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Medtronic posted FY2Q19 revenue of US $744MM, +0.7% vs. FY2Q18. In September, Medtronic announced its intent to acquire Mazor Robotics and plans to close the purchase in FY3Q19. Leadership believes that the integration of the Mazor X robot with Medtronic’s navigation, imaging and implants creates a long-term competitive advantage.
In the quarter, spine and enabling technologies grew in the low-single digits, offset somewhat by soft performance 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 that 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. System utilization increased 10% compared to last quarter and use of Medtronic implant devices was at 50% this quarter, up from 28% in FY4Q18.
- 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 FY2Q19 and YTD segment sales and growth on an as-reported basis as follows.
| FY2Q19 | FY2Q18 | $ 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% |
| FY1H19 | FY1H18 | $ Change | % Change | |
| Spine | $1,231.5 | $1,212.0 | $19.5 | 1.6% |
| Orthobiologics | $251.5 | $253.0 | -$1.5 | -0.6% |
| Total | $1,483.0 | $1,465.0 | $18.0 | 1.2% |
ORTHOWORLD estimates Medtronics’s orthopaedic revenue by geographic region as follows.
| Geographic Region | FY2Q19 | FY2Q18 | $ 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 | $5.0 | 0.7% |
Net earnings in the quarter for all Medtronic revenue is as follows.
| FY2Q19 | Amount ($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.
Medtronic posted FY2Q19 revenue of US $744MM, +0.7% vs. FY2Q18. In September, Medtronic announced its intent to acquire Mazor Robotics and plans to close the purchase in FY3Q19. Leadership believes that the integration of the Mazor X robot with Medtronic’s navigation, imaging and implants creates a long-term competitive advantage.
In the...
Medtronic posted FY2Q19 revenue of US $744MM, +0.7% vs. FY2Q18. In September, Medtronic announced its intent to acquire Mazor Robotics and plans to close the purchase in FY3Q19. Leadership believes that the integration of the Mazor X robot with Medtronic’s navigation, imaging and implants creates a long-term competitive advantage.
In the quarter, spine and enabling technologies grew in the low-single digits, offset somewhat by soft performance 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 that 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. System utilization increased 10% compared to last quarter and use of Medtronic implant devices was at 50% this quarter, up from 28% in FY4Q18.
- 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 FY2Q19 and YTD segment sales and growth on an as-reported basis as follows.
| FY2Q19 | FY2Q18 | $ 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% |
| FY1H19 | FY1H18 | $ Change | % Change | |
| Spine | $1,231.5 | $1,212.0 | $19.5 | 1.6% |
| Orthobiologics | $251.5 | $253.0 | -$1.5 | -0.6% |
| Total | $1,483.0 | $1,465.0 | $18.0 | 1.2% |
ORTHOWORLD estimates Medtronics’s orthopaedic revenue by geographic region as follows.
| Geographic Region | FY2Q19 | FY2Q18 | $ 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 | $5.0 | 0.7% |
Net earnings in the quarter for all Medtronic revenue is as follows.
| FY2Q19 | Amount ($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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Mike Evers is a Senior Market Analyst and writer with over 15 years of experience in the medical industry, spanning cardiac rhythm management, ER coding and billing, and orthopedics. He joined ORTHOWORLD in 2018, where he provides market analysis and editorial coverage.
