupThe Restorative
Therapies Group (RTG) includes the Brain Therapies, Spine,
Specialty Therapies, and Pain Therapies divisions. RTG second
quarter revenue of $2.112 billion increased 6.0 percent as
reported, as well as on an organic basis, which adjusts for the
negative impact from foreign currency and the positive contribution
from the company’s acquisition of Titan Spine. RTG’s revenue
performance was driven by low-double digit growth in Brain
Therapies, mid-single digit growth in Specialty Therapies and
Spine, and low-single digit growth in Pain Therapies, all on an
organic basis.
- Brain Therapies second quarter revenue of $772
million increased 10.1 percent as reported or 11.3 percent on a
constant currency basis, driven by high-teens constant currency
growth in Neurovascular and low-double digit constant currency
growth in Neurosurgery. Neurovascular results were driven by
low-double digit constant currency growth in Hemorrhagic Stroke and
high-twenties growth in Ischemic Stroke. Neurosurgery was led by
strong, double digit growth of StealthStation™ S8 surgical
navigation systems, O-arm™ surgical imaging systems, and Mazor X
Stealth™ Edition robotic guidance systems.
- Spine second quarter revenue of $692 million
increased 5.5 percent as reported or 3.5 percent on an organic
basis. When combined with the company’s sales of enabling
technology used in spine surgeries, including robotics, navigation,
imaging, and powered surgical instruments that are recognized in
the Brain Therapies division, global Spine revenue and U.S. Spine
revenue both grew in the high-single digits on an organic basis.
Cervical spine products grew mid-single digits on an organic basis,
driven by sales of the Infinity™ OCT system and the Prestige LP™
cervical disc system. Spine also benefitted from pull-through of
Medtronic core spine implants used in Mazor™ robotic cases, as well
as strong sales of Infuse™ bone graft, which grew in the low-double
digits on an organic basis.
- Specialty Therapies second quarter revenue of $333
million increased 3.4 percent as reported or 4.3 percent on a
constant currency basis. ENT grew in the high-single digits on a
constant currency basis, driven by capital equipment sales of the
StealthStation™ ENT surgical navigation system, as well as sales of
disposables used with the intraoperative NIM nerve monitoring
system. Pelvic Health grew in the low-single digits on a constant
currency basis, driven by sales of the InterStim™ II sacral
neuromodulation system.
- Pain Therapies second quarter revenue of $315
million increased 0.3 percent as reported or 1.3 percent on a
constant currency basis. Interventional Pain grew in the low-double
digits on the strength of Kyphon™ balloon kyphoplasty and
OsteoCool™ RF ablation system sales. This was offset by declines in
Pain Stimulation, reflecting the slowdown of the spinal cord
stimulation market.
Diabetes GroupDiabetes Group second
quarter revenue of $596 million increased 2.2 percent as
reported or 4.3 percent on a constant currency basis. Diabetes
Group revenue performance was led by international markets, which
grew 14.5 percent as reported or 19.3 percent on a constant
currency basis, driven by the ongoing launch of the MiniMed™ 670G
hybrid closed loop insulin pump system. International growth was
offset by high-single digit declines in the U.S., given increased
competition as the group awaits its expected upcoming product
approvals.
Global sales of integrated continuous glucose
monitoring (CGM) sensors grew in the mid-teens on a constant
currency basis, driven by global adoption of sensor-augmented
insulin pump systems and the resulting strong sensor attachment
rates.
GuidanceThe company today reiterated its
revenue growth guidance and raised its full year EPS guidance for
fiscal 2020.
The company continues to expect revenue growth in
its fiscal year 2020 to approximate 4.0 percent on an organic basis
and for revenue growth to accelerate in the second half relative to
the first. If current exchange rates hold, revenue growth in
fiscal year 2020 would be negatively affected by 0.8 to 1.2
percent.
