• Preliminary Q4 Worldwide Revenue of Approximately $7.3 Billion Grew 7% on a Comparable, Constant Currency Basis; 60% as Reported
• Preliminary Q4 U.S. Revenue of Approximately $4.1 Billion Grew 8% on a Comparable Basis; 67% as Reported
• Preliminary FY15 GAAP Revenue of Approximately $20.3 Billion Grew 19% as Reported, or 6% on a Comparable, Constant Currency Basis
• Company Tightens Fourth Quarter Adjusted EPS Expectations
DUBLIN - May 19, 2015 - Medtronic plc (NYSE: MDT) today announced its preliminary revenue results for the fourth quarter and fiscal year 2015, which ended April 24, 2015. As this is the first quarter where the company is reporting results that include its recent acquisition of Covidien, full financial results are expected to be reported on June 2, 2015, two weeks later than the company’s normal reporting date.
Unless otherwise noted, all comparisons and growth rates in this press release are stated on a comparable, constant currency basis, which includes Covidien plc in the prior year comparison and aligns Covidien’s prior year monthly revenue to Medtronic’s fiscal quarters. Aligning historic Covidien revenue to Medtronic’s fiscal quarters is different than the pro forma revenue information previously included within certain SEC filings, which combined revenues from the closest historical reported quarters of both companies. Management believes that referring to comparable, constant currency growth rates is a more useful way to evaluate the underlying performance of Medtronic’s revenue. For additional revenue detail and the reconciliation of these revenue amounts and growth rates to the most directly comparable GAAP financial measures, please refer to the link at the end of this release.
The company announced preliminary fourth quarter worldwide revenue of approximately $7.302 billion, compared to $7.257 billion on a comparable basis in the fourth quarter of fiscal year 2014, an increase of 7 percent after adjusting for an approximately $482 million negative foreign currency impact. As reported, revenue increased 60 percent when compared to the $4.566 billion reported by Medtronic, Inc. in the fourth quarter of fiscal year 2014.
Fourth quarter U.S. revenue of approximately $4.055 billion increased 8 percent, or 67 percent as reported. Fourth quarter non-U.S. developed market revenue of approximately $2.320 billion increased 5 percent, or 48 percent as reported. Fourth quarter emerging market revenue of approximately $927 million increased 11 percent, or 62 percent as reported, and represented approximately 13 percent of company revenue.
As reported, Medtronic’s fiscal year 2015 revenue of approximately $20.259 billion, increased 19 percent, or 6 percent on a comparable, constant currency basis.
“I am very encouraged by our strong preliminary fourth quarter revenue performance especially as it is the first quarter that reflects the combined results of Medtronic and Covidien,” said Omar Ishrak, Medtronic chairman and chief executive officer. “In addition to making solid progress on our integration of Covidien, these preliminary revenue results reflect disciplined execution across our three core strategies of therapy innovation, globalization, and economic value.”
Cardiac and Vascular Group
The Cardiac and Vascular Group (CVG) includes the Cardiac Rhythm & Heart Failure, Coronary & Structural Heart, and Aortic & Peripheral Vascular divisions. CVG had worldwide revenue in the quarter of approximately $2.596 billion, representing an increase of 10 percent on both a comparable, constant currency basis and as reported. CVG revenue performance was driven by strong balanced growth across all three divisions.
Fourth quarter CVG U.S. revenue of approximately $1.301 billion increased 15 percent, or 28 percent as reported. Fourth quarter CVG non-U.S. developed market revenue of approximately $903 million increased 5 percent, or decreased 7 percent as reported. Fourth quarter CVG emerging market revenue of approximately $392 million increased 11 percent, or 4 percent as reported.
Cardiac Rhythm & Heart Failure (CRHF) revenue of approximately $1.398 billion grew 11 percent, or 4 percent as reported. CRHF performance this quarter was driven by low-teens growth in Low Power, mid-single digit growth in High Power and strong growth of over 30 percent in AF Solutions. Geographically, the CRHF division benefitted from mid-teens growth in the U.S. and Japan. Low Power results were driven by the continued ongoing acceptance of the Reveal LINQTM insertable cardiac monitor and solid performance in the U.S. Pacing business, which grew in the upper-single digits. High Power results were driven by mid-single digit growth in the U.S. and double-digit growth in Japan. The VivaTM XT CRT-D with its AdaptivCRT® algorithm and Attain® PerformaTM Quadripolar Lead continue to show strong market acceptance. AF Solutions results were driven by continued robust growth of our Arctic Front Advance® CryoAblation System.
