Medtronic plc’s MDT Restorative TherapiesGroup (“RTG”) has been on a strong growth trajectory of late, courtesy of solid contribution from majority of the sub-segments.
We expect this strength to reflect in first-quarter fiscal 2019 results, which are scheduled to release on Aug 21, before the opening bell.
Click here to know how the company’s overall Q1 performance is expected to be.
RTGin the Spotlight
RTG consists of Spine, Brain Therapies, Specialty Therapies and Pain Therapies divisions. We note that management expects around 4% revenue growth in RTG business in fiscal 2019.
Further, the company is encouraged by the 6% organic growth recorded in the last reported quarter. Per management, strength in the Pain and Brain Therapies segments will continue to offset any adverse impact from the weakening spine market.
Consequently, the Zacks Consensus Estimate for RTG revenues of $1.90 billion indicates a rise of 5% from the year-ago quarter.
In the last reported quarter, the segment recorded improvement in sales, driven by low-double-digit growth in Brain Therapies and Pain Therapies, mid-single-digit growth in Specialty Therapies and low-single-digit growth in the Spine business. Let's see how things are shaping up in these sub-segments before first-quarter results.
Medtronic PLC Price and EPS Surprise
Medtronic PLC Price and EPS Surprise | Medtronic PLC Quote
Brain Therapies: In Brain Therapies, which now includes Neurovascular and Neurosurgery businesses, the company has been witnessing major developments. In the Neurovascular business, the company received solid contributions from the stroke portfolio in the last reported quarter and grew high-teens.
We encouragingly note that Medtronic announced the receipt of FDA approval for the Riptide Aspiration System in January. This adds a valuable product to the company’s Acute Ischemic Stroke (AIS) product portfolio benefit of which should get reflected in the yet-to-be-reported quarter. We believe this recent development will aid the Brain Therapies business.
The Neurosurgery business grew low double-digits on solid demand for StealthStation S8 Navigation systems, the Mazor X robotic guidance systems for spine surgeries and Visualase MRI-guided laser ablation system. Notably, in April, Medtronic had announced the CE Mark receipt and launch of the Visualase MRI-Guided Laser Ablation System in Europe. These trends are expected to be reflected in the to-be-reported quarter results.
Pain Therapies: The Pain Therapies division, which now includes Pain (Spinal Cord Stimulation and Drug Pumps) and Interventional Spine businesses, contributed encouragingly to the company’s fourth-quarter fiscal 2018 top line. Pain Therapies growth was led by mid-teens growth in the spinal cord stimulation business, including high-teens in the United States. Medtronic also witnessed solid uptake of Intellis platform for spinal-cord stimulation as well as Evolve workflow algorithm and Snapshot reporting.
In January, the company announced the receipt of FDA approval for a new clinician programmer for use with the SynchroMed II Intrathecal Drug Delivery system. Again, in April, Medtronic announced its U.S. launch of OptiSphere embolization spheres, a resorbable embolic platform, developed for embolization of hypervascular tumors.
In view of the company’s efforts to develop its Pain Therapies division,we believe that the solid trend will reflect in the to-be-reported quarter results as well.
Spine: Medtronic’s Spine division includes the Core Spine, BMP and Kanghui businesses. In the last reported quarter, the Spine business grew 1% better than the global spine market. Growth was led by high-single-digit growth in BMP, double-digit growth in Prestige LP Cervical Discs and strong uptake of the new SOLERA VOYAGER 5.5/6.0 fixation systems and ARTiC-L 3D printed titanium cage.
Per management, the combination of enabling technologies like imaging, navigation, powered instruments, nerve monitoring and Mazor Robotics with spine implants has spurred growth in this division.
Medtronic has been continuously forging ahead with initiatives to boost its Spine business. In this regard, in May, the company announced the launch of a titanium 3D printed platform — TiONIC Technology — which allows more complicated designs and integrated surface technologies for spine surgery implants. It also announced the SynergyTLIF workflow which enables a minimally invasive procedure with lesser intra-operative surgical steps for spinal surgery.
Weexpect encouraging top-line contributions from the Spine business in the first quarter.
Zacks Rank & Stocks to Consider
Medtronic currently carries a Zacks Rank #4 (Sell).
A few better-ranked stocks in the broader medical space are Amedisys, Inc. AMED, Intuitive Surgical ISRG and Inogen, Inc. INGN.
Amedisys’ expected long-term earnings growth rate is 18.9%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical’s long-term expected earnings growth rate is 14.7%. The stock carries a Zacks Rank #2 (Buy).
Inogen’s long-term expected earnings growth rate is 24.5%. The stock has a Zacks Rank #2.
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