GuruFocus -
- Revenue Growth: 5% organic growth, exceeding guidance by 50 basis points.
- EPS Growth: 8% growth on a constant currency basis, adjusted EPS at $1.26.
- Gross Margin: 65.2%, down 70 basis points due to foreign currency impact.
- Operating Margin: Declined 90 basis points due to FX, but increased 100 basis points on a constant currency basis.
- Diabetes Segment Growth: 11% growth, with CGM sales up over 20%.
- Neuroscience Segment Growth: High single-digit growth.
- Cardiovascular Segment Growth: Mid-single-digit growth.
- International Markets Growth: High single-digit growth, with low double-digit growth in emerging markets.
- Full-Year Revenue Guidance: Raised to 4.75% to 5% organic growth.
- Full-Year EPS Guidance: Raised to $5.44 to $5.50.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Medtronic PLC (BVMF:MDTC34) (NYSE:MDT) reported a strong quarter with 5% organic revenue growth, translating into 8% EPS growth on a constant currency basis.
- The company raised its full-year revenue and EPS guidance, marking eight consecutive quarters of mid-single-digit organic revenue growth.
- Strong performance was noted in key franchises such as TAVR, PFA, leadless pacemakers, diabetes, spine, and neuromodulation.
- Medtronic PLC (NYSE:NYSE:MDT) is making significant progress in its hypertension management with the Symplicity blood pressure procedure, supported by CMS's transitional pass-through payment.
- The company is actively investing in its pipeline and emerging growth drivers, including surgical robotics and digital solutions, to ensure future growth.
- Medtronic PLC (NYSE:MDT) faced a supply chain disruption due to a third-party component supplier interruption, affecting the growth of its PulseSelect PFA catheter.
- The company is experiencing foreign currency headwinds, impacting its gross and operating margins.
- Despite strong growth in some areas, the medical surgical portfolio showed low single-digit growth due to difficult year-over-year comparisons and market slowdowns.
- There are concerns about the potential impact of tariffs and geopolitical factors on the supply chain, particularly regarding imports from China.
- The early stages of product launches like Hugo and Affera may initially present a mix headwind, affecting margins.
A: Sean Salmon, EVP and President - Cardiovascular Portfolio, explained that the TPT will cover roughly half of the Medicare patient population, accelerating therapy adoption. Broader coverage is needed to streamline billing, and efforts are ongoing with private payers. Coverage with evidence development is being pursued, but no specific updates are available yet.
Q: How do you plan to grow earnings despite potential headwinds like a stronger dollar and tariffs?
A: Gary Corona, Interim CFO, stated that there is no change to margin expectations. They expect margins to improve sequentially in Q3 and Q4, with a focus on automation, digitization, and structural changes to drive leverage. Despite foreign exchange headwinds, they are committed to delivering mid-single-digit revenue growth and 10% EPS growth on a constant currency basis.
Q: What is the outlook for the ablation business, and how do you plan to achieve double-digit growth in Q3?
A: Geoffrey Martha, CEO, mentioned that a third-party component supplier issue has been resolved, allowing them to ramp up PulseSelect supply and activate new accounts. The decline in cryoablation has improved, and with the addition of Sphere-9, they expect strong double-digit growth in Q3.
Q: Can you provide an update on the diabetes segment and the type 2 label expansion?
A: Que Dallara, EVP and President Diabetes Operating Unit, stated that they have completed enrollment for the type 2 indication and expect to submit to the FDA in the first half of the next calendar year. Currently, their installed base is largely type 1, but they see a significant opportunity in type 2 with promising clinical data.
Q: What are your thoughts on the medtech landscape under the Trump administration, particularly regarding tariffs and supply chain?
A: Geoffrey Martha, CEO, noted that the medtech market is healthy, driven by innovation and demographics. While it's too early to speculate on specific policies under the new administration, Medtronic's exposure to imports from China is small, less than 1% of revenue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.