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Medtronic’s Q2 profit falls as sales stagnate

  • Revenue: $7.6 billion, down 0.8%
  • Profit: $489 million, versus $1.4 billion in the prior year

Note: All changes are versus the prior-year period unless otherwise stated

“We’re seeing a faster-than-expected recovery and approaching year-over-year growth,” remarked new CEO Geoff Martha, adding “our revenue growth is improving, our pipeline is advancing and we’re gaining share in an increasing number of businesses.”

Other results:

  • Cardiac and vascular: $2.7 billion, down 4.6%
    • Cardiac rhythm and heart failure: $1.4 billion, flat versus the prior year, as arrhythmia management sales declined in the low-single digits, although the company reported growth in leadless pacemakers, boosted by continued global adoption of its Micra transcathether pacing systems, while heart failure sales also fell by low-single digits
    • Coronary and structural heart: $831 million, down 13%, hit by sales declines for drug-eluting stents, with the company experiencing a slowdown in China ahead of a national tender announcement in mid-October, while revenues for transcatheter aortic valves were down by high-single digits
    • Aortic, peripheral and venous: $468 million, down 1.3%, as aortic products grew in the low-single digits, whiles sales for peripheral and venous products declined in the low- and high-single digits, respectively
  • Minimally invasive therapies: $2.3 billion, up 6.7%
    • Surgical innovations: $1.4 billion, down 4.2%, as advanced surgical products decreased by low-single digits due to the decline of worldwide surgical procedures, which are nonetheless showing a “strong rebound,” while sales of general surgery products were down by high-single digits
    • Respiratory, gastrointestinal and renal: $893 million, up 29.8%, reflecting greater demand for respiratory intervention products amid the COVID-19 pandemic, with sales of ventilators growing nearly four-fold as the company boosted production of its PB980 system
  • Restorative therapies: $2.1 billion, down 2.3%
    • Cranial and spinal technologies: $1.1 billion, down 4.1%, reflecting low-single digit sales declines for the core spine division globally, although the company recorded gains in the US, as well as double-digit growth for Titan spin products
    • Specialty therapies: $581 million, up 1%, with neurovascular achieving share gains driven by aspiration, coils, liquid embolic and access products, while the pelvic health division saw sequential share gains following the launch of the InterStim Micro neurostimulator
    • Neuromodulation: $411 million, down 2.1%, with mid-single digit declines in pain therapies and low-single-digit growth in deep brain stimulation
  • Diabetes: $574 million, down 3.7%, impacted by a delay in new patient starts on insulin pumps and continued competitive pressure, while continuous glucose monitoring products grew in the mid-single digits

Looking ahead:

Medtronic reiterated that “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.”

Martha noted that Medtronic is working on implementing its new operating model, which it plans to begin transitioning to in its fiscal third quarter. “Despite the challenges posed by the pandemic, we’re well positioned to accelerate growth over the medium- and long-term,” he remarked.  FirstWord Medtech

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