Summary
Medtronic plc (MDT) reported strong financial results for the third quarter and first nine months of fiscal year 2019, driven by significant growth in net sales and improved profitability. Net sales increased by 2% to $7.55 billion for the quarter and 3% to $22.41 billion for the nine months, compared to the prior year periods. This growth was broad-based across key segments, with notable strength in the Restorative Therapies Group and Diabetes Group, and solid performance in the Cardiac and Vascular Group. The company saw increased sales in both U.S. and international markets, particularly in emerging economies, indicating successful globalization efforts. A significant factor in the improved net income was the benefit from the U.S. Tax Cuts and Jobs Act, which lowered the company's effective tax rate. Despite ongoing investments in R&D and SG&A to support innovation and growth strategies, Medtronic demonstrated effective cost management, leading to enhanced operating profit. The company also continued to return value to shareholders through dividends and share repurchases, while maintaining a solid liquidity position.
Financial Highlights
54 data points| Revenue | $7.55B |
| Cost of Revenue | $2.27B |
| Gross Profit | $5.28B |
| SG&A Expenses | $2.60B |
| Operating Income | $1.54B |
| Interest Expense | $243.00M |
| Net Income | $1.27B |
| EPS (Basic) | $0.95 |
| EPS (Diluted) | $0.94 |
| Shares Outstanding (Basic) | 1.34B |
| Shares Outstanding (Diluted) | 1.35B |
Key Highlights
- 1Total net sales increased by 2% to $7.55 billion for the three months ended January 25, 2019, and by 3% to $22.41 billion for the nine months ended January 25, 2019, compared to the prior year periods.
- 2Net income attributable to Medtronic significantly improved, rising to $1.27 billion ($0.94 per diluted share) for the quarter and $3.46 billion ($2.54 per diluted share) for the nine months, primarily due to the impact of U.S. tax reform. This compares to a net loss attributable to Medtronic of $1.39 billion ($(1.03) per diluted share) for the same quarter last year.
- 3The Restorative Therapies Group showed strong growth, with net sales up 4% to $2.03 billion for the quarter and 6% to $5.97 billion for the nine months, driven by Brain Therapies, Specialty Therapies, and Pain Therapies divisions.
- 4The Diabetes Group also experienced robust growth, with net sales up 4% to $610 million for the quarter and 18% to $1.77 billion for the nine months, driven by demand for the MiniMed 670G system and Guardian Connect CGM.
- 5Operating profit increased to $1.54 billion for the quarter, up from $1.44 billion in the prior year, while for the nine months it stood at $4.32 billion, a decrease from $4.71 billion, impacted by prior year gains on divestitures and higher litigation charges.
- 6Medtronic generated strong free cash flow of $4.12 billion for the nine months ended January 25, 2019, an increase from $2.87 billion in the prior year period.
- 7The company repurchased 7.3 million shares for $673 million during the third quarter of fiscal year 2019, and has approximately $1.3 billion remaining under its share repurchase program.