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| Medtronic CEO Omar Ishrak |
Medtronic ($MDT) added 2% in early trading after it reported its first earnings since the close of the Covidien acquisition. Recent product launches across business groups helped push it to beat consensus earnings for the quarter by $0.04 at $1.01 and top revenue estimates at $4.32 billion versus the $4.26 billion expectation.
This is the first time the company has reported with its new postacquisition business structure. The group reporting the strongest growth is also its largest: the Cardiac and Vascular Group gained 10% on a constant currency basis to $2.22 billion.
Cardiac Rhythm & Heart Failure was the strongest segment within this group, up 12% to $1.27 billion. And within that Low Power product revenue grew the most at 17% to $489 million, driven by the global launch of the Reveal Linq insertable cardiac monitor.
On the Linq launch, Medtronic Chairman and CEO Omar Ishrak said, "We continue to see strong adoption of this innovative diagnostic with daily implant growth in the high-single digit sequentially." He noted that the company is seeing a pull-through to pacemaker sales from patients who had been monitored by the Reveal Linq.
Medtronic pointed to other launches as supporting the Cardiac and Vascular business, including the international launch of the Resolute Onyx drug-eluting stent, as well as the launch of the Endurant 2S AAA stent graft and the IN.PACT Admiral drug-coated balloons.
"It is worth noting that CVG (the Cardiac and Vascular Group) and RTG (the Restorative Therapies Group) both have significant ongoing product launches contributing to our results today, as well as strong innovation pipelines to fuel our future growth," summed up Ishrak.
The Restorative Therapies Group gained 5% to $1.65 billion on a constant currency basis over the same quarter a year prior. It includes the Spine, Neuromodulation, and Surgical Technologies divisions. Surgical Technologies led the way here, with "double-digit" growth.
Ishrak said he expects minimally invasive surgical technologies will be a "big strategic push" for the company and a focus for the Covidien group.
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| The MiniMed 530G--Courtesy of Medtronic |
The third and final major business category, the Diabetes Group, gained 6% to $449 million on a constant currency basis in the most recent quarter compared with the same period a year earlier. It was driven by strong U.S. adoption of the MiniMed 530G System as well as an early international launch of the next-gen MiniMed 640G System. The company expects to submit a PMA to the FDA for the latter system later this calendar year, Ishrak said.
In addition to earnings news, Medtronic also disclosed that it received a CE mark for its Euphora Semicompliant Coronary Balloon Catheter, which can be used by physicians for predilation to determine lesion characteristics, aid in stent selection and facilitate stent access. The company cited it as one of a dozen new products it plans to introduce in the next two years.
The company also said that it received FDA clearance for expanded indications of the Vertex Reconstruction System to allow for lateral mass and pedicle screws to be used as a form of fixation to treat various pathologies occurring in the posterior cervical spine.
Investors have driven Medtronic up a whopping 37% in the last year, attesting to a significant endorsement of the Covidien acquisition strategy.
- here is the release