Dive Brief:

• Medtronic is in "a way better position" than anticipated three months ago, CEO Geoff Martha said on the company's quarterly earnings call Tuesday, citing sequential monthly improvement across business lines following the April trough in procedure volumes experienced across the medtech sector.
• The company beat analysts' top and bottom line expectations during its fiscal first quarter, recording a 17% decline in organic revenue to approximately $6.51 billion. The Restorative Therapies Group, which houses Medtronic's spine, brain and pain therapies businesses, took the biggest hit in the May through July period, with revenue down nearly 15% as reported and in the "low-twenties" on an organic basis.
• After announcing pandemic-driven delays to its soft tissue robot during its last earnings call, Medtronic said Tuesday it's worked to mitigate impact to that timeline and now expects to file for a CE mark and a U.S. investigational device exemption in the first quarter of calendar year 2021.

Dive Insight:

CEO Geoff Martha, in his second earnings call since taking the top role, teased upcoming structural change at the medtech and acknowledged areas where the company wants to go on the offensive in taking market share. Speaking to investors by video, he talked up efforts to win share where it lags, like diabetes, and in new areas with its upcoming soft tissue surgical robot launch.

Medtronic will elaborate on these plans during a virtual investor day Oct. 14, which Martha said will feature more on its pipeline and actions to "become less bureaucratic." He said one aim is to help Medtronic compete better against more specialized medtechs.

Points of strength during the recent quarter included increasing its share in the spinal surgery market via robotics, imaging and navigation technologies, as well as adding new TAVR customers. During the same period, Medtronic lost share in the deep brain stimulation and pelvic health markets, Martha reported.

The company disclosed that its three acquisitions announced so far this year — Digital Surgery, Medicrea and Companion Medical — have a combined total consideration of about $1 billion. Martha confirmed the company currently has its sights solely set on bolt-on M&A rather than larger takeouts, but noted that a smaller deal could qualify as up to $1 billion.

Medtronic declined to share revenue targets associated with the most recent of those deals, the planned buyout of connected insulin pen maker Companion Medical, but management specified that it sees its potential market, the number of people on multiple daily injection therapy, as12 times larger than the number of people on insulin pumps.

Martha acknowledged Medtronic's lagging competitive position in diabetes tech markets. The unit declined 5% during the quarter, which the company attributed to a delay in new patient starts on insulin pumps amid the pandemic and "continued competitive pressure."

"Look, we’re missing out on the better growth of this market," Martha said in prepared remarks, also highlighting a $337 million investment in development of insulin delivery and glucose monitoring tech from Blackstone Life Sciences announced during the quarter.

In the view of some analysts, the Companion and Blackstone news appear to put to rest rumors that Medtronic may exit the diabetes business, its fourth and smallest division, altogether.

Comparing Medtronic's results to its peers' isn't apples to apples; Medtronic's most recent quarter started about a month later and ended a month after most of the sector. Additionally, Medtronic's quarter included an extra week than normal, as occurs every five or six years in Medtronic's fiscal calendar. That extra week likely added a $360 million to $390 million benefit, the company estimated.

Asked for color on July and August that medtechs that reported earlier couldn't necessarily offer, Martha said there have been big differences in recovery by therapy or product area for urgent versus elective procedures. But both the U.S. and Europe have seen sharper recoveries, while China has been more steady, he said.

Martha noted "everyone's a little nervous about the fall" in light of how school re-openings may affect the trajectory of COVID-19 cases in hospitals. Still, "I do think hospitals are committed to staying open," Martha said, noting that they too "need it financially."