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VOL. 125 | NO. 37 | Wednesday, February 24, 2010

Growth Flat for Medtronic’s Local Divisions

By Tom Wilemon

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Medtronic Inc. increased its revenue by 10 percent during the company’s most recent quarter, but the Memphis-based Spinal and Biologics Division did not factor into that profit margin.

Although Medtronic’s earnings report for its third quarter, which ended Jan. 29, shows a 1 percent increase for Spinal and Biologics, revenue actually slipped by that amount if the numbers are considered on a constant currency basis. International currency rates during the quarter slightly boosted the revenue figure.

Bill Hawkins, chief executive officer of Medtronic, said the company’s overall growth during the quarter was largely because of international sales with double-digit increases in several countries, including China and Western Europe.

Medtronic’s third quarter revenue totaled $3.851 billion, a 10 percent increase over the third quarter from the prior year. Revenue from outside the Untied States grew to $1.615 billion, an increase of 22 percent on paper, but 11 percent on a constant currency basis.

Five of the company’s seven segments also posted double-digit growth.

“These segments offset the slight year-over-year decline in spine,” Hawkins said in an earnings call with industry analysts.

Medtronic employs 1,500 people in Memphis, but not all of them work in Spinal and Biologics. The company also has a distribution center here that ships products from all its business units.

The other units of the Minneapolis-based company include cardiac rhythm disease management, cardiovascular, neuromodulation, diabetes, surgical technologies and physio-control.

Hawkins mentioned new products for treating diabetics and heart patients with atrial defribillation. The company is in the fourth quarter of 2010, according to its accounting calendar.

“We intend to end fiscal year 2010 strong,” Hawkins said. “Looking ahead across all our business units, we are poised to deliver one of the most robust pipelines in our history. Innovation is the lifeline of our company and the foundation on which it was built. And innovation will continue to fuel our success going forward.”

Hawkins also noted that one of the company’s spinal products, the Kyphon, has a new competitor.

He did not specify the name of the company, but Osseon Therapeutics, a startup venture based in California, recently gained approval for another procedure to treat spinal fractures.

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