-
Revenue of $7.3 Billion
Grew 5% as Reported; 6% at Constant Currency
-
GAAP Diluted EPS of $0.59;
Non-GAAP Diluted EPS of $1.12
-
GAAP Diluted EPS Declined
23%; Non-GAAP EPS Grew 10% at Constant Currency
-
GAAP Operating Margin
Declined 380 bps; Non-GAAP Operating Margin Improved 130 bps at
Constant Currency
-
GAAP Cash Flow from
Operations of $2.1 Billion; Free Cash Flow of $1.8
Billion
DUBLIN - February
21, 2017 - Medtronic plc (NYSE: MDT) today announced
financial results for its third quarter of fiscal year 2017, which
ended January 27, 2017.
The company reported third quarter worldwide
revenue of $7.283 billion, an increase of 5 percent, or 6 percent
on a constant currency basis. Foreign currency exchange had a
negative $40 million impact on revenue. Third quarter GAAP
net income and diluted earnings per share (EPS) were $821 million
and $0.59, decreases of 25 percent and 23 percent, respectively.
Third quarter non-GAAP net income and diluted EPS were $1.553
billion and $1.12, representing increases of 3 percent and 6
percent, respectively. After adjusting for the negative 5
cent impact from foreign currency exchange, non-GAAP diluted EPS
increased 10 percent.
"In Q3, we achieved solid results across all of
our business groups and geographies," said Omar Ishrak, Medtronic
chairman and chief executive officer. "At the same time, we
produced meaningful operating profit growth based largely on our
synergy programs from the Covidien integration, as well as our
focus on operating excellence initiatives."
The third quarter GAAP operating margin was 15.7
percent, a 380 basis point decline. The third quarter
non-GAAP operating margin was 28.2 percent, a 40 basis point
improvement. After adjusting for the 90 basis point negative
impact from foreign currency exchange, the third quarter non-GAAP
operating margin was 29.1 percent, representing a 130 basis point
improvement.
U.S. revenue of $4.106 billion represented 56
percent of company revenue and increased 4 percent. Non-U.S.
developed market revenue of $2.193 billion represented 30 percent
of company revenue and increased 6 percent, or 7 percent on a
constant currency basis. Emerging market revenue of $984
million represented 14 percent of company revenue and increased 9
percent, or 11 percent on a constant currency basis.
Cardiac and Vascular
Group
The Cardiac and Vascular Group (CVG) includes the Cardiac Rhythm
& Heart Failure (CRHF), Coronary & Structural Heart (CSH),
and Aortic & Peripheral Vascular (APV) divisions. CVG
worldwide revenue of $2.548 billion increased 5 percent, or 6
percent on a constant currency basis, driven by high-single digit
constant currency growth in CRHF and APV, and low-single digit
constant currency growth in CSH.
-
CRHF revenue of $1.371 billion increased 7
percent, or 8 percent on a constant currency basis, with mid-single
digit constant currency growth in Arrhythmia Management, high-teens
constant currency growth in Heart Failure, and low-double digit
constant currency growth in Services & Solutions.
Arrhythmia Management growth was driven in part by the continued
adoption of the Arctic Front Advance® cryoballoons
and Reveal LINQ® insertable
cardiac monitoring systems. Heart Failure growth was driven
in part by the company's first quarter acquisition of HeartWare
International, Inc.
-
CSH revenue of $751 million increased 2 percent,
or 3 percent on a constant currency basis, with low-double digit
constant currency growth in Structural Heart, partially offset by
mid-single digit constant currency declines in Coronary.
Structural Heart growth was driven in part by the recent U.S.
launch of the CoreValve®
Evolut® R 34 mm
transcatheter aortic heart valve. Coronary had double-digit
constant currency declines in drug-eluting stents in the U.S. and
Japan.
-
APV revenue of $426 million increased 6 percent
on both a reported and constant currency basis, with high-single
digit growth in Peripheral Vascular and mid-single digit growth in
Aortic. Growth was driven by the continued adoption of the
company's Endurant® IIs stent
graft, IN.PACT®
Admiral® drug-coated
balloon, as well as the recent launch of the HawkOne(TM) 6 French
directional atherectomy system.
Minimally Invasive Therapies
Group
The Minimally Invasive Therapies Group (MITG) includes the Surgical
Solutions and the Patient Monitoring & Recovery (PMR)
divisions. MITG worldwide revenue of $2.417 billion increased
5 percent, or 6 percent on a constant currency basis, with
high-single digit constant currency growth in Surgical Solutions
and mid-single digit constant currency growth in PMR.
