Medtronic Reports Second Quarter Revenue of $3.124 Billion and Diluted EPS of $0.58
* Double Digit Revenue Growth Outside the U.S.
* Voluntary Suspension of Fidelis® Lead Significantly Impacted Quarterly Results
MINNEAPOLIS . – Medtronic, Inc. (NYSE:MDT) announced financial results for its second quarter of fiscal year 2008, which ended October 26, 2007.
Medtronic recorded second quarter revenue of $3.124 billion, a two percent increase over the $3.075 billion reported in the second quarter of fiscal year 2007. Non-U.S. revenue of $1.166 billion grew 12 percent including the $73 million positive benefit of currency translation. For the quarter, 37 percent of Medtronic’s revenue was from outside the U.S. Net earnings for the quarter were $666 million, or $0.58 per diluted share, each a two percent decrease over the same period in the prior year.
Commenting on the voluntary suspension of Fidelis® leads and its negative impact to the business this quarter, Bill Hawkins, Medtronic president and chief executive officer said, “This was the right decision as there is nothing more important to us than the safety and well being of patients.”
Unless otherwise noted, all comparisons made in this news release are on an “as reported basis,” not on a constant currency basis, and references to quarterly figures increasing or decreasing are in comparison to the second quarter of fiscal year 2007.
Cardiac Rhythm Disease Management
Cardiac Rhythm Disease Management (CRDM) revenue of $1.148 billion decreased 8 percent. Revenue from implantable cardioverter defibrillators (ICDs) was $639 million, down 16 percent, while worldwide pacing revenue of $495 million in the quarter increased 5 percent. The Fidelis defibrillator lead recall had an estimated negative impact of $115 million and $15 million on ICD and Pacing revenue, respectively. Additionally, CRDM incurred expenses of approximately $31 million in inventory write-offs and other direct costs associated with Fidelis during the quarter.
Spinal revenue of $660 million grew 10 percent, driven by sales of the biologics product line and strong growth outside the U.S. With the acquisition completed earlier than anticipated, the company expects Kyphon will contribute to revenue in the second half of the fiscal year as Medtronic expands its presence in the aging spine market.
CardioVascular revenue of $490 million grew 8 percent, driven by Coronary Stents and Endovascular. Coronary Stent revenue of $149 million grew 13 percent and Endovascular revenue grew 11 percent. Final FDA approval for the Endeavor® drug-eluting stent is anticipated by the end of the calendar year, providing Medtronic entry into this approximately $2 billion U.S. market.
Neuromodulation revenue of $321 million grew 10 percent. Adjusting for the impact of the previously announced divestitures of the three diagnostics related product lines, the Neuromodulation business grew 15 percent.
Diabetes revenue of $246 million grew 16 percent, driven by double digit growth in pump therapies and a robust uptake in continuous glucose monitoring products.
Ear, Nose and Throat (ENT)
ENT revenue of $149 million grew 16 percent, driven by power systems and monitoring disposables along with further global penetration of the product portfolio.
Physio-Control revenue of $74 million was down 33 percent, due to the voluntary suspension of U.S. product shipments to address quality system issues.
In closing Hawkins said, “While we are very focused on addressing the challenges in our CRDM business, we are pleased with a number of highlights in our second quarter including the positive FDA panel recommendation of our Endeavor drug-eluting stent, continued progress with our Prestige® Cervical Disc launch, and improved momentum in our neuromodulation business. With our broad diversified business portfolio and the opportunity to accelerate growth outside the U.S., we remain optimistic about our strong growth potential going forward.”
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