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What Is Medtronic Guiding for Its Business Segments in 2020?

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Revenue growth guidance

On its fourth-quarter earnings conference call, Medtronic (MDT) guided for YoY (year-over-year) organic revenue growth of 4.5%–5% for its minimally invasive therapies group, 4%–4.5% for its restorative therapies group, 6%–8% for its diabetes group, and +/- 2% for its cardiac and vascular group in fiscal 2020.

In the first quarter of fiscal 2020, the company expects its minimally invasive therapies group and restorative therapies group to report YoY organic revenue growth of 3%–3.5%, while the diabetes group is expected to grow its revenues by +/- 5%. The company has guided for flat revenue performance for its cardiac and vascular group segment in the first quarter of fiscal 2020.

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Restorative therapies group’s revenue performance

In the fourth quarter, Medtronic’s spine business reported revenue of $691 million, a YoY fall of 1.1% on a reported basis but a 0.7% rise on a constant-currency basis. The company reported sales of $737 million for its brain business, reflecting YoY rises of 9.7% on a reported basis and 12.8% on a constant-currency basis. The company reported sales of $445 million for its specialty business, YoY rises of 5.0% on a reported basis and 6.8% on a constant-currency basis. Finally, the company reported $342 million sales in its pain business, reflecting YoY rises of 3.0% on a reported basis and 5.4% on a constant-currency basis. The spine, brain, specialty, and pain businesses accounted for 31%, 33%, 20%, and 16%, of Medtronic’s total restorative therapies group revenue, respectively.

According to its fiscal 2019 fourth-quarter earnings conference call, if the company considers its spine business’s revenue in the same manner in which its competitors report, it would need to include the sales of the spine-related enabling technologies it currently records under its neurosurgery business within its brain division. Considering this adjustment, Medtronic’s spine-related revenue rose 5.6% YoY in the fourth quarter.

According to its fiscal 2019 fourth-quarter earnings investor presentation, Medtronic reported an 11% YoY rise in its core spine and enabling technology sales driven by the successful implementation of its surgical synergy strategy. The company expects its enabling technologies, which include navigation, robotics, surgical instruments, and imaging, to further drive the uptake of its spinal implants.

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