VOL. 126 | NO. 230 | Thursday, November 24, 2011
Medtronic’s Spine Revenue Falls 3 Pct.
By Aisling Maki
Medtronic Inc., the world’s largest medical device maker, Tuesday, Nov. 22, reported higher-than-expected earnings in the second quarter, driven by sales of newer devices that compensated for sluggish sales of the company’s heart and spine implants.
The Minneapolis-based company’s Spinal & Biologics Business is at 1800 Pyramid Place in Memphis.
For more than a year, Medtronic has reported weaker sales of its two leading franchises, heart defibrillators and spinal implants, which account for roughly 40 percent of total sales. Tighter hospital budgets, fewer procedures and safety concerns have led physicians to implant fewer devices in patients. Those trends continued in the most recent period, with combined sales of the devices falling 5 percent.
Spinal revenue fell 3 percent to $839 million in Q2. In June, that business took a major publicity blow after The Spine Journal, a scientific, peer-reviewed journal of the North American Spine Society, alleged Medtronic had downplayed the risks of its InFuse spinal repair protein. The implant – approved to treat degenerative spinal disk disease – saw sales of about $800 million last fiscal year, but Medtronic reported a 16 percent drop in sales in the last quarter.
Biologics revenue fell 4 percent to $208 million, driven by declines in the sales of Infuse, partially offset by revenue growth from other Biologics products.
Medtronic Q2 Earnings Highlights
SECOND-QUARTER SURPRISE: Medtronic posted better-than-expected earnings in the last quarter as sales of new devices and reduced expenses overcame sluggish performance for two of the company’s biggest businesses: heart defibrillators and spinal implants.
GUIDANCE AFFIRMED: Medtronic executives reaffirmed their forecast for full-year earnings of $3.43 to $3.50 per share. The company expects its revenue to grow by 1 percent to 3 percent in the second half of the year.
NO-SPIN ZONE: Medtronic CEO Omar Ishrak told analysts he does not expect Medtronic to spin off any additional business units following last week’s announcement that its Physio-Control unit would be sold to Bain Capital.
– The Associated Press
Medtronic said sales of diabetes treatments and surgical tools have helped offset weak spinal sales.
The company’s overall revenue rose 3 percent to $4.13 billion in the second quarter of fiscal year 2012, as compared to $3.9 billion in Q2. The company reported that increase was helped by sales of heart valves, stints and other upgraded products.
International sales rose 6 percent to $1.83 billion in Q2, accounting for 44 percent of the company’s global sales in Q2. Emerging market revenue increased 21 percent to $414 million.
“I’m pleased we delivered another quarter of consistent growth in a difficult environment,” Medtronic CEO Omar Ishrak, who took over executive leadership of the company in June, said in a statement. “A majority of our businesses, and nearly all of our geographies, contributed to this growth. As we continue to focus on innovation, globalization and execution, I see tremendous opportunities for growth in the future.”
Medtronic reported a Q2 net income of $871 million, or 82 cents per share – an increase of more than 54 percent over the same period last year, when results were weighed down by a huge legal settlement surrounding the defective heart defibrillators.
Excluding one-time expenses, the company would have earned $898 million, or 84 cents per share, in the most recent period.
Those results topped analyst expectations for earnings of 82 cents per share on revenue of $4.07 billion. Analysts had speculated Medtronic might scale back its full-year revenue guidance, but the company said it still expects earnings of between $3.43 and $3.50 per share for fiscal 2012.
“We’ve aligned our organization to drive market leading execution and we continue to focus on extending our mission globally to expand growth,” Ishrak said. “Our commitment to developing innovative medical devices that add clinical value for our patients and economic value for our customers will continue to drive all that we do.”
The Associated Press contributed to this report.