May 20, 2008 3:54 pm US/Central
Medtronic Profit Flat Without Tax Gain
MINNEAPOLIS (AP) ―
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Medtronic said its revenue rose 18 percent to $3.86 billion from $3.28 billion a year ago. Analysts expected lower revenue of just under $3.72 billion.
Medical device maker Medtronic reported flat fourth-quarter profits on Tuesday, but investors cheered its strong growth in sales and operating earnings.
Medtronic's new Endeavor drug-coated stent got off to a strong start with its U.S. launch, bringing in $81 million. And it appeared that Medtronic is recovering faster than some expected from its October recall of wires that connect implantable defibrillators to patients' hearts.
"I think they had much stronger sales in (drug-coated stents) and cardiac rhythm management than we had expected," said Jan Wald, an analyst at Stanford Group Co. Medtronic showed it could recover market share in drug-coated stents and heart devices and "beat our expectations pretty handily," he said.
Medtronic's fourth-quarter profit of $812 million was the same as last year, when it recorded a tax gain of about $129 million. Earnings-per-share rose to 72 cents, up from 70 cents per share a year ago. Not counting restructuring and buyout charges it earned 78 cents per share. Analysts surveyed by Thomson Financial had expected 72 cents per share.
Revenue for the quarter rose 18 percent to $3.86 billion, ahead of analyst expectations of about $3.72 billion.
Sales gains for the quarter that ended April 25 were strong across most of Medtronic's segments. Sales of heart-rhythm devices rose 5.5 percent to $1.36 billion. Spinal device sales jumped 35 percent to $869 million in large part because of the addition of $150 million in revenue from Kyphon, a spinal company it bought in November. Kyphon reduced profits during the fourth quarter but Medtronic has said it expects the business to be profitable next year.
The introduction of the Endeavor stent in the U.S. helped boost cardiovascular revenue 22 percent to $643 million.
Still, Fridley-based Medtronic is continuing with a round of 1,100 layoffs worldwide.
"We are consolidating operations where it makes sense and adding resources and people where we have the greatest opportunity for growth," Chief Executive Bill Hawkins wrote in an e-mail.
Medtronic said it expects to earn $2.94 to $3.02 per share for fiscal 2009, on revenue of $15 billion to $15.5 billion.
"Based on current market conditions we are more comfortable with the lower end of these revenue and earnings per share estimates," Chief Financial Officer Gary Ellis said on a conference call.
Analysts surveyed by Thomson Financial were expecting earnings per share of $2.96 on revenue of $15.1 billion.
Its shares rose $1.08, or 2.3 percent, to close at $48.96 on Tuesday.
For the full year that just ended, Medtronic earned $2.23 billion, or $1.95 per share, down from $2.8 billion, or $2.41 per share a year ago. Revenue rose to almost $13.52 billion, up from about $12.3 billion a year ago.
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Medtronic was founded in 1949 as a medical equipment repair shop by Earl Bakken and his brother-in-law, Palmer Hermundslie.
(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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