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Medtronic (MDT) Q4 Earnings Beat Estimates, Margins Down
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Medtronic plc (MDT - Free Report) reported adjusted earnings per share (EPS) of $1.46 in fourth-quarter fiscal 2024, down 7.5% from the year-ago quarter’s figure. The figure beat the Zacks Consensus Estimate by 0.7%.
Without certain one-time adjustments — including restructuring and associated costs, amortization and acquisition-related costs, among others — GAAP EPS were 49 cents, down 44.3% from the year-ago quarter’s reported figure.
For the full year, adjusted earnings were $5.53 per share, up 4.5% from the year-ago period’s tally. The figure beat the Zacks Consensus Estimate by 6.3%.
Total Revenues
Worldwide revenues in the reported quarter grossed $8.59 billion, up 0.5% year over year on a reported basis and 5.4% on an organic basis. The top line exceeded the Zacks Consensus Estimate by 1.8%.
Total revenues for 2024 were $32.36 billion, up 3.6% from the year-ago period’s levels. The figure beat the Zacks Consensus Estimate by 0.5%.
The company's organic revenue results reflect broad-based growth across the company, with mid-single-digit or higher organic revenue growth in all four segments.
Segment Details
The company generates revenues from four major segments, namely Cardiovascular Portfolio, Medical Surgical Portfolio, Neuroscience Portfolio and Diabetes.
In the fiscal fourth quarter, Cardiovascular revenues declined 5.2% at CER to $3.13 billion.
Cardiac Rhythm & Heart Failure sales totaled $1.59 billion, up 1.3% year over year at CER. Revenues from Structural Heart & Aortic were down 20.1% at CER to $883 million. Coronary & Peripheral Vascular revenues were up 4.6% year over year to $660 million.
In Medical Surgical, worldwide sales totaled $2.19 billion, up 3.5% year over year at CER. The Surgical & Endoscopy revenues moved up 4.1%, while Acute Care & Monitoring revenues rose 1.2%.
In Neuroscience, worldwide revenues of $2.54 billion were up 5.6% year over year and 6.5% organic, with a high-single-digit increase in CST, a mid-single-digit rise in Neuromodulation and a low-single-digit increase in Specialty Therapies.
Revenues in the Diabetes group rose 10.9% at CER and 11.1% on organic to $660 million. The company registered low-double-digit growth in the U.S. market, driven by the continued launch of the MiniMed 780G system. Non-U.S. Developed markets grew high-single digits on continued MiniMed 780G system adoption and increased CGM attachment rates.
Margins
Gross margin in the reported quarter contracted 56 basis points (bps) to 64.6% on a 2.1% rise in the cost of revenues.
Research and development expenses rose 5.5% year over year at $675 million. Selling, general and administrative expenses rose 5.7% to $2.77 billion.
Adjusted operating margin contracted 251 bps year over year to 24.5%.
Dividend Increase
Effective May 22, 2024, the Medtronic board of directors approved an increase in Medtronic's cash dividend for the first quarter of fiscal year 2025, raising the quarterly amount to $0.70 per ordinary share. This represents an annual amount of $2.80 per ordinary share.
Medtronic has a consistent dividend-paying history, with the five-year annualized dividend growth being 7.07%.
Guidance
Medtronic issued fiscal 2025 guidance.
For fiscal 2025, organic revenue growth is expected to be 4-5%. The organic revenue growth guidance excludes the impact of foreign currency and revenues related to certain businesses reported as Other. Including Other revenues and the impact of foreign currency exchange, if recent foreign currency exchange rates hold, FY25 revenue growth on a reported basis is likely to be in the range of 2.4-3.7%.
The Zacks Consensus Estimate for the company’s fiscal 2025 worldwide revenues is pegged at $33.51 billion.
The full-year adjusted EPS is projected in the range of $5.40-$5.50 . The Zacks Consensus Estimate for the year’s adjusted earnings is $5.46.