The company increased its fiscal year 2020 diluted
non-GAAP EPS guidance from the prior range of $5.54 to $5.60 to a
new range of $5.57 to $5.63, including an estimated 9 cent negative
impact from foreign exchange based on current rates.
“The first half of this fiscal year has gone well,
as we’ve executed to our commitments and delivered
better-than-expected results,” said Ishrak. “As we look forward,
we’re even more excited about what lies ahead, as the investments
we’ve made in our pipeline begin to pay off by accelerating our
revenue growth and creating value for our shareholders.”
Webcast InformationMedtronic will host a
webcast today, November 19, at 8:00 a.m. EST (7:00 a.m. CST) to
provide information about its businesses for the public, investors,
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 its 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 SchedulesTo view the second
quarter financial schedules and non-GAAP
reconciliations, click here. To view the second quarter
earnings presentation, click here. Both documents can
also be accessed by visiting newsroom.medtronic.com.
About MedtronicMedtronic plc
(www.medtronic.com), headquartered in Dublin, Ireland, is among the
world’s largest medical technology, services and solutions
companies – alleviating pain, restoring health and extending life
for millions of people around the world. Medtronic employs more
than 90,000 people worldwide, serving physicians, hospitals and
patients in more than 150 countries. The company is focused on
collaborating with stakeholders around the world to take healthcare
Further, Together.
FORWARD LOOKING STATEMENTSThis press
release contains forward-looking statements, which are subject to
risks and uncertainties, including those described in Medtronic’s
periodic reports and other filings with the U.S. Securities and
Exchange Commission (the “SEC”). Anticipated results only reflect
information available to Medtronic at this time and may differ from
actual 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.
NON-GAAP FINANCIAL MEASURESThis press
release contains financial measures and guidance, including
adjusted net income and adjusted diluted EPS, which are considered
“non-GAAP” financial measures under applicable SEC rules and
regulations. References to quarterly figures increasing, decreasing
or remaining flat are in comparison to the second quarter of fiscal
year 2019.
Medtronic management believes that non-GAAP
financial measures provide information useful to investors in
understanding the company’s underlying operational performance and
trends and to facilitate comparisons with the performance of other
companies in the med tech industry. Non-GAAP net income and diluted
EPS exclude the effect of certain charges or gains that contribute
to or reduce earnings but that result from transactions or events
that management believes may or may not recur with similar
materiality or impact to operations in future periods (Non-GAAP
Adjustments). Medtronic generally uses non-GAAP financial measures
to facilitate management’s review of the operational performance of
the company and as a basis for strategic planning. Non-GAAP
financial measures should be considered supplemental to and not a
substitute for financial information prepared in accordance with
U.S. generally accepted accounting principles (GAAP), and investors
are cautioned that Medtronic may calculate non-GAAP financial
measures in a way that is different from other companies.
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.
Medtronic calculates forward-looking non-GAAP
financial measures based on internal forecasts that omit certain
amounts that would be included in GAAP financial measures. For
instance, forward-looking organic revenue growth guidance excludes
the impact of foreign currency fluctuations, as well as significant
acquisitions or divestitures. Forward-looking diluted non-GAAP EPS
guidance also excludes other potential charges or gains that would
be recorded as Non-GAAP Adjustments to earnings during the fiscal
year. Medtronic does not attempt to provide reconciliations of
forward-looking non-GAAP EPS guidance to projected GAAP EPS
guidance because the combined impact and timing of recognition of
these potential charges or gains is inherently uncertain and
difficult to predict and is unavailable without unreasonable
efforts. In addition, the company believes such reconciliations
would imply a degree of precision and certainty that could be
confusing to investors. Such items could have a substantial impact
on GAAP measures of financial performance.
-end-
View FY20 Second Quarter Financial Schedules &
Non-GAAP ReconciliationsView FY20 Second Quarter Earnings
Presentation
Erika WinkelsPublic Relations+1-763-526-8478
Ryan WeispfenningInvestor Relations+1-763-505-4626
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