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Product / Company Performance

Medtronic Reports 3Q18 Orthopaedic Revenue of $744MM, +0.7% vs. 3Q17 -

By Mike Evers, ORTHOWORLD

Medtronic posted 3Q18 revenue of US $744MM, +0.7% vs. 3Q17. Figures reflect the company’s FY2Q19 revenue for the period ended 10/31/2018. In September, Medtronic announced its intent to acquire Mazor Robotics and plans to close the purchase in 4Q18. Leadership believes the integration of the Mazor X robot with Medtronic’s navigation, imaging and implants creates a long-term competitive advantage.

In the third quarter, spine and enabling technologies grew in the low-single digits, offset somewhat by a soft quarter in biologics as Infuse bone graft products were down against the prior year due to customer buying patterns. Leadership remains confident that Infuse has strong natural demand. The company believes the spine market has stabilized in the flat to low single-digit growth range as procedure volume increases slightly outpace price declines. ORTHOWORLD projects calendar year 2018 Medtronic orthopaedic revenue of $3,017MM, +1.7% vs. 2017.

Chairman and CEO Omar Ishrak highlighted three growth drivers for Medtronic’s spine business that he believes position the company to take at least low single-digit share in the coming years.

  • Robotics - Ishrak said, “We look at every major account as kind of like a socket if you will, and the key is the robotic sale.” Even before the launch of Mazor X Stealth, which integrates navigation into the unit, Medtronic is performing ahead of their expectations in robotics sales. Of those sales, 70% are placements in which the account is paying for the unit through incremental spine share over a period of three to four years. Use of Medtronic implant devices with Mazor X units was 50% in 3Q18, up from 28% in 1Q18.
  • China - Leadership noted that many of their competitors are strong in ex-U.S. markets, especially China. Medtronic’s Restorative Therapies Group segment grew 17% in China for the quarter, driven primarily by growth in spine sales.
  • Product pipeline - the company’s speed-to-scale strategy will address some gaps in the spine portfolio.

ORTHOWORLD estimates 3Q18 and YTD segment sales and growth on an as-reported basis as follows.

  3Q18 3Q17 $ Change % Change
Spine $614.5 $606.0 $8.5 1.4%
Orthobiologics $129.5 $133.0 -$3.5 -2.6%
Total $744.0 $739.0 $5.0 0.7%
  9Mo18 9Mo17 $ Change % Change
Spine $1,872.5 $1,838.0 $34.5 1.9%
Orthobiologics $397.5 $386.0 $11.5 3.0%
Total $2,270.0 $2,224.0 $46.0 2.1%

ORTHOWORLD estimates Medtronics’s orthopaedic revenue by geographic region as follows.

Geographic Region 3Q18 3Q17 $ Change % Change
US $517.52 $518.98 -$1.5 -0.3%
Ex-US $226.50 $220.02 $6.5 2.9%
Total $744.0 $739.0 $5.0 0.7%

Net earnings in the quarter for all Medtronic revenue is as follows.

3Q18 Amount ($MM) % of Sales
Sales $7,481.0  
   Cost of Sales -$2,203.0 29.4%
   Administrative -$2,605.0 34.8%
   R&D -$590.0 7.9%
   Other -$968.0 12.9%
Net Earnings $1,115.0 14.9%

Sources: Medtronic; ORTHOWORLD estimates. All revenue figures presented in USD $MM.

Mike Evers is ORTHOWORLD’s Market Analyst. He can be reached by email.

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