What’s Driving Medtronic’s Revenue Growth?

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Medtronic’s (NYSE:MDT) revenue has grown around 6% over the last three years. This can be attributed to steady growth in its Restorative Therapies Group, Cardiac & Vascular Group, and Diabetes Group, partly offset by a decline in the Minimally Invasive Therapies Group, due to certain divestures. In this note we discuss the key sources of revenue for Medtronic, revenue trend, and forecast. You can view our interactive dashboard analysis ~ MDT Revenues: How Does Medtronic Make Money? ~ for more details. In addition, you can see more of our data for Healthcare companies here.

Medtronic Generates Its Revenue Primarily From Sales of Medical Devices. Its Largest Segments In Terms of Revenues Is Cardiac & Vascular Group, Which Accounted For 38% of Total Revenues In Fiscal 2019.

  • Cardiac & Vascular Group includes cardiac rhythm management devices for the diagnosis, treatment, and management of heart rhythm disorders and heart failure. It also includes coronary balloons, drug-coated balloons, and thoracic stent graft systems, among others.
  • Minimally Invasive Therapies Group includes devices and therapies for neurological problems and imaging systems among other products.
  • Restorative Therapies Group primarily includes devices and implants for conditions relating to the spine, musculoskeletal system, brain, and nerves.
  • Diabetes Group includes sales of diabetes management products, which primarily consist of insulin pumps, and continuous glucose monitoring systems.
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Medtronic’s Business Model

  • What Need Does It Serve?
    • Medtronic primarily serves the medical devices market. These medical devices are used primarily by various healthcare institutions in over 150 countries.
    • The company reports its revenues under four segments, Cardiac and Vascular Group, which includes Cardiac Rhythm & Heart Failure, Coronary & Structural Heart, Aortic & Peripheral Vascular sub-segments. Minimally Invasive Technologies Group, includes Surgical Solutions, Patient Monitoring and Recovery sub-segments, Restorative Therapies Group, which includes Spine, Neuromodulation, Neurovascular, Surgical Technologies, and Diabetes Group.
  • Who Pays To Medtronic?
    • Hospitals and clinics.
    • Various surgeons, including ENT surgeons, neurosurgeons, spinal surgeons, cardiovascular surgeons, orthopedic surgeons, among others.
    • Neurologists, pain management specialists, anesthesiologists, physiatrists, electrophysiologists, implanting cardiologists, heart failure specialists, diabetologists, endocrinologists, and internists.
  • Which Other Players Compete With Medtronic?
    • Other companies that manufacture medical devices, include Abbott Labs, Johnson & Johnson, Boston Scientific, and Intuitive Surgical, among others.

  • Medtronic’s total revenues grew from $28.8 billion in fiscal 2016 to $30.6 billion in fiscal 2019.
  • This represents an average annual growth rate of 2.0%.
  • We forecast the revenues to be around $33.6 billion by fiscal 2021, reflecting an average annual growth rate of 4.8%.

  • Cardiac & vascular group revenue grew from $10.2 billion in fiscal 2016 to $11.5 billion in fiscal 2019, and it could grow to $12.2 billion in fiscal 2021, primarily led by higher Evolut PRO valve sales.
  • Minimally invasive therapies group revenue declined from $9.6 billion in fiscal 2016 to $8.5 billion in fiscal 2019, but it could grow to $9.4 billion in fiscal 2021, The decline earlier was due to the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses. Looking forward, the growth will likely be led by higher demand for its patient monitoring products, along with sealing instruments, and advanced stapling products, a trend seen in the recent quarters.
  • Restorative therapies group revenue increased from $7.2 billion in fiscal 2016 to $8.2 billion in fiscal 2019, and it could grow to $9.1 billion in fiscal 2021, primarily led by higher demand for its brain and pain therapies, which have seen strong growth in the recent quarters, led by its Intellis spinal cord stimulation platform, and StealthStation surgical navigation systems.
  • Diabetes group revenue also increased from $1.9 billion in fiscal 2016 to $2.4 billion in fiscal 2019, and we estimate it to grow to $2.8 billion in fiscal 2021, benefiting from the expansion of 670G, along with expected launch of 780G, which is an advanced version of its hybrid closed-loop system.

 

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