Medtronic Reports Strong Q2 FY2025 Financial Results and Raises Full-Year Guidance

On November 19, 2024, Medtronic (NYSE: MDT) announced its financial results for the second quarter (Q2) of fiscal year 2025 (FY25), ended October 25, 2024.

• Reported revenue of $8.4 billion, an increase of 5.3%, with organic growth of 5.0%.

• GAAP Diluted Earnings Per Share (EPS) was $0.99; Non-GAAP Diluted Earnings Per Share was $1.26

• Company Raises Organic Revenue Growth and Earnings Per Share Guidance for FY2025

Medtronic Reports Global Revenue of $8.403 Billion for the Second Quarter, with Reported Growth of 5.3% and Organic Growth of 5.0%. Organic revenue growth comparisons exclude:

• Other income for the current year was $37 million, compared to $61 million for the previous year.

• Foreign currency translation gains for the remaining segments were $45 million.

According to reports, the GAAP net income and diluted earnings per share (EPS) for the second quarter were $1.27 billion and $0.99, respectively, representing increases of 40% and 46%. As described in the financial guidance at the end of this press release, the non-GAAP net income and non-GAAP diluted earnings per share for the second quarter were $1.62 billion and $1.26, respectively, representing a decrease of 3% and an increase of 1%. The non-GAAP diluted earnings per share for the second quarter included a -$0.09 impact from foreign exchange translation. The non-GAAP adjusted diluted earnings per share increased by 8% on a constant currency basis.

Medtronic Chairman and CEO Jeff Martha said, "As we continue to deliver on our commitments and achieve strong results that exceed expectations for yet another quarter, our momentum is building. Innovation is critical, and innovation is driving our growth today. Looking ahead, we believe this diversified growth will continue, especially given the strength of our product portfolio in high-impact markets, which will enable us to benefit even more patients around the world."

The Cardiovascular portfolio includes the Cardiac Rhythm and Heart Failure (CRHF), Structural Heart and Aortic (SHA), and Coronary and Peripheral Vascular (CPV) divisions. Revenue was $3.102 billion, with reported growth of 6.1% and organic growth of 5.6%, including high single-digit growth for SHA and mid-single-digit growth for CRHF and CPV, all organically.

• CRHF's performance includes mid-single-digit growth in the cardiac rhythm management business, driven by high-single-digit growth in defibrillation solutions and cardiac pacing therapy businesses, including double-digit growth in the Micra™ transcatheter pacing system; performance in the cardiac ablation solutions business was flat, as strong growth in the PulseSelect™ pulsed field ablation (PFA) system offset the decline in the cryoablation business.

• SHA's performance was driven by high single-digit growth in structural heart, the launch of the Evolut™ FX+ TAVR system in the U.S., and low double-digit growth in cardiac surgery.

• CPV Achieved Mid-Single-Digit Growth in Both Coronary Artery (Especially Guide Catheters and Balloons) and Peripheral Vascular Health Fields

• Following FDA Approval in Late October, Commercialization of Affera™ Mapping and Ablation System and Sphere-9™ Catheter to Expand Further

• Evolut™ FX+ TAVR System Receives CE Mark in Late October; Commercial Launch Begins in Europe This Month

• Launch of Avalus Ultra™ Surgical Valve in Western Europe and VitalFlow™ Extracorporeal Membrane Oxygenation (ECMO) System in the United States

• In September, the Symplicity™ Blood Pressure Monitoring System was selected for Fortune magazine's 2024 "Change the World" list.

• At the beginning of this month, according to the Medicare Hospital Outpatient Prospective Payment System (OPPS) in the United States, the Symplicity Spyral™ Renal Denervation (RDN) Catheter has been granted Transitional Pass-Through (TPT) payment, effective January 1, 2025. This catheter is used for the Symplicity™ Blood Pressure Procedure.

The Neuroscience Portfolio includes Cranial & Spinal Technologies (CST), Specialty Therapies, and Neuromodulation. Revenue was $2.451 billion, with reported growth of 7.1% and organic growth of 6.7%. The Neuromodulation division achieved low double-digit growth, while CST and Specialty Therapies divisions both achieved mid-single-digit growth, all organically.