-
Surgical Solutions revenue of $1.343 billion
increased 6 percent, or 7 percent on a constant currency basis,
driven primarily by its Open to Minimally Invasive Surgery growth
initiative, including innovative new products in Advanced Stapling
and Advanced Energy, including endo stapling specialty reloads, the
Valleylab(TM) FT10 energy platform, and LigaSure(TM) vessel sealing
instruments. The division also benefitted from the second
quarter acquisition of Smith & Nephew's gynecology
business.
-
PMR revenue of $1.074 billion increased 5
percent on both a reported and constant currency basis. This
is a result of strong growth in the Airways and Ventilation
business, driven by continued adoption of the Puritan Bennett(TM)
980 ventilator, and in the Patient Monitoring business, driven by
strength in Nellcor(TM) pulse oximetry. PMR also benefitted
from the fiscal year 2016 fourth quarter acquisition of Bellco in
the Renal Care Solutions business.
Restorative Therapies
Group
The Restorative Therapies Group (RTG) includes the Spine, Brain
Therapies, Specialty Therapies, and Pain Therapies divisions.
RTG worldwide revenue of $1.817 billion increased 4 percent
on both a reported and constant currency basis. Group results
were driven by high-single digit growth in Brain Therapies,
mid-single digit growth in Specialty Therapies, and low-single
digit growth in Spine, offsetting declines in Pain Therapies, all
on a constant currency basis.
-
Spine revenue of $657 million increased 3
percent on both a reported and constant currency basis, the
division's strongest growth in over 7 years. Core Spine grew
in the low-single digits on a constant currency basis, as the focus
on "Speed-to-Scale" new product launches continues to drive
improved results. BMP also grew in the low-single digits on a
constant currency basis.
-
Brain Therapies revenue of $518 million
increased 7 percent, or 8 percent on a constant currency basis.
Neurovascular grew in the low-double digits on a constant
currency basis, driven in part by sales of the Axium(TM) Prime
Extra Soft detachable coil and the Pipeline(TM) Flex embolization
device. Neurosurgery grew in the high-single digits on a
constant currency basis, driven by strong growth in navigation
capital equipment and disposables, as well as continued solid
adoption of the O-arm® O2 surgical
imaging system. Brain Modulation grew in the low-single
digits on a constant currency basis on the strength of the
company's MR conditional Activa® DBS
portfolio.
-
Specialty Therapies revenue of $370 million
increased 4 percent, or 5 percent on a constant currency
basis. All three businesses contributed to growth, with
Advanced Energy growing in the low-double digits, Pelvic Health
growing in the mid-single digits, and ENT growing in the low-single
digits, all on a constant currency basis.
-
Pain Therapies revenue of $272 million decreased
3 percent, or 2 percent on a constant currency basis. After
adjusting for the divestiture of the division's drug business,
which occurred in the third quarter of fiscal year 2016, Pain
Therapies revenue was flat on both a reported and constant currency
basis. Pain Therapies had low-single digit constant currency
declines in Spinal Cord Stimulation, as the business faced
competitive pressures, and low-single digit constant currency
declines in Drug Pumps, partially offset by high-single digit
constant currency growth in the Interventional business.
Diabetes Group
The Diabetes Group includes the Intensive Insulin Management (IIM),
Non-Intensive Diabetes Therapies (NDT), and Diabetes Service &
Solutions (DSS) divisions. Diabetes Group worldwide revenue
of $501 million increased 6 percent, or 7 percent on a constant
currency basis, with all three divisions contributing to
growth.
-
IIM grew in the low double-digits on a constant
currency basis, with low double-digit growth in the U.S. driven by
strong interest in the MiniMed® 630G system
and the Priority Access Program for the MiniMed® 670G
system. In addition, the division delivered high-single digit
constant currency growth in international markets as a result of
continued strong sales in Europe and Asia Pacific of the
MiniMed® 640G
system. The division continues to be on track for a spring
U.S. launch of the MiniMed® 670G system,
the world's first hybrid closed loop insulin delivery system.
-
NDT grew in the high-teens on a constant
currency basis, led by the sales of the iPro®2
Professional Continuous Glucose Monitor (CGM) technology with
Pattern Snapshot to primary care physicians.
