Medtronic Inc. said its profit gained in the fiscal first quarter, buoyed by strong international growth and geographic expansion as well as robust demand for cardiac and vascular devices.
(Daily News File/Lance Murphey)
Net income in the three months ended July 26 gained 10 percent to $953 million, or 93 cents per share, from $864 million, or 83 cents per share, during the same period a year earlier. Profit excluding one-time items was 88 cents per share.
Revenue also rose 2 percent to $4.08 billion, from $4.01 billion, during the same period last year.
Net income was in line with Wall Street analysts’ expectations, while revenue fell slightly short on weaker-than-expected sales of defibrillators and some spinal products, according to FactSet. "Our Q1 results reflect that we are broadly outperforming our sector," said Omar Ishrak, Medtronic chairman and chief executive officer. "At the same time, we continue to strengthen and geographically diversify our business and remain confident in both our outlook for the remainder of the year and our long-term competitive position in the changing health care environment."
Medtronic Spine, which is based in Memphis, reported first-quarter global Spine revenue declined 2.7 percent to $765 million, compared with $786 million a year earlier. Core Spine revenue was $641 million, compared with $645 million a year earlier. BMP, commercially marketed as rhBMP-2 INFUSE Bone Graft, revenue slumped 12.1 percent to $124 million, compared to $141 million.
Infuse Bone Graft sales have been hurt by revelations about the company’s handling of studies and marketing of the product. Last year, a U.S. Senate investigation concluded Medtronic helped write and edit journal articles about the graft that downplayed its risks.
Excluding the impact of exchange rate fluctuations, Medtronic Spine said total revenue declined about 1 percent, while core spine revenue grew 1 percent.
“We saw continued stability in our business, with growth across our largest segments,” said Doug King, senior vice president at Medtronic and president of Medtronic Spine. “Our core spine and other biologics portfolio performed well in the quarter, as our new technologies, enabling technologies and procedural innovations continued to gain broad surgeon acceptance.”
Excluding the impact of exchange rate fluctuations, sales of cardiac and vascular devices gained 2 percent to $2.16 billion, compared to $2.12 billion, on improved demand for pacemakers, heart valves and devices to treat atrial fibrillation. Sales of defibrillators slumped on regulatory scrutiny, weaker European demand and general economic uncertainty.
Medtronic, including the Spine division in Memphis, has been cutting costs, including employee layoffs, on increased pressure as U.S. hospitals push for lower prices and European austerity plans trim procedures and profits.
That has led CEOs like Ishrak to look to emerging markets such as China for growth. Last year, the global medical device maker increased its Chinese presence with the purchase of China Kanghui Holdings, a maker of spine and joint products.
Medtronic shares closed Tuesday at $52.83, down about 2.3 percent from its closing price of $54.10 Monday. The company’s shares have been trading around five-year highs.
The Associated Press contributed to this report.