The Fridley medical device firm expects continued growth as cardiac and vascular products turn corner to profitability.
If the second quarter is any indication, Medtronic Inc. has hit its stride.
Not only did CEO Omar Ishrak tell analysts Tuesday that the company has delivered consistent numbers “for upwards of eight quarters,” he assured them that he expects more of the same. The Fridley-based med-tech giant will soon roll out a sizable slate of new products in the United States and abroad, he said.
“It is important to note that Medtronic’s ability to create innovative therapies and new markets is fundamental to our overall growth strategy,” he said.
Medtronic’s largest business, cardiac and vascular products, is finally contributing to growth, with revenue up 3 percent over the same quarter a year ago. Those results, combined with positive numbers from other medical technology companies, have analysts believing the overall market has returned to stability after years of decline. Medtronic’s cardiac rhythm management business, which includes pacemakers and implantable defibrillators (ICDs), rose 4 percent to $1.27 billion.
Overall, the company earned $902 million, or 89 cents a share, in the fiscal second quarter, ended Oct. 25, compared with $646 million, or 63 cents a share, a year earlier. Second-quarter revenue of $4.2 billion grew better than 2 percent over the previous year and international revenue of $1.867 billion increased 3 percent.
Analysts such as Joanne Wuensch of BMO Capital Markets Corp. and Danielle Antalffy of Leerink Swann Research said in notes to investors that Medtronic’s ICD numbers were better than expected. Joshua Jennings of Cowen, said the company’s “ICD sales rebound bodes well for out-year revenue growth.”
That will continue as new therapies that have been successful in international markets make their way to the United States, he said. Later, during an interview, Ishrak said: “The only reason I was so confident is we’ve got evidence and have crossed all the hurdles of uncertainty that are associated with some of these products. … Our team has built a track record of execution. It’s tough not to get a little excited.”
Newer therapies include new cardiac resynchronization devices and Medtronic’s Advisa MRI pacemaker, an MRI-compatible device. A global rollout is planned for Medtronic’s MRI-compatible spinal cord stimulator — the RestoreSensor MRI — and its implantable cardiac diagnostic tool, the Reveal LINQ. The company continues to work with the FDA to bring its next artificial cervical disc, Prestige LP, to the U.S. market.
“Finally, we are making excellent progress on three fundamentally new therapy areas that meaningfully impact our outlook for [Fiscal 2015] and beyond: our CoreValve transcatheter aortic valve, our Symplicity Flex renal denervation system for treatment-resistant hypertension and our IN.PACT Admiral drug-eluting balloon,” Ishrak said. “All three of these products are market leaders in Europe, and we are planning to launch all of them in the U.S. over the coming quarters.”
Analyst Jeff Windau of Edward Jones Investment said Medtronic’s reported results for the quarter showed many positives, while still reflecting continuing challenges in some areas. Revenue declined 17 percent for Infuse, a bone graft product used in spinal fusion surgery that has come under scrutiny regarding its safety and efficacy.
“I think [Ishrak] has done a very solid job of running the company. The challenge is that there are some businesses that are up and some that are down and he is navigating some very rough waters,” Windau said. “Still, he has been able to meet or exceed expectations. “
Shares in Medtronic fell just shy of 1 percent Tuesday. But Medtronic shares have risen more than 38 percent, year-to-date.
James Walsh • 612-673-7428