Medtronic, Inc.’s spine business reported $765 million in revenue for the company’s first fiscal quarter of 2014. Revenue declined by 1% on a constant currency basis over the same quarter the previous year.
Core spine sales rose 1%, while biologics declined 11% on a constant currency basis.
Core Spine Growing
In a prepared statement on August 20, 2013, the company said the core spine business continues to show signs of stability, with growth driven by new products and procedures, as well as enabling technologies, including imaging, navigation, and powered surgical instruments.
Omar Ishrak, the company’s president and CEO, said there were a number of positive highlights in their spine business. “Core spine outperformed a relatively stable market as our new products and enabling technologies continued to make a difference. Our U.S core spine business, excluding balloon kyphoplasty grew 1% this quarter. In BMP [bone morphogenetic protein] (Infuse), the decline appeared to be tapering and we saw relative sequential stability again this quarter. The independent reviews of Infuse commissioned by Yale University were completed in Q1, providing further evidence that for approved indications, Infuse is a safe and effective treatment option.”
Gary Ellis, the company’s CFO said: excluding the kyphoplasty business, core spine grew by 3% globally. He added that the core spine market continues to see stability with a low single-digit price mix decline and flat procedure volumes. “Our new procedures and technologies, including our Solera posterior fixation system, Bryan Artificial Cervical Disk, Premium DBMs and AMT interbody devices are driving growth in our core spine business.”
Ellis also told analysts that the company is differentiating its spine business from the competition through enabling technologies leveraged from their surgical technologies business, including O-arm imaging, StealthStation navigation and POWEREASE power surgical instruments. “Hospitals are investing in our capital equipment for spine surgery as they seek clear value from improved surgical precision and more efficient procedures. We are still early in realizing this large differentiated opportunity in spine which is resulting in increased revenue and share for our spinal implants as well as solid growth of our capital equipment in our surgical technologies business.”
No Evidence of Cancer Risk for Infuse
Ishrak noted that later this fall, the company is expecting final publication of its retrospective analysis of a large, national payer database investigating the cancer incidents in the real world use of Infuse. “The manuscript of that study was recently published online, ahead of print by the journal Spine. The authors found no evidence that administration of BMP at the time of lumbar fusion surgery was associated with cancer risk. Looking ahead, if current trends continue, we expect our global FY’14 BMP revenue to be down in the mid single-digits which would be a significant improvement from the 15% decline last fiscal year.”
Spine Market Growing
Piper Jaffray analyst Mike Miksic said that based on his estimates and the other companies that have reported, the total global spine market grew between 2.5 – 3.0%, recovering from a dip in the first quarter of 2013 driven in part by selling day differences and seasonality.
China and Lots of Cash
Management said their Kanghui orthopedics business in China continues to perform well with its revenue growing in excess of 20% and offsetting the lost revenue from their former Weigao joint venture.
Just to throw in a little extra for the analysts, Ishrak told them that over the next five years, the company expects to generate over $25 billion of free cash flow.
