Medtronic has released positive earnings in its financial results for its third quarter of fiscal year 2011, which ended Jan. 28. The revenue and earnings were strongly bolstered by strong returns in its cardiac and vascular group, but the company restated its intention to sell off external defibrillator unit Physio-Control.
As reported, the third quarter net earnings were $924 million, an increase of 11 percent compared with the same period in the prior year. The Minneapolis-based company also reported worldwide third quarter revenue of $3.96 billion, compared with $3.85 billion reported in the third quarter of fiscal year 2010—an increase of 3 percent. International sales of $1.7 billion increased 5 percent as reported compared to the same period of 2010.
The cardiac and vascular group at Medtronic is comprised of cardiac rhythm disease management (CRDM), cardiovascular and Physio-Control. The group reported worldwide sales in the quarter of $2.1 billion, which represents an increase of 2 percent. Cardiac and vascular group international sales of $1.14 billion were up 4 percent.
Overall, group performance was driven by strong sales growth in structural heart, endovascular and atrial fibrillation (AF) solutions, offset by “modest declines” in CRDM implantables, according to the company.
The CRDM revenue of $1.22 billion declined 2 percent. Revenue from implantable cardioverter-defibrillators (ICDs) also slipped to $735 million from $881 million in the previous year’s third quarter. Pacing revenue was $450 million in the quarter, a decline from $495 million in the 2010 third quarter.
CRDM sales were negatively affected by “slower market growth,” Medtronic said, but partially offset by the adoption of the Protecta ICD in Europe, as well as continued growth in the AF solutions business—driven in part by the U.S. launch of the Arctic Front Cardiac CryoAblation catheter system.
Physio-Control revenue of $104 million increased 4 percent. Results were driven by "solid growth" of the Lifepak 15 monitor/defibrillator in the pre-hospital market and the Lifepak 20e monitor/defibrillator in the hospital market, according to the company.
However, Medtronic management also announced its intention to “reinitiate its efforts to divest its Physio-Control business unit.”
Finally, its cardiovascular revenue of $774 million grew 7 percent as reported. Revenue growth was driven by “solid performance in all businesses and particularly in emerging markets, where revenue growth was 30 percent compared to the same period in the prior year,” the company said.
The coronary and peripheral, structural heart and endovascular businesses grew worldwide revenue of 4 percent, 13 percent, and 12 percent, respectively, on a constant currency basis.
“While the stent market continues to experience year-over-year declines, Medtronic gained share with its highly deliverable Integrity platform,” said the company, adding that its U.S. market share in bare-metal stents was up nearly 9 percentage points compared with the same period in the prior year.
Structural heart revenue was driven by continued solid growth in transcatheter valves as well as revenue from the recent acquisition of ATS Medical. Growth in endovascular revenue was driven by the U.S. launch of the Endurant stent graft for the treatment of abdominal aortic aneurysms, Medtronic reported.