Coronary & Structural Heart (CSH) revenue of approximately $792 million increased 9 percent, or 1 percent as reported. CSH performance was driven by upper-teens growth in Structural Heart and low-single digit growth in Coronary. Structural Heart grew in the upper-teens globally and approximately 30 percent in the U.S. driven by Transcatheter Valves, which grew approximately 50 percent globally based on the ongoing success of CoreValve® in the U.S., and the launch of the CoreValve® EvolutTM R recapturable system in international markets. Coronary benefitted from mid-single digit Drug Eluting Stent (DES) growth driven by the recent launch of Resolute OnyxTM in Europe and the continued acceptance of Resolute Integrity® DES in the U.S. The business also had low-double digit growth in balloons as a result of the recent launch of the company’s differentiated EuphoraTM SC balloon dilatation catheter.
Aortic & Peripheral Vascular (APV) revenue of approximately $406 million increased 9 percent, or 69 percent as reported. APV performance was driven by very strong mid-teens growth in the Peripheral business, which is comprised of the legacy Medtronic peripheral business and a portion of the legacy Covidien Peripheral business, and low-single digit growth in Aortic. Growth in the Peripheral business was driven by the IN.PACT® Admiral® drug-coated balloon, which was launched at the beginning of the fiscal fourth quarter. The company estimates it now has the leading position in the U.S. Drug Coated Balloon market. This leadership position was attained without the benefit of having a full quarter of a combined Medtronic and legacy Covidien peripheral salesforce. Peripheral was also driven by strong double-digit growth in Chronic Venous Insufficiency (CVI) reflecting the continued acceptance of ClosureFastTM in Japan.
Minimally Invasive Therapies Group
The Minimally Invasive Therapies Group (MITG), formerly referred to as the Covidien Group following completion of the Covidien acquisition, includes both the Surgical Solutions division and the Patient Monitoring & Recovery division, formerly referred to as Medical Care Solutions by Covidien prior to the acquisition. The group had worldwide sales in the quarter of approximately $2.385 billion, representing an increase of 6 percent. Incremental revenue from acquisitions contributed just over 1 percent to consolidated growth. MITG revenue performance was driven by strong double-digit growth in Surgical Solutions and low-single digit growth in Patient Monitoring & Recovery.
Fourth quarter MITG revenue in the U.S. of approximately $1.228 billion increased 6 percent. Fourth quarter MITG non-U.S. developed market revenue of approximately $852 million increased 4 percent. Fourth quarter MITG emerging market revenue of approximately $305 million increased 11 percent.
Surgical Solutions revenue of approximately $1.293 billion increased 10 percent. Surgical Solutions performance this quarter was driven by high-single digit growth in Advanced Surgical and low-single digit growth in General Surgical. Advanced Surgical results were driven by balanced low-double digit growth in both Stapling and Energy coupled with growth of over 40 percent in Early Technologies, which benefitted significantly from acquisitions. Stapling growth reflected continued strong market adoption in the U.S. of new product introductions including the Endo GIATM Reinforced Reload. Energy results were driven by continued robust procedural growth in Vessel Sealing. Early Technologies results included strong growth across all three product lines: GI Solutions, Advanced Ablation, and Interventional Lung Solutions.
Patient Monitoring & Recovery (PMR) revenue of approximately $1.092 billion increased 2 percent. Patient Monitoring grew in the mid-single digits, and both Airway & Ventilation and Nursing Care grew in the low-single digits, offsetting low-single digit declines in Patient Care. The strong U.S. flu season drove pulse oximetry sales.
Restorative Therapies Group
The Restorative Therapies Group (RTG) includes the Spine, Neuromodulation, Surgical Technologies, and Neurovascular divisions. The group had worldwide revenue in the quarter of approximately $1.854 billion, representing an increase of 5 percent, or 7 percent as reported. Group revenue performance was driven by growth in Surgical Technologies, Neuromodulation, and Neurovascular, partially offset by declines in Spine.
Fourth quarter RTG U.S. revenue of approximately $1.233 billion increased 4 percent, or 8 percent as reported. Fourth quarter RTG non-U.S. developed market revenue of approximately $426 million increased 4 percent, or declined 4 percent as reported. Fourth quarter RTG emerging market revenue of approximately $195 million increased 12 percent, or 25 percent as reported.
Spine revenue of approximately $743 million declined 2 percent, or 5 percent as reported. Core Spine and Interventional revenue both declined in the low-single digits, offsetting low-single digit growth in Bone Morphogenetic Protein (BMP). The Core Spine business is focused on differentiating itself from the competition over the long-term through its leading technology and procedural innovation, enhanced by its Surgical Synergy(TM) program of enabling technologies, including imaging, navigation, and powered surgical instruments.
Neuromodulation revenue of approximately $518 million grew 6 percent, or 1 percent as reported. Neuromodulation performance was driven by mid-teens growth in Gastro/Uro and double-digit growth in Deep Brain Stimulation (DBS). Pain Stim was flat in the quarter, in-line with the market. Geographically, the Neuromodulation business benefitted from strong growth of over 30 percent in emerging markets, low-single digit growth in the U.S., and mid-single digit growth in Europe.
