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Medtronic handily beats Wall Street quarterly earnings forecasts

August 21, 2018

Medtronic handily beat Wall Street quarterly earnings forecasts Tuesday and raised its full-year outlook.

The Minnesota-run maker of pacemakers and advanced insulin pumps beat earnings by six cents per share and upped its financial expectations for the year that will end next April. Chief Executive Omar Ishrak was upbeat about the current and future performance in a news release.

“Our pipeline of innovation, invention, and disruption has never been stronger,” Ishrak said. “We are also putting the pieces in place to improve free cash flow conversion, creating additional capital that can be returned to shareholders and reinvested to drive future growth, all with a goal of creating long-term shareholder value.”

Medtronic reported adjusted diluted earnings of $1.6 billion on $7.38 billion in revenue for the three months that ended July 27. Wall Street had been expecting a 2 percent revenue decline compared to the same quarter last year, but current-quarter revenue was just a fraction of a percent below last year.

Net income, meanwhile, was up almost 4 percent over the prior period. Wall Street had expected growth of 3 cents per share, but the company turned in nine cents of improvement instead, with earnings of $1.17 per share for the just-ended period.

Operating profit, a closely watched measure at Medtronic, climbed nearly 3 percent to $2 billion. Medtronic’s effective worldwide tax rate grew three tenths of a percent to 13.3 percent in the quarter.

Sales of Medtronic heart products grew by 5 percent on a comparable basis to $2.65 billion. Restorative therapies like chronic pain treatments grew by 7 percent to $1.81 billion and minimally invasive surgical therapy sales grew by 5 percent to $1.94 billion. Diabetes sales grew by 26 percent to $449 million.

Looking ahead, Medtronic raised its full-year revenue and EPS guidance.

The company now expects organic revenue growth in a range of 4.5 to 5 percent. That figure is offset by a corresponding rise in negative international currency fluctuations, with currency changes in the fiscal year potentially decreasing revenue by up to $520 million, up from the prior projected negative impact of up to $150 million.

EPS are forecast to grow by 9 to 10 percent on a constant currency basis during the year, up one percentage point on both ends of the range. Because of foreign exchange impacts, Medtronic kept its full-year EPS estimate unchanged at $5.10 to $5.15 per share.

Joe Carlson • 612-673-4779

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