-
DSS grew in the low-single digits on a constant
currency basis, with double-digit constant currency growth in
international markets as a result of strong growth in consumables
and Diabeter clinic revenue, offsetting low-single digit U.S.
declines.
Outlook and
Guidance
The company today reiterated its fiscal year 2017 revenue outlook,
EPS guidance, and free cash flow outlook.
The company continues to expect fiscal year 2017
revenue growth to be within the mid-single digit range on a
constant currency, constant weeks basis, which is consistent with
the company's long-term, mid-single digit constant currency revenue
growth expectation. The company expects revenue growth for
the fourth quarter of fiscal year 2017 to be in the lower half of
the mid-single digit range on a constant currency basis.
While the impact from foreign currency exchange is fluid, if
current exchange rates remain similar for the remainder of the
fiscal year, the company's full year revenue and fourth fiscal
quarter would both be negatively affected by approximately $20
million to $40 million.
The company continues to expect fiscal year 2017
diluted non-GAAP EPS growth to be in the double digits on a
constant currency, constant week basis, which is consistent with
the company's long-term, double digit constant currency EPS growth
expectation. Taking into account the estimated 8 to 10 cent
impact from the extra week in the first quarter last fiscal year,
the estimated negative impact from foreign currency exchange of
approximately 20 cents, and assuming current exchange rates remain
similar for the rest of the year, this growth guidance implies
fiscal year 2017 non-GAAP diluted EPS in the range of $4.55 to
$4.60.
For fiscal year 2017, the company continues to
expect free cash flow to be in the range of $5 billion to $6
billion.
"We remain confident in our ability to deliver
mid-single digit constant currency revenue growth and double-digit
constant currency EPS growth, not only in our current fiscal year,
but also into the future," said Ishrak. "With our differentiated
growth platforms and leadership in strong healthcare growth
markets, we believe we are well positioned to create long-term,
dependable value for our shareholders."
Webcast Information
Medtronic will host a webcast today, February 21, 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 our 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 Schedules
To view the third quarter financial schedules and non-GAAP
reconciliations, click here. To view the third quarter
earnings presentation, click here. Both of these documents
can also be accessed by visiting newsroom.medtronic.com.
About Medtronic
Medtronic 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 88,000 people worldwide, serving
physicians, hospitals and patients in approximately 160 countries.
The company is focused on collaborating with stakeholders
around the world to take healthcare Further, Together.
FORWARD LOOKING
STATEMENTS
This press release contains forward-looking
statements related to product and service growth drivers, market
position and opportunities, the transforming healthcare
environment, strategies for and sustainability of growth, benefits
from collaborations and acquisitions, availability of and plans for
cash, the creation of shareholder value and shareholder returns,
product launches, and Medtronic's future results of operations,
which are subject to risks and uncertainties, such as competitive
factors, difficulties and delays inherent in the development,
manufacturing, marketing and sale of medical products, challenges
with respect to third-party collaborations and integration of
acquired businesses, effectiveness of growth and restructuring
strategies, challenges relating to our worldwide operations,
challenges or unforeseen risks in implementing our growth
strategies, government regulation, fluctuations in foreign currency
exchange rates, future revenue and earnings growth, and general
economic conditions and other risks and uncertainties 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
MEASURES
This press release contains financial measures and
guidance, including free cash flow figures (defined as operating
cash flows less property, plant and equipment additions), revenue
and growth rates on a constant currency basis, net income, and
diluted EPS, all of which are considered "non-GAAP" financial
measures under applicable SEC rules and regulations. Unless
otherwise noted, all revenue amounts given in this press release
are stated in accordance with U.S. generally accepted accounting
principles (GAAP). References to quarterly figures increasing or
decreasing are in comparison to the third quarter of fiscal year
2016.
Medtronic management believes
that in order to properly understand its short-term and long-term
financial trends, including period over period comparisons of the
company's operations, investors may find it useful to 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 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 revenue
growth and EPS projections exclude the impact of foreign currency
exchange fluctuations. Forward-looking 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, such as
amortization of intangible assets and acquisition-related, certain
tax and litigation, and restructuring charges or gains. 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, we
believe 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 FY17 Third Quarter Financial Schedules &
Non-GAAP Reconciliations
View FY17 Third Quarter Earnings Presentation
Contacts:
Fernando Vivanco
Public Relations
+1-763-505-3780
Ryan Weispfenning
Investor Relations
+1-763-505-4626
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Medtronic plc via Globenewswire
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