Medtronic Inc.'s (MDT) fiscal first-quarter profit tumbled 39%,
weighed down by $360 million in charges for stent-related legal
settlements, though the big medical-devices maker's core earnings
and revenue beat expectations.
Chairman and Chief Executive Bill Hawkins credited the results
to "solid performance" across the board. Medtronic noted that
launching the drug-coated Endeavor stent in Japan during the
quarter helped push coronary revenue up 1.1% to $353 million. The
business had seen a decline in the prior quarter, while the latest
results were also aided by the period having an extra week.
Medtronic last month agreed to pay Abbott Laboratories (ABT)
$400 million in a settlement concerning design and delivery systems
for its stents, scaffolding-like devices that prop arteries open.
The deal is expected to free Medtronic to focus more on efforts to
improve health care for vascular-disease patients.
For the period ended July 31, Medtronic's profit dropped to $445
million, or a 40 cents a share, from $723 million, or 64 cents a
share, a year earlier. Excluding 39 cents in charges, 32 cents of
which was related to the stent settlement, earnings rose to 79
cents from 72 cents.
Net sales rose 6.1% to $3.93 billion.
Analysts polled by Thomson Reuters were expecting 78 cents a
share on revenue of $3.82 billion.
Medtronic is the biggest player in the heart-rhythm business,
controlling about half of the $6 billion global market for
implantable cardioverter defibrillators. But it is feeling pressure
in that market and its spinal-products business, which has been
under pressure since a Food and Drug Administration notice last
summer regarding complications when a bone-graft product is used in
an unapproved manner.
But both segments saw sales gains in the quarter. Sales
Heart-rhythm devices rose 3% as ICD sales edged up 1%. The spinal
business had 7% growth. Cardiovascular revenue, which includes the
stent unit, rose 9%.
Medtronic shares were flat premarket at $38.
-By Mike Barris, Dow Jones Newswires; 212-416-2330;
mike.barris@dowjones.com