Medtronic slows in Q2 but expects growth to pick back up

Medtronic HQ
Growth in Medtronic's diabetes unit dipped due to limits on the supply of CGM sensors, but the company plans to expand its sensor manufacturing by Q4.

Medtronic’s sales took a 4% hit in the second quarter, which the company attributes to the impact of Hurricane Maria on its operations in Puerto Rico, as well as the divestiture of a trio of businesses to Cardinal Health.

“Excluding the approximate $55 million to $65 million impact of Hurricane Maria to the company's revenue, which was split across the company's Minimally Invasive Therapies Group and Restorative Therapies Group, second-quarter revenue growth would have been 4% on a comparable, constant currency basis,” the company said in a statement.

The full-year guidance for both the Minimally Invasive and Restorative Therapies groups have been adjusted due to the hurricane, but the former’s growth will ramp up in the second half, with “many product launches” on the horizon in fiscal 2018, said CEO Omar Ishrak on the second-quarter earnings call.

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In diabetes, growth dipped 2%, curbed by constraints on the supply of continuous glucose monitoring sensors, but the company is working on expanding its sensor capacity, which will be complete in the fourth quarter.

Medtronic scored FDA approval for its “artificial pancreas,” the MiniMed 670G hybrid closed-loop system, last fall and rolled the device out in a Priority Access program. It began shipping systems to patients in June. The company expects growth to “significantly improve” in the third quarter as it has finished shipping pumps for the program, Ishrak said.

And with Johnson & Johnson exiting the insulin pump market in the U.S. and Canada, Medtronic has access to the 90,000 patients who use Animas insulin pumps. When Animas announced it would cease the manufacture and sale of its pumps, it partnered with Medtronic to offer its customers the opportunity to transfer to a new device.