Medtronic Surprises with Especially Strong Earnings

At least five products helped fuel Medtronic's strong third-quarter growth.

Nancy Crotti

Medtronic stock was up nearly 4% on Tuesday, after the company reported that successful product launches had produced better-than-expected financial results for the company in the three months before it late January merger with Covidien.

Medtronic earned $977 million, or 98 cents per share, off $4.32 billion in sales for the third quarter ended January 23.

The results beat analysts' predictions of 97 cents per share profits off $4.25 billion in sales, according to Thomson Reuters. They were also a marked increase from the $650 million in profits and $4.16 billion in revenue that Medtronic saw for the same quarter a year before.

1. Reveal LINQ

Cardiac and vascular sales topped $2.2 billion worldwide for the quarter, boosted by what the company called "the strong ongoing global launch" of its Reveal LINQ insertable cardiac monitor. The Reveal is one-third the size of an AAA battery, making it more than 80% smaller than other ICMs.

2. Resolute Onyx

The company also launched its Resolute Onyx drug-eluting stent in international markets late in the quarter.

3. MiniMed 640G

There was also a partial launch of Medtronic's next-generation MiniMed 640G System with the Enhanced Enlite continuous glucose-monitoring sensor. In addition to incorporating a new insulin pump design and user interface, the MiniMed 640G automatically suspends insulin delivery when sensor glucose levels are predicted to approach a low limit, and then resumes insulin delivery once glucose levels recover, the company said.

4. RestoreSensor SureScan MRI

Medtronic also attributed part of its U.S. earnings growth to itsRestoreSensor SureScan MRI spinal cord stimulation system, which has an automatic stimulation adjustment feature and access to MRI scans anywhere in the body.

5. O-arm Surgical Imaging System

Its third-quarter surgical technologies revenue of $418 million grew 8% with "solid, balanced growth" driven by among several other products, its O-arm Surgical Imaging System, the company said.

The multi-dimensional surgical imaging platform designed for use in spine, orthopedic, and trauma-related surgeries, provides real-time, intra-operative imaging of a patient's anatomy with images and a large field-of-view in both two and three dimensions, according to the Medtronic website. Integrating O-arm technology with its StealthStation surgical navigation systems enables surgeons to improve visualization to complete and confirm the accuracy of complex and minimally invasive surgical procedures before the patient leaves the operating room, the company said.

The company may be benefiting not only from successful product launches, but also from overall strategy. Medtronic has latched onto the idea of medical device companies manufacturing not only individual devices, but also offering an array of services around them to aid healthcare systems in disease management.

Medtronic plc, which has moved its official headquarters to Dublin, Ireland while keeping its operational headquarters outside Minneapolis, predicts revenue growth of 4% to 6% in its 2015 fourth quarter, which will include results from Medtronic and Covidien as well as any financial effects of the acquisition. 

Nancy Crotti is a contributor to Qmed and MPMN.

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