Medtronic reports 4% Q2 revenue drop due to hurricanes, divestiture to Cardinal Health: 5 key notes

Spinal Tech

Medtronic reported second quarter worldwide revenue dropped 4 percent due to the company's divestiture of the Patient Care, Deep Vein Thrombosis and Nutritional Insufficiency businesses to Cardinal Health.


Hurricane Maria also had a $55 million to $65 million impact on the company's second quarter revenue, hitting the minimally invasive therapies and restorative therapies group hardest. Second quarter revenue would have grown 4 percent on a comparable, constant currency basis.


"Our second quarter financial results are very encouraging, when considered in the context of a quarter in which we faced three hurricanes and the California wildfires," said CEO Omar Ishrak. "Hurricane Maria, in particular, significantly affected our manufacturing operations in Puerto Rico. Against this backdrop, we delivered a sequential acceleration in our organic revenue growth, as expected."


Here are five things to know from the report:


1. U.S. revenue represented 53 percent of the company's revenue, a 10 percent drop over the same period last year. Non-developed market revenue accounted for 32 percent of the company's revenue and increased 1 percent as reported. Emerging market revenue hit $1 billion in the quarter and was up 9 percent over the same period last year.


2. Second quarter spine revenue hit $659 million, a 1 percent decrease over the same period last year.


3. Medtronic's biologics business reported mid-single digit growth while the core spine business reported low-single digit revenue growth in the international markets, offset by mid-single digit declines in the U.S. as a result of Hurricane Maria.


4. Pain therapies reported $264 million in second quarter revenue, an 8 percent decrease over the same period last year. Interventional pain revenue growth was offset by decreases in spinal cord stimulation and pain pump revenue declines.


5. Medtronic expects 2018 fiscal year revenue to hit $275 million to $375 million, including a $155 million to $175 million positive impact in the third quarter of the fiscal year. The company expects constant currency revenue growth at 4 percent to 5 percent.


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