Earnings Highlights: Medtronic’s Fiscal 1Q18 Results



Medtronic’s fiscal 1Q18 results

After Medtronic (MDT) announced its fiscal 1Q18 results on August 22, 2017, its stock fell 2% from the previous day and closed at ~$81.76. Medtronic recorded revenues of $7.4 billion in fiscal 1Q18, falling short of Wall Street analysts’ estimates of $7.5 billion. The company registered EPS (earnings per share) of $1.12, surpassing analysts’ estimates of $1.08 per share.

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Earnings highlights

Medtronic’s revenues registered ~3% YoY (year-over-year) growth on a reported basis. Its peers Becton, Dickinson and Co. (BDX), Abbott Laboratories (ABT), and Zimmer Biomet Holdings (ZBH) recorded YoY revenue growth of around -5.2%, 24.5%, and 1.0%, respectively, in their recently ended quarters.

Global IT disruption in June 2017 and sensor supply constraints due to higher-than-expected demand were recorded as temporary drags on Medtronic’s revenues. However, underlying business strength, stable end markets, and diversification drove the company’s sales.

Medtronic recorded strong margin improvements in fiscal 1Q18. Combined with tax benefits in the quarter, these improvements translated into significant earnings leverage. Medtronic also closed the acquisition of Cardinal Health this quarter. Also, the company divested a portion of its Patient Monitoring and Recovery division under its MITG (Minimally Invasive Therapies Group) business.

For the company’s fiscal 1Q18 earnings details, read Medtronic: A Post-1Q18 Checkup. Investors interested in gaining broad-based exposure to Medtronic can invest in the iShares Core S&P 500 ETF (IVV), which holds ~0.52% of its total portfolio in MDT.

Series focus

In this series, we’ll discuss Medtronic’s (MDT) major headwinds in fiscal 1Q18, their possible impact in the quarters ahead, and the company’s margin expansion. We will also look at the company’s key growth strategies, emerging market position, shareholder value creation plans, and product pipeline. 

We’ll also examine Medtronic’s outlook for fiscal 2Q18 and fiscal 2018. Also, we’ll look at the updates related to its recently closed divestiture to Cardinal Health.

Next, let’s look at Medtronic’s Diabetes segment’s headwinds that could impact the company’s performance for the rest of fiscal 2018.


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