Our Take
Medtronic recorded earnings and revenue beat in the fiscal fourth quarter. Broad-based, durable growth across the company, including Cranial & Spinal Technologies, Diabetes, Cardiac Pacing and Surgical businesses looks encouraging. The company is gaining momentum as the company enters new product cycles across many high-growth markets.The company received FDA approval for the Evolut FX+ TAVR system in March 2024. Within Diabetes, Non-U.S. Developed markets grew high-single digits on continued MiniMed 780G system adoption and increased CGM attachment rates
However, macroeconomic headwinds related to persistent inflation and unfavorable foreign currency movements continue to challenge the company’s earnings performance.
Zacks Rank & Other Key Picks
Medtronic currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are Medpace (MEDP - Free Report) , ResMed (RMD - Free Report) and Encompass Health Corporation (EHC - Free Report) .
Medpace, sporting a Zacks Rank #1 (Strong Buy), reported first-quarter 2024 EPS of $3.20, beating the Zacks Consensus Estimate by 30.6%. Revenues of $511 million increased 17.7% from last year’s comparable figure. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace has an estimated 2024 earnings growth rate of 26.5% compared with the industry’s 12.3%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 12.8%.
ResMed, sporting a Zacks Rank #2, reported first-quarter 2024 EPS of $2.13, which topped the Zacks Consensus Estimate by 10.9%. Revenues of $1.20 billion surpassed the Zacks Consensus Estimate by 1.9%.
RMD has an estimated fiscal 2024 earnings growth rate of 17.9% compared to the industry’s 15.7%. In each of the trailing four quarters, the company delivered an average earnings surprise of 2.8%.
Encompass Health, carrying a Zacks Rank #2, reported first-quarter 2024 adjusted EPS of $1.12, which surpassed the Zacks Consensus Estimate by 20.4%. Net operating revenues of $1.3 billion topped the Zacks Consensus Estimate by 3.6%.
EHC has an estimated long-term earnings growth rate of 15.6% compared with the industry’s 11.7% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.7%.
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Medtronic (MDT) Q4 Earnings Beat Estimates, Margins Down
Medtronic plc (MDT - Free Report) reported adjusted earnings per share (EPS) of $1.46 in fourth-quarter fiscal 2024, down 7.5% from the year-ago quarter’s figure. The figure beat the Zacks Consensus Estimate by 0.7%.
Without certain one-time adjustments — including restructuring and associated costs, amortization and acquisition-related costs, among others — GAAP EPS were 49 cents, down 44.3% from the year-ago quarter’s reported figure.
For the full year, adjusted earnings were $5.53 per share, up 4.5% from the year-ago period’s tally. The figure beat the Zacks Consensus Estimate by 6.3%.
Total Revenues
Worldwide revenues in the reported quarter grossed $8.59 billion, up 0.5% year over year on a reported basis and 5.4% on an organic basis. The top line exceeded the Zacks Consensus Estimate by 1.8%.
Total revenues for 2024 were $32.36 billion, up 3.6% from the year-ago period’s levels. The figure beat the Zacks Consensus Estimate by 0.5%.
The company's organic revenue results reflect broad-based growth across the company, with mid-single-digit or higher organic revenue growth in all four segments.
Segment Details
The company generates revenues from four major segments, namely Cardiovascular Portfolio, Medical Surgical Portfolio, Neuroscience Portfolio and Diabetes.
In the fiscal fourth quarter, Cardiovascular revenues declined 5.2% at CER to $3.13 billion.
Cardiac Rhythm & Heart Failure sales totaled $1.59 billion, up 1.3% year over year at CER. Revenues from Structural Heart & Aortic were down 20.1% at CER to $883 million. Coronary & Peripheral Vascular revenues were up 4.6% year over year to $660 million.
In Medical Surgical, worldwide sales totaled $2.19 billion, up 3.5% year over year at CER. The Surgical & Endoscopy revenues moved up 4.1%, while Acute Care & Monitoring revenues rose 1.2%.
