Medtronic Reports Fourth Quarter and Full Year Fiscal 2024 Financial Results
Medtronic
Medical Device Manufacturer
May 23, 2024 – Medtronic (NYSE:MDT) today announced its financial results for the fourth quarter and fiscal year 2024 (FY24) ended April 26, 2024.
The report states,Revenue in the fourth quarter was $8.6 billion, an increase of 0.5%, with organic growth of 5.4%;
Q4 GAAP diluted earnings per share (EPS) was $0.49; Non-GAAP diluted earnings per share was $1.46;
The report shows that revenue for fiscal year 24 was $32.4 billion, an increase of 3.6%, with organic growth of 5.2%.
Diluted earnings per share under GAAP for fiscal year 24 were $2.76; non-GAAP diluted earnings per share were $5.20;
$6.8 Billion in Operating Cash for FY24Increased by 12%;Free cash flow of $5.2 billion in FY24 increased by 14%;
The company returned $5.5 billion to shareholders in fiscal year 24, including $1.6 billion returned to shareholders through net stock repurchases in the fourth quarter;
Dividend increased quarterly to $0.70 per share, or $2.80 annually; marking the 47th consecutive year of dividend growth;
Evolut™ FX+ TAVR System and Inceptiv™ Closed-Loop Spinal Cord Stimulator Receive FDA Approval; Symplicity Spyral™ Renal Denervation System Receives NMPA Approval in China; Affera Sphere-9™ Ablation Catheter and Simplera Sync™ CGM Submitted to FDA for Approval;
"We will continue to advance our technology and strategy in a financially prudent manner," Fischer said. "We have maintained a strong balance sheet, which enables us to bring a transformative product ecosystem to market, fund its commercialization, and achieve profitability. We have multiple goals and hope to achieve breakthrough growth by 2025 and beyond."
Financial Results for the Fourth Quarter
Medtronic reported global revenue of $8.589 billion for the fourth quarter, with an increase of 0.5% and organic growth of 5.4%.The company's organic revenue performance reflects broad growth across the entire company, with organic revenue growth in all four segments at mid-single digits or higher. Organic revenue growth comparisons exclude:
Due to business divestiture and product line exits, this year's revenue was $57 million, compared to $114 million last year, categorized as other;
Foreign currency translation had an unfavorable impact of $72 million on the remaining segments;
And last year's $265 million revenue came from a one-time intellectual property (IP) agreement, reported by the Structural Heart and Aortic division within the Cardiovascular portfolio.
According to reports, the GAAP net income and diluted earnings per share in the fourth quarter were $654 million and $0.49, respectively, representing decreases of 45% and 44%.
The diluted earnings per share were $19.29 billion and $146, representing decreases of 8% and 7%, respectively. In the fourth quarter non-GAAP diluted earnings per share, the unfavorable impact from foreign currency translation was 7 cents, accounting for 4%.
Financial Performance for FY24
Medtronic Reports Global Revenue of $32.364 Billion in FY24, Up 3.6%, with Organic Growth of 5.2%Organic revenue growth comparison for FY24 excludes:
Due to business divestiture and product line exits, this year's revenue was $111 million, compared to $358 million last year, categorized as other;
Foreign currency translation had a favorable impact of $43 million on the remaining segments;
AndLast year's revenue from one-time intellectual property agreements was $265 million.
Net income and diluted earnings per share (EPS) under GAAP for FY24 were $3.676 billion and $27.6, respectively, both decreasing by 2%. As detailed in the financial schedules at the end of this press release, non-GAAP net income and non-GAAP diluted EPS for FY2024 were $6.918 billion and $5.20, respectively, both declining by 2%. The non-GAAP diluted EPS for FY24 included an unfavorable foreign exchange translation impact of $0.33. On a constant currency basis, non-GAAP diluted EPS for FY24 grew by 5%.
Operating cash flow for FY24 was $6.787 billion, an increase of 12%. Free cash flow for FY24 was $52 billion, an increase of 14%, representing a 75% conversion rate of free cash flow to non-GAAP net income. The growth was driven by improvements in working capital.
Medtronic Chairman and CEO Geoff Martha said, "We delivered a strong performance in this fiscal year with robust business results, achieving mid-single-digit or higher organic revenue growth across all four of our segments." "Our momentum is building as we enter the new fiscal year. We are starting new product cycles in some of the most attractive markets within medical technology, which will be further strengthened by the application of artificial intelligence across our portfolio. We are very optimistic about what we can achieve in fiscal year 25 and beyond."
