Medtronic books dip in earnings, despite CV sales increase in Q2

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Medtronic has announced a decrease in net earnings, despite an increase in revenues among its financial results for the second quarter of fiscal year 2011, which ended Oct. 29.

The second quarter net earnings were $566 million, a decrease of 35 percent over the same period in the prior year, according to the Minneapolis-based Medtronic.

The company reported worldwide second quarter revenue of $3.9 billion, compared with the $3.84 billion reported in the second quarter of fiscal year 2010, an increase of 2 percent. International revenue of $1.61 billion increased 4 percent compared with the same period last year. International sales accounted for 41 percent of Medtronic’s worldwide revenue.

“Overall, we saw relative market stability from July through October in a challenging market environment with more consistent performance in our businesses, resulting in sequential share gains in ICDs, pacemakers, spine and drug-eluting stents,” said Bill Hawkins, Medtronic’s chairman and CEO. “While macroeconomic challenges remain, we continue to advance our pipeline, drive growth in emerging markets and with our emerging therapies, remain focused on leveraging our size and scale to reduce our cost structure.”

The company’s cardiac and vascular group is comprised of cardiac rhythm disease management (CRDM), cardiovascular and Physio-Control. Group performance was driven by strong cardiovascular and Physio-Control sales offset by slower sales in CRDM.

The group reported worldwide sales in the quarter of $2.09 billion, which represents an increase of 1 percent as reported or 2 percent after adjusting for foreign currency. The international sales of its cardiac and vascular group were $1.08 billion—up 4 percent as reported.

CRDM revenue of $1.24 billion declined 2 percent from the prior-year quarter. Revenue from implantable cardioverter-defibrillators (ICDs) of $745 million was down 1 percent compared with the same period in the prior year, but up 3 percent sequentially compared with the first quarter of fiscal year 2011. Pacing revenue was $472 million in the quarter, a decline of 5 percent. CRDM sales were negatively affected by slower market growth, but partially offset by continued growth of the AF Solutions business and the continued adoption of the Protecta ICD in Europe, according to Medtronic.

Cardiovascular revenue of $738 million grew 6 percent over the 2010 second quarter. Revenue growth was driven by strong international performance, particularly in Latin America, Greater China and other Asian countries, leading to an increase in international sales of 10 percent as reported, or 12 percent after adjusting for foreign currency.

Medtronic said its coronary and peripheral, structural heart and endovascular businesses grew worldwide revenue by 3 percent, 17 percent and 3 percent, respectively, after adjusting for foreign currency. Structural heart revenue was driven by continued solid growth in transcatheter valves as well as revenue from the recent acquisition of ATS Medical, which closed in August.

Physio-Control revenue of $109 million increased 16 percent compared with the previous-year second quarter. U.S. growth of 31 percent was due in part to strong sales of the Lifepak 15 monitor/defibrillator and the resolution of a supplier constraint at the beginning of the quarter.