Medtronic’s Latest Quarterly Results Impress, Boost ETF

Medtronic's Latest Quarterly Results Impress, Boost ETF

It’s been a busy week for Medtronic (NYSE:MDT), which has put out three different press releases since Sunday. 

The world’s largest medical technology company said on November 16 that new data supports the clinical and economic value of its cardiac resynchronization therapy devices, and the next day announced that both it and Covidien (NYSE:COV), which it plans to acquire, have scheduled shareholder meetings in connection with the purchase.

However, what really caught investors’ attention was the Tuesday release of Medtronic’s financial results for the second quarter of the 2015 fiscal year, which came to an end on October 24, 2014.

The company said that during the period its worldwide revenue came to an impressive $4.366 billion, up from $4.194 billion in the year-ago quarter. US revenue increased 5 percent to hit $2.456 billion, while international revenue came to $1.91 billion — that’s a 5-percent rise on a constant currency basis, or 3 percent as reported. Finally, emerging market revenue was $554 million, an increase of 12 percent on a constant currency basis, or 10 percent as reported.

A Reuters article notes that what pushed revenue up was new products, such as a miniature implantable diagnostic heart monitor called Reveal and the CoreValve replacement heart valve.

Meanwhile, Q2 GAAP net earnings were $828 million, or $0.83 per diluted share. Those numbers are down 8 and 7 percent from Q2 2014, respectively, but according to Medtronic the fall is “a result of a $100 million pre-tax charitable cash donation” that it made to its Medtronic Foundation.

Commenting on the results, Omar Ishrak, chairman and CEO of Medtronic, said, “[o]ur second quarter performance was strong and well balanced across our businesses and geographies. Revenue growth was at the upper end of our full-year revenue outlook and within our mid-single digit baseline goal, reflecting the strong execution of our global organization.”

Market watchers also seem pleased with the company’s results — Medtronic reached a new 52-week high on Tuesday, ending the day up 4.74 percent, at $72.47. Praising the company, Reuters’ Lisa Bernhard said in a video that its “quarterly profit [was] in line with expectations,” adding that it “raised the low end of its full-year revenue growth forecast and said its merger with Covidien … is also on track to close in 2015.”

The confirmation of the merger is significant, according to Reuters, because changes in US tax rules “aimed at curbing a spate of so-called tax inversion acquisitions” had caused some investors to worry that it would not go through.

A final plus regarding Medtronic’s results is that they likely partially spurred Tuesday’s 1.61-percent rise in the Health Care SPDR ETF (ARCA:XLV). That said, Bernhard believes news about the coming merger between Actavis (NYSE:ACT) and Allergan (NYSE:AGN) probably also played a role.

Nevertheless, all of the news from Medtronic is certainly good for investors, as well as those interested in the healthcare and life science industries as a whole. Moving forward it will be interesting to watch for the completion of Medtronic’s Covidien acquisition.


Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 

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