On February 23, 2021 Medtronic plc (NYSE:MDT) reported financial results for its third quarter of fiscal year 2021, which ended January 29, 2021 (Press release, Medtronic, FEB 23, 2021, View Source [SID1234575499]).
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The company reported third quarter worldwide revenue of $7.775 billion, an increase of 0.8 percent as reported and a decrease of 1.0 percent on an organic basis, which adjusts for the $136 million benefit of foreign currency translation. Unless otherwise stated, all revenue growth rates in this press release are stated on an organic basis, which adjusts for the impact of foreign currency translation. There were no acquisitions made in the last year that had a significant impact on the company’s or any individual segment’s third quarter revenue growth.
As reported, third quarter GAAP net income and diluted earnings per share (EPS) were $1.270 billion and $0.94, respectively. As detailed in the financial schedules included through the link at the end of this release, third quarter non-GAAP net income and non-GAAP diluted EPS were $1.753 billion and $1.29, respectively, both decreases of 10 percent. Adjusting for the negative 6 cent impact from foreign currency, third quarter non-GAAP diluted EPS decreased 6 percent.
Third quarter U.S. revenue of $3.939 billion represented 51 percent of company revenue and decreased 2 percent. Non-U.S. developed market revenue of $2.522 billion represented 32 percent of company revenue and increased 6 percent as reported and was flat organic. Emerging Markets revenue of $1.314 billion represented 17 percent of company revenue and was flat as reported and increased 1 percent organic.
"Our Q3 results reflect that our business is well on the way to returning to growth, with sequential improvements in both revenue and earnings, despite the impact of the COVID resurgence on procedure volumes in late December and January. We’re outperforming our end markets, as new products are driving share gains in an increasing number of our businesses," said Geoff Martha, Medtronic chairman and chief executive officer. "Looking ahead, we’re positioning ourselves for long-term success as we implement our new operating model and execute on a number of large opportunities to win share and create and disrupt big markets."
Cardiac and Vascular Group
The Cardiac and Vascular Group (CVG) includes the Cardiac Rhythm & Heart Failure (CRHF), Coronary & Structural Heart (CSH), and Aortic, Peripheral & Venous (APV) divisions. CVG third quarter revenue of $2.707 billion decreased 4.0 percent as reported and 5.9 percent organic. CVG’s revenue reflected the impact of the COVID-19 resurgence on procedure volumes in the third quarter in late December and January. CVG’s organic performance reflected mid-single digit declines in CRHF, high-single digit declines in CSH, and mid-single digit declines in APV.
Cardiac Rhythm & Heart Failure third quarter revenue of $1.371 billion decreased 1.6 percent as reported and decreased 3.7 percent organic. Arrhythmia Management revenue declined in the mid-single digits. This included mid-sixties growth globally and mid-seventies growth in the United States in Leadless Pacemakers, on the continued global adoption of the company’s Micra transcatheter pacing systems. Heart Failure declined low-single digits, as low-single digit declines in Cardiac Resynchronization Therapy Pacemakers (CRT-Ps) and mid-twenties declines in Left Ventricular Assist Devices (LVADs) were partially offset by low-single digit growth in cardiac resynchronization therapy defibrillators (CRT-Ds) from the recent launch of Cobalt and Crome.
Coronary & Structural Heart third quarter revenue of $873 million decreased 7.9 percent as reported and 9.5 percent organic, reflecting low-double digit declines in drug-eluting stents (DES). The company experienced a continued impact to DES sales in China as a result of the national tender announcement in mid-October. While transcatheter aortic valves (TAVR) declined mid-single digits versus the prior year, the company estimates it gained share sequentially.
Aortic, Peripheral & Venous third quarter revenue of $463 million decreased 3.1 percent as reported and 5.0 percent organic. Aortic declined in the low-single digits, Peripheral declined in the mid-single digits, and Venous declined in the low-double digits. Sales of the company’s IN.PACT drug-coated balloons increased high-single digits.
Minimally Invasive Therapies Group
The Minimally Invasive Therapies Group (MITG) includes the Surgical Innovations (SI) and the Respiratory, Gastrointestinal & Renal (RGR) divisions. MITG third quarter revenue of $2.313 billion increased 6.3 percent as reported and 4.6 percent organic. MITG’s revenue reflected the increased demand for COVID-19 related diagnostics and therapies, offset by the impact of the COVID-19 resurgence on procedure volumes in late December and January. RGR’s mid-twenties organic growth was partially offset by SI’s mid-single digit organic decline.
Surgical Innovations third quarter revenue of $1.423 billion decreased 3.5 percent as reported and 5.3 percent organic. Advanced Surgical declined mid-single digits and General Surgery declined in the high-single digits, both reflecting the deceleration of worldwide surgical procedure recovery due to the resurgence of the COVID-19 pandemic.
Respiratory, Gastrointestinal & Renal third quarter revenue of $890 million increased 26.8 percent as reported and 25.4 organic. Respiratory Interventions increased mid-seventies organic, with sales of ventilators increasing nearly three-fold to meet global demand as a result of the COVID-19 pandemic. Patient Monitoring increased in the low-double digits on strength of the company’s Nellcor pulse oximetry products.
Restorative Therapies Group
The Restorative Therapies Group (RTG) includes the Cranial and Spinal Technologies, Specialty Therapies, and Neuromodulation divisions. RTG third quarter revenue of $2.126 billion increased 0.7 percent as reported and decreased 0.8 percent organic. RTG’s revenue reflected the impact of the COVID-19 resurgence on procedure volumes in the third quarter in late December and January, partially offset by growth from new products. RTG’s organic performance this quarter included mid-single-digit declines in Cranial and Spinal Technologies and low-single digit organic growth in Specialty Therapies and Neuromodulation.
Cranial and Spinal Technologies third quarter revenue of $1.081 billion decreased 3.2 percent as reported and 4.5 percent organic, including mid-single digit declines in Spine and low-single digit declines in Enabling Technology. The company had solid sales of capital equipment in the U.S., with sales growth in Mazor robotics, O-arm imaging, and Midas-Rex powered surgical instruments.
Specialty Therapies third quarter revenue of $618 million increased 5.1 percent as reported and 3.2 percent organic. Neurovascular increased in the mid-single digits and Pelvic Health increased in the mid-teens, partially offset by mid-single digit declines in ENT.
Neuromodulation third quarter revenue of $426 million increased 4.9 percent as reported and 3.4 percent organic, with new products driving low-single digit growth in Pain Therapies and mid-single digit growth in DBS.
Diabetes Group
Diabetes Group third quarter revenue of $630 million increased 3.3 percent as reported and 0.8 percent organic. Diabetes Group revenue performance reflected mid-single digit growth in durable pumps and CGM due to the launch of MiniMed 780G in international markets and the MiniMed 770G launch in the U.S.
Guidance
Given the uncertainty on near-term financial results caused by the COVID-19 pandemic, the company is not providing formal annual or quarterly financial guidance at this time.
Webcast Information
Medtronic will host a webcast today, February 23, 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 news.medtronic.com. Medtronic will be live tweeting during the webcast on its 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.
Medtronic plans to report its fiscal year 2021 fourth quarter results on May 27, 2021, and its fiscal year 2022 first, second, and third quarter results on August 24, 2021, November 23, 2021, and February 22, 2022, respectively. Confirmation and additional details will be provided closer to the specific event.
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 documents can also be accessed by visiting news.medtronic.com.