Diversified Growth Has Boosted MDT’s Cardiac and Vascular Segment



Cardiac and vascular segment

In the first quarter of fiscal 2018, Medtronic (MDT) reported revenues close to $2.6 billion for its cardiac and vascular (or CVG) group, which is 5% year-over-year (or YoY) growth on a reported basis and 6% YoY growth on an operational basis. The company’s CVG group is further organized into three segments:

  • Cardiac Rhythm & Heart Failure Disease Management (or CRHF)
  • Coronary & Structural Heart Disease Management (or CSH)
  • Aortic & Peripheral Vascular Disease Management (or APV)

The above diagram gives a snapshot of Medtronic’s cardiac and vascular group differentiated across business units and then further categorized across therapy types. The key customers of the company’s cardiovascular products are electrophysiologists, vascular surgeons, interventional cardiologists, radiologists, heart failure specialists, cardiovascular and cardiothoracic surgeons, and implanting cardiologists. With its broad and diversified product portfolio, the company is competing effectively with other cardiovascular device players such as Abbott Laboratories (ABT), Boston Scientific (BSX), and Edwards Lifesciences (EW).

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Segmental performance

In 1Q18, Medtronic’s CRHF segment reported revenues close to $1.4 billion, which is 4% YoY growth on a reported basis and 5% YoY growth on an operational basis. In this quarter, the CSH segment reported revenues of around $817 million, which is 7% YoY growth on a reported basis and 8% YoY growth on an operational basis. Finally, the APV segment reported revenues close to $439 million in 1Q18, which is YoY growth of 4% on a reported basis and 5% on an operational basis. The robust growth across these segments is attributed to solid demand for the company’s multiple products including transcatheter valves, left ventricular assist devices (or LVADs), transcatheter pacing systems, catheter ablation for atrial fibrillation, atherectomy, insertable diagnostics, and drug-coated balloons.

If Medtronic continues to witness rapid uptake of its cardiovascular products, it could have a favorable impact on its stock as well as the Vanguard Total Stock Market ETF (VTI). Medtronic makes up about 0.43% of VTI’s total portfolio holdings.

In the next article, we’ll discuss growth prospects for the company’s CRHF segment in greater detail.


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