Cardiovascular Combination
The Cardiovascular portfolio includes the Cardiac Rhythm and Heart Failure (CRHF), Structural Heart and Aortic (SHA), and Coronary and Peripheral Vascular (CPV) divisions. The report shows fiscal year 2024 revenue of $11.831 billion, an increase of 2.7%, with organic growth of 5.0%. SHA achieved high single-digit growth, CPV had mid-single-digit growth, and CRHF saw low single-digit growth, all on an organic basis.It was reported that the revenue in the fourth quarter was 3.13 billion US dollars, decreased by 5.2%, and increased organically by 4.0%. The organic growth of SHA and CPV was in the mid-single digits, and the organic growth of CRHF was in the low single digits.
• The Q4 results of CRHF include low single-digit growth in cardiac rhythm management, driven by high single-digit growth in cardiac pacing therapies, including low 20s growth of the Micra™ Transcatheter Pacing System; cardiac ablation solutions grew by mid-single digits, with strong growth in pulsed field ablation (PFA) offsetting the decline in cryoablation.
•SHA's fourth-quarter performance was driven by high single-digit growth in structural heart and cardiac surgery; structural heart achieved double-digit growth in Western Europe and Japan due to the continued adoption of the Evolut™ FX Transcatheter Aortic Valve Replacement (TAVR) system.
• CPV in the fourth quarter achieved mid-single-digit coronary growth, with increased strength in catheters and balloons; peripheral vascular health also grew at a mid-single-digit rate, with drug-coated balloons and vascular embolization products growing in the mid-teens.
• The Evolut™ FX+ TAVR system received approval from the U.S. Food and Drug Administration in March and was commercially launched for the first time in the spring of 2024, with full market availability in the summer of 2024; the launch of Avalus Ultra™ surgical aortic tissue valve in the United States; the Symplicity Spyral™ renal denervation system received approval from China's National Medical Products Administration (NMPA) and authorization from Health Canada.
• The one-year results of the SMART trial were simultaneously presented at the American College of Cardiology and published in The New England Journal of Medicine in April, demonstrating that the Medtronic Evolut™ TAVR platform is the optimal treatment for severe aortic stenosis in patients with small annuli (mainly women).
• The first human data of the Sphere-360™ PFA catheter was presented at the European Heart Rhythm Association Annual Meeting in April; the one-year results of the SPHERE-PER AF pivotal study on the Sphere-9™ pulsed field (PF) and radiofrequency (RF) ablation, as well as the high-density (HD) mapping catheter of the Affera cardiac mapping and navigation platform, which were published last week in Heart Rhythm. This system has been submitted to the U.S. Food and Drug Administration (FDA) for regulatory review and approval.
Neuroscience Product Portfolio
The neuroscience portfolio includes Cranial & Spinal Technologies (CST), Specialty Therapies, and Neuromodulation. In FY24, revenue was reported at $9.406 billion, representing a 5.0% increase and organic growth of 5.2%. CST achieved high single-digit growth, Specialty Therapies saw mid-single-digit growth, and Neuromodulation experienced low single-digit growth, all on an organic basis.Reportedly, the revenue in the fourth quarter was $2.545 billion, increasing by 5.6%, with an organic growth of 6.5%. CST achieved high single-digit growth, neuromodulation had mid-single-digit growth, and specialty therapies experienced low single-digit growth, all of which were organic growth.
• CST's fourth-quarter performance was driven by the continued adoption of the AiBLE™ ecosystem, with mid-teens growth in neurosurgery attributed to strong capital equipment sales, high single-digit growth in biologics, and mid-single-digit growth in Core Spine.
• The fourth-quarter performance of the Professional Therapies segment was driven by high single-digit growth in ENT, strong momentum in capital equipment and disposables, and robust sales of local drug delivery sinus implants; neurovascular declined by low single digits as volume-based procurement tenders in China offset the strength of flow diversion products; pelvic health grew by mid-single digits due to continued adoption of the InterStim X™ system.
• With the launch of the Percept™ RC neurostimulator featuring BrainSense™ technology, brain modulation in neuromodulation achieved low double-digit growth in the fourth quarter; pain therapies grew by a mid-single-digit rate, including low double-digit growth in targeted drug delivery and low single-digit growth in Pain Stim.
