Medtronic kicked off its fiscal year with double-digit revenue growth, building on momentum the company posted coming out of its previous year.
Medtronic grew revenue by 13.7% to $9.8 billion in its fiscal first quarter, fueled by double-digit growth in its cardiovascular and medical surgical businesses. The strong quarter prompted the company to increase its organic revenue growth forecast for the full fiscal year.
“Importantly, these results reinforce our confidence and the durability of our business,” CEO Geoff Martha told investors on a Tuesday earnings call.
J.P. Morgan analyst Robbie Marcus wrote in a note to investors that Medtronic beat Wall Street’s consensus expectations in sales by about $220 million in the quarter.
Much like in the fourth quarter, Medtronic’s cardiovascular unit was a bright spot for the company. The business brought in $3.93 billion in revenue, representing nearly 20% growth year over year.
The segment’s growth was fueled by ongoing momentum for the cardiac ablation solutions unit, which includes Medtronic’s pulsed field ablation business. Cardiac ablation solutions grew year over year by 88%, including 139% growth in the U.S., driven by strong demand for the company’s Affera Sphere 9 PFA catheter. Medtronic said in earnings materials that it gained nine points of U.S. market share in PFA.
Medtronic’s continuing success in PFA comes at a time when one of its largest competitors — Boston Scientific — is struggling in the space. Boston Scientific has seen its PFA growth slow in recent quarters, contributing to the company lowering its forecast twice this year.
Martha told investors that the cardiac ablation solutions business is performing “exceptionally” well, and the company believes the business will grow at more than three times the market in its fiscal second quarter.
“Expect another good quarter in Q2, despite comps that are getting tougher and tougher,” CFO Thierry Piéton said on the call.
Medtronic raised its growth outlook for the full year based on its strong start. The company now expects organic revenue growth of 7.25% to 7.75%, compared with a forecast of 6.75% to 7.25% given on its fourth-quarter call in June.
Hugo update
On the call, Medtronic provided an update on the launch of its Hugo soft tissue robot, which received Food and Drug Administration clearance at the end of last year. The robot competes in the soft tissue robotics space, which is seeing an increase in competitors but is still dominated by longtime market leader Intuitive.
Martha said that Hugo will have been used in more than 50,000 cases and have 250 units installed by the end of Medtronic’s fiscal year. The company is also seeking more indications for the robot. In June, Medtronic said that it submitted for indications in general and gynecological procedures after being cleared for just urology procedures when the FDA authorized the system.
