By the numbers
FY2024 Q2 revenue: $7.98 billion
5.3% year-over-year growth
Medical Surgical revenue: $2.14 billion
7% year-over-year growth
Diabetes revenue: $610 million
9.7% year-over-year growth
Medtronic CEO Geoff Martha was the latest medtech executive to downplay the effects of weight loss drugs on the industry, telling investors on a Tuesday morning earnings call that the recent jump in interest for the medications will not slow the company’s growth.
Weight loss drugs have been a hot topic this earnings season, with analysts questioning companies across the industry about how the medications will impact their businesses. The questions come after stock prices were under pressure earlier in the year.
Martha attempted to allay investors’ concerns even before the Q&A portion of the company’s earnings call, saying that Medtronic does not expect an impact on its growth in the near or long term. Regarding bariatric surgery, the CEO said that there is likely to be little impact as patients do not typically remain on the drugs for more than a year, adding that the weight loss medications may lead to new patients considering surgery.
“We believe the current headwinds on U.S. bariatric procedures will stabilize over the next several quarters and return to growth by calendar year 2025, and this is modest and manageable within our broader diversified surgical business,” Martha told analysts on the earnings call.
Medtronic doesn’t expect a meaningful hit to its diabetes business either, Martha said, as its customers are primarily Type 1 patients. He explained that the penetration rates for insulin pumps in the Type 2 market are so low that “even using aggressive GLP-1 modeling assumptions, we don’t see any meaningful change in our diabetes growth outlook through 2030.”
Laura Mauri, chief scientific, medical and regulatory officer, said that Novo Nordisk’s recent trial results of Wegovy, called the SELECT study, did not change Medtronic’s expectations. She said there would be a “negligible” impact on the growth of cardiovascular procedures.
Environment stabilizing
Much like their medtech peers, Medtronic executives said that the economic environment last quarter was fairly stable after years of disruption and uncertainty from COVID-19 surges.
“The markets are pretty stable, especially relative to what we’ve seen over the last couple of years, with procedures back to normal growth,” Martha said. “The staffing issues that were hurting the procedural growth are more or less under control.”
He added that pricing and the supply chain have both been more stable as well.
CFO Karen Parkhill said the company had a strong quarter, regardless of the month. She added that the first weeks of the current quarter have been trending well and are in line with expectations.
Medtronic continued to produce year-over-year growth in its 2024 fiscal year, reporting second-quarter sales growth of 5% to $7.98 billion. The company more than doubled its net income year over year last quarter to $911 million, after reporting a 15% year-over-year decrease in its fiscal first quarter.
Martha noted some improvement in transcatheter aortic valve replacement (TAVR) procedures, even though the company grew below the market at mid-single-digits last quarter. While U.S. TAVR procedures declined slightly year over year, they grew 4% sequentially. Medtronic also said TAVR procedures had high-single-digit growth in Europe and solid growth in Japan.
Meanwhile, the company’s diabetes unit continues to rebound from safety issues over the past several years, which delayed key product releases. Martha said Medtronic expects to return to year-over-year U.S. sales growth in the back half of its fiscal year.
Medtronic raised its revenue growth forecast from 4.5% to 4.75% due to a solid first half of its fiscal year.