In Neuroscience, worldwide revenues of $2.54 billion were up 5.6% year over year and 6.5% organic, with a high-single-digit increase in CST, a mid-single-digit rise in Neuromodulation and a low-single-digit increase in Specialty Therapies.
Medtronic PLC Price, Consensus and EPS Surprise
Medtronic PLC price-consensus-eps-surprise-chart | Medtronic PLC Quote
Revenues in the Diabetes group rose 10.9% at CER and 11.1% on organic to $660 million. The company registered low-double-digit growth in the U.S. market, driven by the continued launch of the MiniMed 780G system. Non-U.S. Developed markets grew high-single digits on continued MiniMed 780G system adoption and increased CGM attachment rates.
Margins
Gross margin in the reported quarter contracted 56 basis points (bps) to 64.6% on a 2.1% rise in the cost of revenues.
Research and development expenses rose 5.5% year over year at $675 million. Selling, general and administrative expenses rose 5.7% to $2.77 billion.
Adjusted operating margin contracted 251 bps year over year to 24.5%.
Dividend Increase
Effective May 22, 2024, the Medtronic board of directors approved an increase in Medtronic's cash dividend for the first quarter of fiscal year 2025, raising the quarterly amount to $0.70 per ordinary share. This represents an annual amount of $2.80 per ordinary share.
Medtronic has a consistent dividend-paying history, with the five-year annualized dividend growth being 7.07%.
Guidance
Medtronic issued fiscal 2025 guidance.
For fiscal 2025, organic revenue growth is expected to be 4-5%. The organic revenue growth guidance excludes the impact of foreign currency and revenues related to certain businesses reported as Other. Including Other revenues and the impact of foreign currency exchange, if recent foreign currency exchange rates hold, FY25 revenue growth on a reported basis is likely to be in the range of 2.4-3.7%.
The Zacks Consensus Estimate for the company’s fiscal 2025 worldwide revenues is pegged at $33.51 billion.
The full-year adjusted EPS is projected in the range of $5.40-$5.50 . The Zacks Consensus Estimate for the year’s adjusted earnings is $5.46.
Our Take
Medtronic recorded earnings and revenue beat in the fiscal fourth quarter. Broad-based, durable growth across the company, including Cranial & Spinal Technologies, Diabetes, Cardiac Pacing and Surgical businesses looks encouraging. The company is gaining momentum as the company enters new product cycles across many high-growth markets.The company received FDA approval for the Evolut FX+ TAVR system in March 2024. Within Diabetes, Non-U.S. Developed markets grew high-single digits on continued MiniMed 780G system adoption and increased CGM attachment rates
However, macroeconomic headwinds related to persistent inflation and unfavorable foreign currency movements continue to challenge the company’s earnings performance.
Zacks Rank & Other Key Picks
Medtronic currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are Medpace (MEDP - Free Report) , ResMed (RMD - Free Report) and Encompass Health Corporation (EHC - Free Report) .
Medpace, sporting a Zacks Rank #1 (Strong Buy), reported first-quarter 2024 EPS of $3.20, beating the Zacks Consensus Estimate by 30.6%. Revenues of $511 million increased 17.7% from last year’s comparable figure. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace has an estimated 2024 earnings growth rate of 26.5% compared with the industry’s 12.3%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 12.8%.
ResMed, sporting a Zacks Rank #2, reported first-quarter 2024 EPS of $2.13, which topped the Zacks Consensus Estimate by 10.9%. Revenues of $1.20 billion surpassed the Zacks Consensus Estimate by 1.9%.
RMD has an estimated fiscal 2024 earnings growth rate of 17.9% compared to the industry’s 15.7%. In each of the trailing four quarters, the company delivered an average earnings surprise of 2.8%.
Encompass Health, carrying a Zacks Rank #2, reported first-quarter 2024 adjusted EPS of $1.12, which surpassed the Zacks Consensus Estimate by 20.4%. Net operating revenues of $1.3 billion topped the Zacks Consensus Estimate by 3.6%.
EHC has an estimated long-term earnings growth rate of 15.6% compared with the industry’s 11.7% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.7%.