-
Revenue of $7.1 Billion; GAAP
Diluted EPS of $1.48; Non-GAAP Diluted EPS of
$1.07
-
Given Divestiture, Revenue
Decreased 4% as Reported; Increased 3% at Comparable, Constant
Currency or 4% Adjusting for Hurricane Maria Impact
-
Company Reiterates Full Year
Revenue and EPS Guidance
DUBLIN - November 21, 2017 -
Medtronic plc (NYSE: MDT) today announced financial results for its
second quarter of fiscal year 2018, which ended October 27,
2017.
The company reported second quarter worldwide
revenue of $7.050 billion, a decrease of 4 percent as reported,
with the decline driven by the company's divestiture of its Patient
Care, Deep Vein Thrombosis (Compression), and Nutritional
Insufficiency businesses to Cardinal Health that occurred at the
beginning of the quarter. Second quarter revenue increased 3
percent on a comparable, constant currency basis, which adjusts for
the divestiture and a $35 million positive impact from foreign
currency. Excluding the approximate $55 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
percent on a comparable, constant currency basis.
As reported, second quarter GAAP net income and
diluted earnings per share (EPS) were $2.017 billion and $1.48,
respectively. As detailed in the financial schedules included
through the link at the end of this release, second quarter
non-GAAP net income and diluted EPS were $1.456 billion and $1.07,
decreases of 7 percent and 4 percent, respectively. Adjusting for
the divestiture, a positive 1 cent impact from foreign currency,
and the approximate 3 cent impact from Hurricane Maria, second
quarter non-GAAP diluted EPS increased approximately 5 percent.
Second quarter U.S. revenue of $3.734 billion
represented 53 percent of company revenue and decreased 10 percent
as reported, or was flat on a comparable basis. Non-U.S. developed
market revenue of $2.241 billion represented 32 percent of company
revenue and increased 1 percent as reported, or 5 percent on a
comparable, constant currency basis. Emerging market revenue of
$1.075 billion represented 15 percent of company revenue and
increased 9 percent as reported, or 12 percent on a comparable,
constant currency basis.
"Our second quarter financial results are very
encouraging, when considered in the context of a quarter in which
we faced three hurricanes and the California wildfires. Hurricane
Maria, in particular, significantly affected our manufacturing
operations in Puerto Rico," said Omar Ishrak, Medtronic chairman
and chief executive officer. "Against this backdrop, we delivered a
sequential acceleration in our organic revenue growth, as
expected."
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
second quarter revenue of $2.773 billion increased 7 percent on
both a reported and constant currency basis. CVG revenue
performance was driven by strong, low-double digit growth in CSH
and mid-single digit growth in CRHF and APV, all on a constant
currency basis.
-
CRHF second quarter revenue of $1.467 billion
increased 5 percent, or 4 percent on a constant currency basis.
Arrhythmia Management grew in the mid-single digits on a constant
currency basis, driven by high-teens growth in AF Solutions and
low-double digit growth in Diagnostics, both on a constant currency
basis, as well as strong adoption of the Micra(TM) Transcatheter
Pacing System and TYRX(TM) absorbable antibacterial envelope. Heart
Failure grew in the high-single digits on a constant currency
basis, driven by strong demand for the company's portfolio of
quadripolar cardiac resynchronization therapy-pacemakers (CRT-P),
as well as growth in Mechanical Circulatory Support.
-
CSH second quarter revenue of $854 million
increased 13 percent, or 12 percent on a constant currency basis,
led by high-thirties growth on a constant currency basis in
transcatheter aortic valves on the strength of the recently
launched CoreValve®
Evolut® PRO and U.S.
intermediate risk indication. In addition, the Coronary business
returned to growth, driven by the company's recent launch of the
Resolute Onyx(TM) drug-eluting stent in the U.S. and Japan.
-
APV second quarter revenue of $452 million
increased 5 percent, or 4 percent on a constant currency basis.
Aortic growth was led by the solid adoption of the
Heli-FX®
EndoAnchor® System and
solid performance of the Valiant®
Captivia® thoracic
stent graft systems. Peripheral was driven by double digit growth
in both PTA balloons and drug-coated balloons. Mid-single digit
growth in endoVenous was driven by the recently launched
Concerto(TM) 3D detachable coil system.
Minimally Invasive Therapies
Group
The Minimally Invasive Therapies Group (MITG) is now organized into
the Surgical Innovations (SI) and the Respiratory, Gastrointestinal
& Renal (RGR) divisions following the divestiture of its
Patient Care, Deep Vein Thrombosis (Compression), and Nutritional
Insufficiency (Enteral Feeding) businesses. MITG worldwide second
quarter revenue of $1.952 billion decreased 21 percent as reported,
or increased 2 percent on a comparable, constant currency basis.
MITG second quarter revenue growth reflected mid-single digit
growth in SI, which was affected by Hurricane Maria, offset by
low-single digit declines in RGR.
-
SI second quarter revenue of $1.334 billion
increased 4 percent on a comparable, constant currency basis,
driven by new products in Advanced Stapling and Advanced Energy,
including endo stapling specialty reloads, the Signia(TM) powered
stapler, and LigaSure(TM) vessel sealing instruments.
-
RGR second quarter revenue of $618 million
decreased 3 percent on a comparable, constant currency basis. The
declines were driven by difficult comparisons in its Respiratory
business following the return to market last year of the Puritan
Bennett(TM) 980 ventilator.