• Received U.S. FDA approval for the Inceptiv™ Closed-Loop Spinal Cord Stimulator on the last day of the fourth quarter; the OsteoCool™ 2.0 Bone Tumor Ablation System received U.S. FDA approval in the fourth quarter and is planned for a broader market release later this calendar year.
Medical Surgical Product Portfolio
The medical surgical product portfolio includes the Surgical and Endoscopic (SE) and Acute Care and Monitoring (ACM) divisions. The report shows that revenue for fiscal year 24 was $8.417 billion, increasing by 5.4%, with organic growth of 4.7%. SE grew at a mid-single-digit rate, while ACM grew at a low-single-digit rate, both organically.Reportedly, the revenue in the fourth quarter was $2.198 billion, increasing by 3.5%, with an organic growth of 4.5%. The organic growth in the southeastern region was in the mid-single digits, while the organic growth of ACM was in the low single digits.
• SE's fourth-quarter performance includes high single-digit growth in general surgical technology, strong growth in wound management and hernia products, low single-digit growth in advanced surgical technology, and high single-digit growth in the endoscopy business with robust capital sales.
• Driven by the strong demand for McGrath™ Mac video laryngoscopes, ACM's fourth-quarter performance saw mid-single-digit growth in oxygen management due to robust sales of Nellcor™ pulse oximetry products, as well as mid-single-digit growth from airlines.
• Launched Touch Surgery™ Live Stream and 14 new artificial intelligence-driven algorithms on the Touch Surgery™ Performance Insights platform for laparoscopic and robot-assisted surgery; received FDA approval for the BIS™ Advance anesthesia monitor; initiated enrollment for two new indication studies of the Hugo™ robotic-assisted surgery system: hernia and gynecology.
Diabetes
Reportedly, diabetes revenue in FY24 was $2.488 billion, increasing by 10.0%, with organic growth of 8.6%. Q4 revenue was reported at $660 million, growing by 10.9%, with organic growth of 11.1%.
• Due to the continued launch of the MiniMed™ 780G system, U.S. fourth-quarter revenue grew by a low double-digit percentage; sales of U.S. insulin pumps achieved high growth in the 40s, with strong growth in new patient sales.
• Outside the U.S., developed markets achieved high single-digit growth driven by the continued adoption of the MiniMed™ 780G system and increased CGM attachment rates.
• Submit Simplera Sync™ CGM to the U.S. Food and Drug Administration in the fourth quarter, seeking approval for use with the MiniMed™ 780G System.
Guidance
The company expects organic revenue growth in fiscal year 25 to be between 4% and 5%.Organic revenue growth guidance excludes the impact of foreign exchange and acquisitions, and is reported under "Other." Including other revenue and the impact of foreign exchange, if recent foreign currency exchange rates remain unchanged, revenue growth for fiscal year 25 will be between 2.4% and 3.7%.
The company expects fiscal year 2025 non-GAAP diluted earnings per share to be between $5.40 and $5.50, including a 5% unfavorable impact due to foreign exchange rates based on recent exchange rates. This implies fiscal year 2025 non-GAAP diluted earnings per share growth will be between 4% and 6%.
Dividend Increase
The company announced today that, effective May 22, 2024, the Medtronic Board of Directors has approved an increase in the cash dividend for the first quarter of the 2025 fiscal year, raising the quarterly dividend to $0.70 per ordinary share. This represents an annual amount of $2.80 per ordinary share.Medtronic has a long history of dividend growth and is a constituent of the S&P 500 Dividend Aristocrats Index. Today's announcement marks the 47th consecutive year of dividend payment increases. Including today’s increase, Medtronic's dividend per share has grown by 30% over the past five years, by 130% over the past ten years, and at a compound annual growth rate of 16% over the past 47 years.
Medtronic has a strong track record of returning capital to shareholders, including $5.5 billion in fiscal year 2024. The company remains committed to returning at least 50% of its free cash flow to shareholders, primarily through dividends and, to a lesser extent, through share repurchases. The dividend will be paid on July 12, 2024, to registered shareholders as of the close of business on June 28, 2024.
Medtronic Executive Vice President and Chief Financial Officer Karen Parkhill said, "We delivered on our promises in the fourth quarter and for the fiscal year, driving sustained revenue growth, improved profitability, and strong free cash flow. Our guidance for fiscal year 2025, along with our dividend growth and recent share repurchases, reflects our confidence in the continued trajectory."
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