Aided by the impressive performance of its key business segments, medical device maker Medtronic (MDT) reported a 6% increase in second-quarter revenues, which also outpaced the estimates. The resultant earnings growth and the company’s upbeat guidance drove up its stock in the early trading hours Tuesday.
Earnings, adjusted for special items, grew 14% to $1.22 per share. Analysts were looking for a slower growth. Meanwhile, net income attributable to shareholders dropped to $1.12 billion or $0.82 per share in the October quarter from $2.02 billion or $1.48 per share in the year-ago quarter.
Revenues climbed 6.1% annually to $7.48 billion, exceeding Wall Street estimates. Organic revenue grew 7.5%. In the US market, revenues moved up 8.3%, while the non-US developed market registered a 1.8% growth. Emerging market revenue was 7.3% higher compared to the second quarter of 2018.
Revenues of the Cardiac and Vascular Group rose 3.1% year-on-year and those of Minimally Invasive Therapies Group moved up 4.9%. Restorative Therapies Group revenue was 7% higher compared to last year, while Diabetes Group surged 26%.
“This was an outstanding quarter for Medtronic. We are executing on multiple fronts, resulting in robust top-line growth, solid margin expansion, and increasing free cash flow. Yet, even more exciting than our results this quarter is the progress we are making on our new product pipeline, which is stronger than at any time in our company’s history,” said CEO Omar Ishrak.
The company revised up its full-year 2019 organic revenue growth outlook to the range of 5% to 5.5% from the earlier outlook of 4.5-5%. Maintaining the adjusted earnings per share outlook in the $5.10-$5.15 per share range, the management said it expects to absorb incremental expenses in the later part of the year, mainly those related to foreign exchange, China tariffs and the pending buyout of medical robotics company Mazor.
Medtronic shares reached a peak in mid-September but pared a part of the grains in the following weeks. The stock grew 8% since the beginning of the year, outperforming the S&P 500, and continued the uptrend after Tuesday’s earnings report.