Medtronic brought the medtech earnings season to a close Tuesday with a set of results that echoed the patchy, incomplete but still faster-than-expected recovery of medical device sales seen across the industry despite the ongoing pandemic. Yet, the financials feature points of divergence from rivals, including a high-single-digit drop in sales related to transcatheter aortic valve replacement (TAVR).

The Medtronic financial year is slightly out of step with those of other medtech companies, making it difficult to directly compare its performance to competitors. Medtronic's last quarter, the second of its fiscal year, ended on Oct. 30. Most other medtech companies closed their quarters on Sept. 30.  

With that caveat, the results still offer a look at how Medtronic is faring in key, competitive markets. Currently, the rapid growth of TAVR make it among the most important markets. After seeing TAVR sales fall 12% in the second quarter, Edwards Lifesciences’ franchise returned to growth in its most recent results, rising 6% year on year. The growth set expectations for Medtronic's TAVR business.

Medtronic reported a high-single-digit decline in TAVR sales in its results this week, contributing to a 13% decline in coronary and structural heart revenues. Despite seeing sales contract at a time when its chief rival grew, Medtronic estimated it held share in the third quarter versus the prior quarter. 

An analyst picked up on the apparent contradiction, leading Medtronic EVP Michael Coyle to explain that moving "customers on to consignment who essentially want to hold inventories" and away from doing bulk purchasing accounts for the difference between sales and market share. 

"If you look year-over-year, our hospital-held inventories of TAVR product are probably down around $25 million. When you correct for that the year-over-year comparisons we're essentially flat in terms of our global TAVR market," Coyle said, estimating the overall TAVR market was up about 2% in the quarter.

Medtronic sees opportunities to grow share in the coming quarters. Boston Scientific's decision to discontinue its Lotus Edge TAVR system eliminates the third, albeit smaller, challenger for the market, giving Edwards and Medtronic the chance to gobble up business. A note from Jefferies said Medtronic "should disproportionately benefit in the $125mn market up for grabs."

Coyle said Boston Scientific's action is the most important opportunity to gain share but not the only one available to Medtronic.

The Medtronic management team also expects to win share from Edwards. Coyle pointed to perceived hemodynamic benefits over Edwards' device that Medtronic is assessing in a head-to-head clinical trial to argue that share gains are possible. Medtronic is also looking to China as a long-term source of TAVR growth, highlighting the value of gaining a foothold in the country to explain its willingness to accept a lower price for its drug-eluting stents in a national tender. 

"This is going to be the tip of the spear, if you will, for more aggressively taking our commercial organization into the lower tier cities, the rural cities in China, tier two, tier three. It will also help us pull through other products around coronary today, plus in the future with TAVR," Medtronic CEO Geoff Martha told investors. Edwards' TAVR device is approved in China but it has a narrower portfolio than Medtronic and expects it to take "significant time" to grow the business. 

Neuromod, spine businesses

Medtronic's results also provided insights into how its neuromodulation and spine units are faring. In the recent quarter, neuromodulation sales fell 3% on an organic basis as mid-single-digit declines in pain therapy sales offset low-single-digit growth in deep brain stimulation. Boston Scientific also saw its neuromodulation sales fall 3% in its most recent results. 

However, other neuromodulation businesses performed better. Sales at Abbott's neuromodulation franchise were flat in its third quarter. Nevro, a neuromodulation specialist, grew its sales by 8%, leading CEO Keith Grossman to claim the introduction of Senza Omnia has enabled the company to make further market share gains in the spinal cord stimulator (SCS) sector.   

Medtronic also estimated it gained market share in the quarter, only for "headwinds in replacements given where we are in our cycle" to offset the gains. U.S. sales of Medtronic's new SCS implants grew in the high single digits and trialing increases were "strong." Medtronic claimed most of its new implant and trialing growth is coming from competitive accounts. 

In spine, another competitive market targeted by Medtronic, Martha estimated the company held share globally, with a slight gain in the U.S. Still, core spine sales fell in the low single digits as growth in the U.S. was more than offset by weakness overseas. 

Spine specialist NuVasive reported a high-single-digit increase in international sales, enabling it to return to growth globally. Stryker called out a "very strong performance" for its international spine business in a quarter in which its neurotechnology and spine unit grew 4%. CEO Kevin Lobo attributed the improved performance of the spine business to progress with the "tough integration" of K2M, which Stryker bought for $1.4 billion, and the introduction of new products.