Medtronic (NYSE:MDT) is raising its full-year guidance following strong second-quarter financial results that came in ahead of the consensus forecast.
Shares of MDT were down more than 1% to $85.91 apiece in at the opening of trading today.
The world’s largest medical device company reported profits of nearly $1.3 billion. That equals 99¢ per share on sales of $8.4 billion for the three months ended Oct. 25, 2024.
Medtronic recorded a 40.3% bottom-line gain on a sales increase of 5.2%.
Adjusted to exclude one-time items, earnings per share came in at $1.26. That landed 1¢ ahead of expectations on Wall Street. Sales also topped the forecast as experts projected $8.27 billion in revenue.
“Our momentum is building as we keep executing on our commitments, delivering yet another consecutive quarter of strong results that came in ahead of expectations,” said Geoff Martha, Medtronic chair and CEO. “Innovation matters, and innovation is really driving our growth today. As we look ahead, we’re confident that this diversified growth will keep going, especially given the strength of our pipeline in high-impact markets that will allow us to benefit even more patients around the world.”
Medtronic raised the low end of both its sales and adjusted EPS guidance for 2025. It increased its revenue growth guidance from a range of 4.5% to 5% to between 4.75% and 5%. The company updated its adjusted EPS guidance from between $5.42 and $5.50 to between $5.44 and $5.50.
“We’re restoring our earnings power through our focus on underlying margin improvement, delivering another quarter of high-single digit constant currency adjusted EPS growth,” said Gary Corona, Medtronic interim CFO. “And now, as the impact from foreign currency abates, we expect to report high-single digit adjusted EPS growth in the back half of our fiscal year, in line with our long-term commitment to deliver durable, mid-single digit organic revenue growth with EPS leverage.”
How did Medtronic’s business portfolios perform?
Medtronic reported 6.1% growth in its Cardiovascular portfolio, 7.1% growth in Neuroscience, 1.2% in Medical Surgical and 12.4% in Diabetes.
For Cardiovascular, the company saw high-single-digit and mid-single-digit increases in the Cardiac Rhythm & Heart Failure and Coronary Peripheral Vascular divisions. It highlighted growth in defibrillation solutions and cardiac pacing therapies, with flat results in cardiac ablation.
Significantly, Medtronic highlighted growth for its PulseSelect pulsed field ablation system, offsetting declines in cryoablation.
However, Martha said an issue with an third-party component supplier limited availability of the PulseSelect system, holding back the broader ablation business.
“That supplier is back on track,” Martha said, without naming the supplier or component. “That issue’s resolved. They’ve expanded their capacity as well, and which is allowing us to ramp the PulseSelect supply and activate new accounts. PulseSelect is doing well and it’s in a good spot from a supply perspective going forward.”
The company also began ramping commercial availability for the Affera mapping and ablation system and Sphere-9 catheter after earning FDA approval last month.
In Neuroscience, Medtronic said continued adoption of its Aible ecosystem of spine implants drove above-market performance in Cranial & Spinal Technologies. Neuromodulation drove above-market performance, too, with the continued launch of the Percept RC deep brain stimulator (DBS).
Medical Surgical saw a low-single-digit increase in Acute Care & Monitoring, while Surgical & Endoscopy remained flat. The company says Surgical & Endoscopy results were affected by a difficult comparison from the previous year’s supply recovery in Surgical.
The Diabetes business’ double-digit revenue growth was bolstered by the continued adoption of the MiniMed 780G automated insulin delivery system. Medtronic also highlighted international growth with increasing CGM attachment rates and the continued rollout of the next-generation Simplera Sync sensor.
Commentary from earnings call
Notably, on the company’s second-quarter earnings call, Martha outlined plans to submit the Hugo surgical robot platform to the FDA for urology indications in early 2025. Medtronic first unveiled Hugo in September 2019 as a potential competitor to long-time soft tissue surgical robotics leader Intuitive Surgical.
Martha also said on the earnings call that TAVR, pulsed field ablation, neuromodulation, diabetes and more continue to drive growth for the company.
Renal denervation is another area with growth potential, with Medtronic recently securing a Transitional Pass-Through (TPT) payment under the Medicare Hospital Outpatient Prospective Payment System for its Symplicity Spyral renal denervation catheter.
“We continue to make really great progress on the reimbursement front,” said Sean Salmon, EVP and president of the Medtronic Cardiovascular portfolio.
When asked about M&A strategy, Martha said the company targets tuck-in acquisitions with a “top-down approach.”
“We’re looking at our leadership team, looking at the areas we’re prioritizing and really looking to those areas to be priority areas for M&A,” Martha said. “It’s our high-growth markets and segments, but also some of our well-established businesses, from time to time, need some tuck-in support to keep them going.”
With curiosity around the incoming presidential administration in the U.S. next year, Martha said it’s too early to tell how potential changes in policy may affect medtech and Medtronic moving forward.
“With President-elect Trump coming in, I do think it’s still a bit early to speculate about different policies, whether it be healthcare policy or exactly what’s going to happen or not going to happen to tariffs,” Martha said. “It’s still too early. We’re running different scenarios here, obviously, and preparing for different scenarios. But I don’t want to get into that speculation.”
See more of what Martha had to say about the potential impact of new import taxes under Trump at Medical Design & Outsourcing.
