CEO: Omar Ishrak
Based: Dublin, Ireland
2016 sales: $29.7 billion*
2015 sales: $28.8 billion
* Medtronic’s FY 2017 ended April 28, 2017, so EvaluateMedTech considers it as 2016 data. For simplicity, we refer to FY 2017 as 2016, except when quoting earnings calls.
After logging a whopping 42% sales growth in 2015, Medtronic saw just a 1% uptick in sales from 2015 to 2016.
The spike between 2014 and 2015 was thanks to Medtronic’s $50 billion merger with Covidien, as well as several smaller deals. As the devicemaker continues to digest Covidien’s assets, the question is where it will look to generate more growth.
“We have now realized over $600 million in synergy savings [from the Covidien deal] and remain on track to deliver our goal of $850 million of total cost savings by the end of the next fiscal year,” said CEO Omar Ishrak on the Q4 2017 earnings call.
Early on, Ishrak said Medtronic aims to achieve “sustained and consistent mid single-digit growth” by pushing new therapies and product innovation and focusing on geographic diversification, specifically in emerging markets. Medtronic made a handful of tuck-in deals in 2016, which it expects will boost revenue growth over time.
In May, the device giant agreed to buy Smith & Nephew’s gynecology business for about $350 million. The main attraction was the Truclear power morcellator, which, as a hysteroscopic device, is exempt from the FDA’s black-box warning for the morcellators.
In the fall, Medtronic closed its $1.1 billion acquisition of HeartWare, adding the pump maker’s flagship Ventricular Assist System (HVAD) to its Cardiac Rhythm & Heart Failure business Placed using a less invasive procedure, the HVAD is the smallest implantable heart pump available in the U.S. Despite having an edge in a two-player market, the HVAD has been beset by problems, resulting in class 1 recalls issued before and after Medtronic snapped HeartWare up.
Toward the end of its fiscal year, Medtronic agreed to offload its Patient Care, Deep Vein Thrombosis and Nutritional Insufficiency units to Cardinal Health to the tune of $6.1 billion. The trio of businesses reeled in $2.3 billion in sales in the 12 months ending October 2016; shedding them should “have an immediate positive impact on our revenue growth rates and margins,” Ishrak said.
Just ahead of fiscal 2017, the FDA approved the tiny leadless pacemaker, Micra, which is implanted directly in the heart’s right ventricle via catheter— rather than a surgical procedure. The pacemaker then scored Medicare coverage, widening patient access to the device.
Medtronic’s biggest story of the year was the FDA approval of its “artificial pancreas,” a hybrid-closed loop system for blood glucose control based on its MiniMed 670G insulin pump.
While a slew of other players—including Roche, Insulet and Dexcom—are working on similar systems, Medtronic is enjoying a sizable lead. After a limited rollout at select U.S. sites, the company launched the device to more than 20,000 patients via a Priority Access Program in June.
“[We] do not expect revenue growth to ramp substantially until after we have fulfilled the Priority Access orders, given the low revenue associated with the upgrade program.”
Another product on the horizon is Medtronic’s surgical robot, slated to launch at the end of the year, according to what Bryan Hanson, president of Medtronic’s Minimally Invasive Therapies unit, said on the Q4 earnings call.
While the company does not expect material revenue until 2019, it has been working with Israel’s Mazor Robotics in a co-development, co-promotion deal since May 2016. If Mazor fulfills the agreement’s milestones this year, then Medtronic will pick up the global sales and distribution rights for the company’s spine surgery products.