CST's performance exceeded market performance, driven by the continued adoption of the AiBLE™ Spinal Implant Ecosystem and supporting technologies, with Core Spine achieving mid-single-digit growth, and Biologics and Neurosurgery achieving high single-digit growth.

• Specialty therapy performance was driven by single-digit growth in the neurovascular and pelvic health segments, with strong performance from hemorrhagic stroke products and continued adoption of the InterStim X™ system in pelvic health; ENT achieved low single-digit growth due to strong capital deployment.

• Neuromodulation business performance outperformed market performance, with the brain modulation business achieving high double-digit growth driven by the continued launch of the Percept™ RC Deep Brain Stimulator (DBS) featuring BrainSense™ technology; pain therapies business achieved low double-digit growth, with the U.S. pain stimulation business realizing low double-digit growth due to the ongoing rollout of the Inceptiv™ Spinal Cord Stimulator.

• Medtronic pioneered the ADAPT-PD clinical trial approach and published preliminary data on adaptive deep brain stimulation (aDBS) in the September issue of "npj Parkinson's Disease," a journal that is part of the prestigious "Nature" series.

• In September, the AiBLE™ Spine Surgery Ecosystem was expanded through new technologies, and a collaboration with Siemens Healthineers was announced for co-marketing and integration of the Siemens Healthineers Multitom Rax™ imaging system.

The Medical Surgical portfolio includes the Surgical and Endoscopic (SE) division and the Acute Care and Monitoring (ACM) division. The report shows revenue growth of 1.2% to $2.128 billion, with organic growth of 0.7%. ACM achieved low single-digit organic growth, while SE had flat organic growth. SE's year-over-year performance was impacted by tough comparisons with the surgical supply recovery from the previous year, but it showed high single-digit sequential growth.

• SE performance was flat, including Advanced Surgical Technologies and Advanced Energy businesses. Strong performance in the Advanced Energy business, driven by continued adoption of the LigaSure™ Maryland XP Vessel Sealer, offset the decline in the Advanced Stapling business; General Surgical Technologies achieved low single-digit growth with robust performance from hernia and wound management products.

• ACM Performance Includes High Single-Digit Growth for Nellcor™ Oximetry Management Products

Revenue was $686 million, an increase of 12.4% year-over-year, with organic growth of 11.0%.

• Due to the continued adoption of the MiniMed™ 780G Automated Insulin Delivery (AID) System, U.S. revenue achieved high single-digit growth.

• Due to the increased attachment rate of CGM and the ongoing launch of the Simplera Sync™ sensor, international revenue achieved low double-digit growth.

• In September, a meta-analysis of 28 randomized controlled trials published in *Diabetes/Metabolism Research and Reviews* concluded that the MiniMed™ 780G achieved the longest treatment time among seven commercially available AID systems.

The company raised its revenue growth and earnings per share guidance for fiscal year 25 today.

The company raised its organic revenue growth guidance for fiscal year 2025 from the previous 4.5% to 5% to 4.75% to 5%. The organic revenue growth outlook excludes the impact of foreign exchange and revenue reported under "other." If "other" revenue and foreign exchange impacts are included, and if recent foreign exchange rates remain unchanged, the adjusted revenue growth rate for fiscal year 2025 is expected to be between 3.4% and 3.9%.

The company raised its fiscal year 2025 non-GAAP diluted earnings per share guidance from the previous range of $5.42 to $5.50 to a new range of $5.44 to $5.50. This includes the impact of foreign exchange rates estimated at -5% based on recent exchange rates, unchanged from the prior expectation. The company’s guidance represents fiscal year 2025 non-GAAP diluted earnings per share growth of 4.6% to 5.8%.

Medtronic's Interim CFO Gary Corona stated, "We are restoring profitability by focusing on improving underlying profit margins, achieving another quarter of high single-digit constant currency adjusted earnings per share growth. Now, as foreign exchange impacts ease, we expect to deliver high single-digit adjusted earnings per share growth in the second half of this fiscal year, consistent with our long-term commitment to sustainable mid-single-digit organic revenue growth through earnings per share leverage."