Medtronic Inc. announced on Tuesday, Feb. 19, higher than anticipated revenues of more than $4 billion for its fiscal third quarter ended Jan. 25, marking an increase of 3 percent as reported compared to the same period last year.
Medtronic Inc. announced higher than anticipated revenues of more than $4 billion for its fiscal third quarter, which ended Jan. 25, marking an increase of 3 percent as reported compared to the same period last year.
(Daily News File Photo: Lance Murphey)
“We are playing a leading role in transforming global health care by implementing our long-term strategies of economic value and globalization,” Omar Ishrak, Medtronic chairman and CEO, said in a statement. “We are only at the beginning of establishing our track record, but we believe that crisp execution of both our baseline and long-term growth strategies, combined with strong and disciplined capital allocation, will enable us to create long-term dependable value in health care.”
The Minneapolis-based medical device company, which makes implantable heart devices, insulin pumps and spine surgery products, has its Spinal and Biologics Business based in Memphis.
The spine unit is the second largest at the company, employing 5,600 people worldwide and approximately 1,500 employees locally, with annual revenue of $3.4 billion.
“We continued to see stabilization in the spine market, and I was pleased by our overall performance in Core Spine, including our ability to take market share,” Doug King, Medtronic senior vice president and president of Medtronic Spine, said in a statement.
For the third quarter, total Spine revenue of $753 million declined 3 percent year-over-year on a constant currency basis (4 percent as reported), driven by continued decline in bone graft and balloon kyphoplasty sales. However, the company’s Core Spine revenue, excluding balloon kyphoplasty, grew 2 percent in the third quarter, driven by continued adoption of new products and therapies and strong growth in sales.
“Hospitals are investing in our capital equipment for spine surgery, as they see clear value from better outcomes and more efficient procedures,” Gary Ellis, Medtronic senior vice president and chief financial officer, said in a statement. “In fact, in accounts that have our OR, we are seeing Core Spine revenue grow 10 points higher than non-OR accounts this fiscal year.”
The impact from the new medical device excise tax, which took effect Jan. 1, was less than the company expected thanks to final rules and regulations that were recently released stating that the tax only applies to newly manufactured devices and not on older inventory.
“So there’s going to be a little bit of a smaller ramp-up on the device tax itself just based on the existing inventory levels out there for various businesses,” Ellis said.
Medtronic had previously anticipated roughly $50 million in medical device tax for the fiscal year, but the company is now slicing that estimate in half to only $20 million to $25 million.
Medtronic’s third quarter net earnings and diluted earnings per share on a non-GAAP basis were $946 million and $0.93, an increase of 7 percent and 11 percent, respectively, over the same period in the prior year. Third quarter net earnings equaled $988 million, or $0.97 per diluted share, an increase of 6 percent and 10 percent, respectively, over the same period in the prior year.
Internationally, Medtronic revenues grew 5 percent as reported in Q3, rising to $1.856 billion. International sales accounted for 46 percent of the company’s worldwide revenue in the quarter, and emerging market revenue jumped 20 percent as reported to $475 million.