By Omar Ford, Staff Writer
Medtronic plc revealed strong 3Q17 sales in its most recent earnings, distancing itself from a relatively bleak 2Q17. The Dublin-based company’s revenue grew about six percent during the three months ending on Jan. 27 compared to the same period last year. Strong sales also boosted Medtronic’s adjusted income up 3.3 percent to $1.5 billion, on total sales of $7.28 billion during the quarter. With these earnings the company is rebounding from a period of stalled growth.
“The 6 percent growth in the quarter dispelled some of the concerns that last quarter’s 3 percent, including 1 percent in the U.S. was indicative of a sustained slowdown at Medtronic,” said Raj Denhoy, an analyst with Jefferies.
Medtronic’s adjusted earnings were about $1.12 per share, narrowly beating out Wall Street analysts’ consensus expectations by about one cent. The company also set 2017 earnings per share in the range of $4.55 to $4.60.
During a Tuesday earning’s call, Medtronic’s president and CEO, Omar Ishrak said, “3Q17 was a solid quarter,” and that he was “pleased by the revenue growth and sequential improvement” in the company’s groups and regions.
“Our solid revenue performance resulted from crisp execution on our three growth strategies – therapy innovation, globalization and economic value,” Ishrak said.
Most of Medtronic’s divisions grew substantially, but the firm’s diabetes group stood out. The unit had about 7 percent growth. During Medtronic’s earnings call, company executives noted that the diabetes unit was capturing market share and experiencing strong U.S. clinician and consumer demand for its 6 Series pumps through purchases of the Minimed 630G insulin pump system as well as enrollment in the Minimed 670G Priority Access Program.
The program gives users first in line access to the Minimed 670G hybrid closed loop system – dubbed the artificial pancreas, which received FDA approval last year. (See Medical Device Daily, Sept. 29. 2016.)
“While difficult to predict, it is worth noting that our diabetes growth could slow somewhat in [the next quarter] due to postponed purchases as we get closer to the full launch of the Minimed 670G,” Ishrak said during the earnings call. “As mentioned last quarter, we do expect Diabetes to deliver double-digit growth next fiscal year once the Minimed 670G is fully launched.”
The company plans to roll out the Minimed 670G in April.
During the call, the company revealed its plans to enter into the surgical robotics market. The firm is expected to launch a surgical robotics system on a limited basis in specific countries towards the end of fiscal year 2018. Material revenue would come in fiscal year 2019.
While there were some strong elements coming out of the quarter which includes double-digit growth in structural heart and peripheral vascular – aided by Corevalve and In.Pact Admiral drug-coated balloon, that momentum was partially offset by single-digit declines in other coronary products.
Debbie Wang, an analyst with Morning Star, said, “we expect both these trends to continue as Medtronic currently participates in the duopoly [with Edwards Lifesciences Corp.] for the transcatheter aortic valve market [TAVR], and this is unlikely to change until additional competitors enter the U.S. market.”
The firm is slated to present its SURTAVI data on its latest TAVR offerings at the American College of Cardiology annual meeting in March. The study results will be used to support the company’s submission for a TAVR indication expansion into the U.S. intermediate risk population.
A weak spot in the earnings comes from the firm’s stent products. Medtronic’s stents face pressure for market share in coronary stents from Boston Scientific Corp’s. Synergy stent with a resorbable polymer. The Marlborough, Mass.-based company received FDA approval for Synergy in 2015. (See Medical Device Daily, Oct. 6, 2015.)
“The impending U.S. approval of the Resolute Onyx stent could help Medtronic mitigate competitive pressure from Synergy, but we continue to believe Synergy’s differentiation is highly relevant to practitioners,” Wang said