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Analyzing Medtronic’s Sales Growth by Segment in 1Q17

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1Q17 performance by segment

Medtronic (MDT) operates under four segments: Cardiac and Vascular Group (or CVG), Minimally Invasive Therapies Group (or MITG), Restorative Therapies Group (or RTG), and Diabetes Group. To learn more about these segments, read An Investor’s Guide to Medtronic: Key Company Overview.

Medtronic’s CVG, MITG, and RTG segments witnessed YoY (year-over-year) revenue declines of approximately 2%, 1%, and 2%, respectively, on a reported basis. However, the company’s diabetes segment reported a rise in YoY revenues amounting to approximately 2% on a reported basis. Constant-currency sales, however, met the company’s expectations.

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Key factors impacting sales

The decline in revenues from Medtronic’s CVG, MITG, and RTG segments was triggered by the company’s market share loss in pacemakers, defibrillators, and the drug-eluting stents market to the company’s key competitor, Boston Scientific (BSX). BSX launched MRI-safe devices and Synergy stents, which presented some stiff competition to Medtronic in 1Q17. However, Medtronic’s diabetes pumps continued to drive diabetes segment sales. The company expects to witness low double-digit growth in diabetes segment sales in 2016. St. Jude (STJ) and Edwards Lifesciences (EW) are some of the other major competitors offering stiff competition through competitive launches. The iShares S&P 500 Growth ETF (IVW) invests ~0.71% of its portfolio in Medtronic.

Medtronic’s heart valve therapies business grew in double digits when the overall CVG segment sales declined. This growth was driven by the growing TAVR (transcatheter aortic valve replacement) market. Medtronic continued to gain market share in Europe and launched CoreValve in Japan. Aortic and peripheral vascular sales also witnessed YoY growth in 1Q17, amounting to approximately 2%, driven by the continued momentum of its Heli-FX EndoAnchor, its IN.PACT Admiral drug-coated balloon (or DCB), and its other strong product launches.

For more about the factors driving Medtronic’s growth by segment, read Health Check: What Could Be in the Cards for Medtronic.

Next, let’s discuss the key drivers of Medtronic’s 1Q17 diabetes segment sales.

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