Dive Brief:

• A number of major medtech companies used this week's J.P. Morgan Healthcare Conference as an opportunity to present new data and insight on the upcoming fiscal year.
• Boston Scientific CEO Mike Mahoney spoke Tuesday following early release of the company's fourth quarter and full fiscal year 2018 earnings, which were $2.56 billion and $9.82 billion, respectively, also touting the six out of seven market segments that his company grew faster than peer groups in 2018. Boston Scientific's target for 2019 and 2020 includes a "double-digit goal" for adjusted EPS growth and 35% company investment in high-growth markets by 2021.
• The day before, Medtronic stock was down more than 6% at market close following a presentation by CEO Omar Ishrak and colleagues. While Ishrak and his team maintained Medtronic's guidance for fiscal year 2019, CFO Karen Parkhill noted that recently proposed tax regulations "more punitive" than the company had anticipated could impact earnings per share growth during fiscal year 2020. Still, executives talked up the company's pipeline prospects and predicted above-trend EPS growth in fiscal years 2021 and 2022 — if 2020 does turn out to be a down year for that metric.

Dive Insight:

Pipelines were a preferred talking point for medtech executives at JPM.

"This business is about innovation and pipeline. I believe we have a stronger and more compelling pipeline and innovation cadence at Boston than we ever have looking forward," Mahoney said, citing the company's focus on R&D and tuck-in acquisitions. He shed light on a few of those acquisitions, calling Boston Scientific's recent deal with Millipede a "smart shot on goal" for mitral repair, and that the pending $4.2 billion acquisition of BTG "continues to expand this trend of cancer for Boston."

"Whether it be Augmenix, whether it be nVision, the work we’re doing in endoluminal surgery, and now with BTG, we’re building an impressive portfolio of both diagnostic and therapeutic capabilities in cancer detection, be it in liver, kidney, or lung, which we believe is the most compelling application going forward," he said. The Boston Scientific team highlighted TAVR and reusable scopes as additional areas to watch in the coming year.

"BSX enters 2019 with a much cleaner balance sheet, with no major calls to cash and the ability to continue being nimble from an M&A perspective and perhaps get even more aggressive in cash deployment," Leerink analysts wrote to investors in the hours leading up to the presentation. "To us, BSX remains one of the strongest and safest "growth" stories in large-cap MedTech, with top-tier and above-market sales and EPS growth that is likely sustainable for the foreseeable future."

Whereas Boston Scientific announced a likely tax rate of about 13% going forward, Medtronic's Parkhill indicated that her company's operational tax rate for fiscal year 2019 is about 15%. Parkhill said that fiscal year 2020 EPS growth could dip below the company's long-range target of 8%. A Medtronic spokesperson listed potentially impactful proposed regulations as fall 2018 updates related to global intangible low-taxed income, foreign tax credit regulations, base erosion and anti-tax avoidance regulations and hybrid regulations.

Still, Ishrak said Medtronic is "very confident" in maintaining its guidance for fiscal year 2019, which includes 5.0 to 5.5% revenue growth and adjusted EPS of $5.10 to $5.15, and that the 8% long-range EPS growth goal remains realistic.

A Monday note to investors from SunTrust Robinson Humphrey analysts also touched on Medtronic's softened growth guidance on its cardiac and vascular group specifically, largely due to slowdown in the left ventricular assist device market, which means 2019 total reported revenue growth is more likely to hit the mid-range of guidance within the projected 5.0% to 5.5% range.

Echoing themes from Medtronic's most recent earnings call in November, Ishrak called Medtronic's pipeline "as strong as it’s ever been, and stronger," and highlighted recent product launches like the Mazor X Stealth Edition robot for spinal surgery as emerging sources of growth for the company. Leadership cited the company's Minimally Invasive Therapies Group and Restorative Therapies Group as strong performers to offset factors outside of the company's control like tax regulations, international tariffs and increasing competition in the cardiovascular and diabetes spaces.

Boston Scientific will host a full earnings call Feb. 6, while Medtronic is expected to release its third quarter earnings for fiscal year 2019 on Feb. 19.

Other medtech players on the JPM schedule this week include Zimmer Biomet, Thermo Fisher Scientific and BD, as well as diagnostics giants Quest and LabCorp.