Surgical Technologies revenue of approximately $461 million grew 9 percent, or 5 percent as reported. Surgical Technologies’ performance was driven by solid, balanced growth across all three businesses. Neurosurgery grew in the mid-single digits reflecting record worldwide O-arm® surgical imaging unit sales, continued strength in StealthStation® navigation service revenue, and the contribution of Visualase® MRI-guided laser ablation. ENT low-double digit growth reflected continued strong StraightShot® M5 Microdebrider and NuVent(TM) sinus balloon penetration offset partially by a divestiture in the Surgical Technolgies division, which occurred in the third quarter of fiscal year 2015. Advanced Energy grew in the upper-teens driven by the continued adoption of PEAK PlasmaBlade®. Geographically, the business had low-teens growth in the U.S. on the strength of new products.
Neurovascular revenue of approximately $132 million increased 23 percent. The business, formerly part of legacy Covidien, posted strong double-digit growth across coils, stents, flow diversion, and access product lines. Robust growth in neurovascular stents was driven by the SolitaireTM FR revascularization device following the publication of several positive clinical studies in the New England Journal of Medicine, including SWIFT PRIME. Flow diversion growth benefitted from the third quarter U.S. launch of the PipelineTM Flex embolization device.
Diabetes Group
The Diabetes Group includes the Intensive Insulin Management, Non-Intensive Diabetes Therapies, and Diabetes Services & Solutions divisions. The group had worldwide revenue in the quarter of approximately $467 million, representing an increase of 8 percent, or 2 percent as reported.
Fourth quarter Diabetes U.S. revenue of approximately $293 million increased 8 percent on both a comparable, constant currency basis and as reported. Fourth quarter Diabetes non-U.S. developed market revenue of approximately $139 million increased 8 percent, or decreased 9 percent as reported. Fourth quarter Diabetes emerging market revenue of approximately $35 million increased 5 percent, or decreased 5 percent as reported.
Diabetes Group revenue in the quarter was driven by continued strong adoption in the U.S. of the MiniMed® 530G System with Enlite® CGM sensor and its proprietary Threshold Suspend technology. Growth was also driven by the continued international launch of the next-generation MiniMed® 640G System with a new insulin pump design, user interface, the Enhanced Enlite® CGM sensor and SmartGuardTM technology, a proprietary algorithm that can automatically suspend insulin delivery when sensor glucose levels are predicted to approach a low limit and resume insulin delivery once sensor glucose levels recover. The Intensive Insulin Management division continued to progress toward the development of an artificial pancreas system, with a minority investment in, and licensing of the DreaMed algorithm for a next generation closed loop system. The group continues to grow its Diabetes Services & Solutions division as evidenced by the recently announced partnership with IBM Watson Health and its minority investment in Glooko. The recent Diabeter acquisition also marks an important first move into the diabetes integrated care service space in the pediatric Type 1 population.
Fourth Quarter Earnings Expectations and Fiscal Year 2016 Perspective
Based on preliminary revenue and operating results, the company today updated its expectation that fourth quarter adjusted cash earnings per share would be at the upper half of the previously communicated range of $1.08 to $1.13. However, it is important to note that adjusted cash earnings per share for the fourth quarter exclude a number of significant charges, including, but not limited to, amortization of intangible assets, net restructuring charges, acquisition related items, the impact of inventory purchase price step-up, and certain tax adjustments.
“As we look ahead to fiscal year 2016, we feel increasingly confident about our business outlook on an operational basis.” said Gary Ellis, Medtronic executive vice president and chief financial officer. “However, foreign exchange continues to represent a significant headwind to many multinational companies, including Medtronic. While recently the U.S. dollar has weakened, it is important to note that the foreign exchange rates in our fourth quarter were below the rates assumed in the outlook we forecasted on our third quarter earnings call in February.”
Webcast Information
Medtronic will report its fourth quarter and full-year financial results on Tuesday, June 2, 2015, and intends to provide its initial fiscal year 2016 EPS guidance and revenue outlook at that time. A news release will be issued at approximately 6:15 a.m. Central Daylight Time and will be available at newsroom.medtronic.com. Medtronic will host a webcast at 7:00 a.m. Central Daylight Time to provide information about its businesses for the public, analysts, and news media. The webcast can be accessed by clicking on the Investors link on the Medtronic website at www.medtronic.com/newsroom on June 2, 2015. 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 through the Investors section of the Medtronic website.
Revenue Schedules
To view the preliminary fourth quarter and fiscal year revenue schedules, click here or visit www.medtronic.com/newsroom.
About Medtronic
Medtronic plc, headquartered in Dublin, Ireland, is the global leader in medical technology - alleviating pain, restoring health, and extending life for millions of people around the world.
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