Restorative Therapies
Group
The Restorative Therapies Group (RTG) includes the Spine, Brain
Therapies, Specialty Therapies, and Pain Therapies divisions. RTG
worldwide second quarter revenue of $1.863 billion increased 2
percent on both a reported and constant currency basis. Group
results were driven by low-double digit growth in Brain Therapies,
offsetting declines in Spine, Specialty Therapies, and Pain
Therapies, all on a constant currency basis. Hurricane Maria
primarily affected the Spine and Pain Therapies division, as well
as the Pelvic Health business in the Specialty Therapies
division.
-
Spine second quarter revenue of $659 million
decreased 1 percent on both a reported and constant currency basis.
Mid-single digit constant currency growth in Biologics worldwide
and low-single digit constant currency growth in Core Spine in
international markets was offset by mid-single digit declines in
Core Spine in the U.S. as a result of the impact of Hurricane
Maria.
-
Brain Therapies second quarter revenue of $575
million increased 14 percent, or 13 percent on a constant currency
basis. Growth was driven by high-twenties constant currency growth
in Neurovascular, with strength across its product portfolio. The
Neurosurgery business grew in the mid-teens on a constant currency
basis, led by strong sales of the StealthStation(TM) S8 surgical
navigation system, O-arm®2 surgical
imaging system, Visualase® MRI-guided
laser ablation system, and Midas Rex® surgical
instruments.
-
Specialty Therapies second quarter revenue of
$365 million decreased 1 percent on both a reported and constant
currency basis. Mid-single digit global constant currency growth in
Transformative Solutions, ENT, and high-single digit international
constant currency growth in Pelvic Health was offset by mid-single
digit declines in Pelvic Health in the U.S., with the declines
driven by the impact of Hurricane Maria on InterStim®
II sales.
-
Pain Therapies second quarter revenue of $264
million decreased 8 percent, or 9 percent on a constant currency
basis. Growth in Interventional Pain was offset by mid-teens
declines in Spinal Cord Stimulation and mid-single digit declines
in Pain Pumps, all on a constant currency basis, driven in part by
the impact of Hurricane Maria.
Diabetes Group
The Diabetes Group includes the Intensive Insulin Management (IIM),
Diabetes Service & Solutions (DSS), and Non-Intensive Diabetes
Therapies (NDT) divisions. Diabetes Group worldwide second quarter
revenue of $462 million was flat, or decreased 2 percent on a
constant currency basis. The group is experiencing strong global
demand for its new sensor-augmented insulin pump systems, and
similar to the first quarter, growth was tempered as demand
outpaced supply. The group's ability to meet increasing patient
demand has improved, as evidenced by the improved sequential
revenue growth. In addition, the Diabetes Group's capacity
expansion plans for the second half of fiscal year 2018 are on
track.
-
IIM second quarter revenue declined in the
low-single digits on a constant currency basis. In the U.S., IIM
experienced a 15 percent growth in new patients. This was offset by
delays in converting its existing installed base to new pumps due
to CGM sensor supply constraints. In international markets, IIM
delivered high-single digit constant currency growth due to the
continued strength of the MiniMed® 640G
system.
-
DSS second quarter revenue was flat on a
constant currency basis. In the U.S., consumables benefited from
installed base growth and improved patient utilization, which was
offset by price declines and increased payer requirements. In
international markets, the Diabeter business had mid-twenties
patient growth, while in consumables, installed base growth was
offset by temporary market pressures in China and France.
-
NDT second quarter revenue declined in the
high-twenties on a constant currency basis given the temporarily
limited supply of sensors for professional CGM. However, the
division had 60 percent new account growth in US primary
care.
Guidance
Medtronic today reiterated its revenue and non-GAAP EPS guidance.
The company's guidance is given on a comparable, constant currency
basis, which accounts for the divestiture of certain businesses
from its prior period Patient Monitoring & Recovery division by
removing the financial impact of these businesses from the second,
third, and fourth quarters of fiscal year 2017, as well as removing
the impact of foreign currency.
In fiscal year 2018, the company continues to
expect comparable, constant currency revenue growth to be in the
range of 4 to 5 percent. While the impact of foreign currency
remains fluid, if current exchange rates remain similar for the
remainder of the fiscal year, the company's revenue would be
positively affected by approximately $275 million to $375 million
for the fiscal year, including an approximate $155 to $175 million
positive impact in the third fiscal quarter.
In fiscal year 2018, the company continues to
expect diluted non-GAAP EPS growth to be in the range of 9 to 10
percent on a comparable, constant currency basis from the prior
year comparable EPS of $4.37. Assuming current exchange rates
remain similar for the rest of the year, the foreign exchange
impact on the company's non-GAAP EPS would be approximately
negative 2 cents for the fiscal year, including an approximate
positive 1 cent impact in the third fiscal quarter.
"We are seeing increased revenue momentum from
several important new product launches, which we expect to continue
into the second half of the fiscal year," said Ishrak. "The
combination of our growth momentum, business and geographic
diversification, as well as our scale in markets around the world
contribute to our goal of delivering increasingly consistent and
dependable results for our shareholders."
Webcast Information
Medtronic will host a webcast today, November 21, at 8:00 a.m. EST
(7:00 a.m. CST) to provide information about its businesses for the
public, 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 second quarter financial schedules and non-GAAP
reconciliations, click here. To view the second quarter earnings
presentation, click here. Both 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 84,000 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, which are subject to risks and uncertainties, including
those 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 revenue and growth rates on a comparable,
constant currency basis, net income, and diluted EPS, all of which
are considered "non-GAAP" financial measures under applicable SEC
rules and regulations. References to quarterly figures increasing
or decreasing are in comparison to the second quarter of fiscal
year 2017.
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 U.S. generally
accepted accounting principles (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
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. 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 FY18 Second Quarter Financial Schedules &
Non-GAAP Reconciliations
View FY18 Second 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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