Medtronic Third Quarter Revenue up 12 Percent to $3 405 Billion
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January 25, 2008.
Medtronic recorded third quarter revenue of $3.405 billion, a 12 percent increase over the $3.048 billion reported in the third quarter of fiscal year 2007. Non-U.S. revenue of $1.307 billion grew 20 percent, including a $117 million benefit from currency translation, and accounted for 38 percent of Medtronic's revenue. Net earnings for the quarter were $77 million, or $0.07 per diluted share. As detailed in the attached table, adjusting for $0.56 of special charges relating to the impairment of intangible assets, litigation charges and in-process research and development (IPR&D) charges primarily related to the acquisition of Kyphon, non-GAAP net earnings and diluted earnings per share were $713 million and $0.63 per share. As expected, the Kyphon acquisition, excluding IPR&D, charges had a dilutive impact of $0.05 in the third quarter.
"Our quarterly performance reflected the double digit growth in our Neuromodulation, Diabetes, Spinal and ENT businesses and the successful close of the Kyphon acquisition," said Bill Hawkins, Medtronic president and CEO. "We are pleased with our ICD sales which demonstrate our strong customer loyalty and the flexibility of our company to respond to dynamic inflections in our business."
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 third quarter of fiscal year 2007.
Cardiac Rhythm Disease Management
Cardiac Rhythm Disease Management (CRDM) revenue of $1.218 billion increased 3 percent. Revenue from implantable cardioverter defibrillators (ICDs) was $726 million, up 2 percent, while worldwide pacing systems revenue of $478 million increased 4 percent. During the quarter, Medtronic gained market approval for the Sprint Quattro(TM) lead in Japan and transitioned its global supply of leads from Sprint Fidelis(R) to Quattro.
Spinal
Spinal revenue of $808 million grew 35 percent, driven by $147 million in Kyphon revenue. Excluding Kyphon, revenue grew 11 percent with strong double digit performance in worldwide Biologics, and strong growth in Core Spinal outside the U.S.
CardioVascular
CardioVascular revenue of $512 million grew 7 percent. Coronary stent revenue of $157 million grew 6 percent and Endovascular revenue grew 9 percent, led by strong sales of thoracic products. FDA approval for the Endeavor(R) drug-eluting coronary stent system was received in early February, and Endeavor is now commercially available in the United States.
Neuromodulation
Neuromodulation revenue of $320 million grew 10 percent. Adjusting for the impact of the previously announced divestitures of the diagnostics related product lines, the Neuromodulation business grew 16 percent. Within Gastro/Urological, market development efforts to reach out to new implanting physicians resulted in revenue growth of 26 percent for the InterStim(R) therapy for urinary control. Additionally, in early February, Medtronic announced FDA approval to market the RestoreULTRA(TM) neurostimulation system for the treatment of chronic back and leg pain. RestoreUltra is the smallest and thinnest 16 electrode neurostimulator on the market.
Diabetes
Diabetes revenue of $258 million grew 14 percent, driven by worldwide revenue growth in continuous glucose monitoring sensors and pump therapy growth outside the U.S.
Ear, Nose and Throat (ENT)
ENT revenue of $154 million grew 15 percent, driven by the successful launch of Fusion(TM), an advanced new Image Guidance Surgery System to facilitate sinus surgical procedures, along with strong growth of power systems and nerve monitoring disposables outside the U.S.
Physio-Control
Physio-Control revenue of $94 million was down 10 percent as the company continues to address quality system issues.
In closing Hawkins said, "We expect to see strong growth in the fourth quarter with the launch of Endeavor in the U.S., the introduction of RestoreUltra by our Neuromodulation business, and the addition of Kyphon to our spinal platform. Combined with Medtronic's continued strong track record outside the U.S. and our broad and diversified portfolio, we remain optimistic about our long-term growth prospects."
Webcast Information
Medtronic will host a webcast for the public, analysts and news media today, Feb. 19 at 8 a.m. EST (7 a.m. CST), to provide information about its businesses and quarterly financial results. This quarterly webcast can be accessed by clicking on the Investor Relations link on the Medtronic home page at www.medtronic.com
Within 24 hours, a replay of the webcast and a transcript of the company's prepared remarks will be available in the "Presentations & Transcripts" section of the Investor Relations homepage.
About Medtronic
Medtronic, Inc., headquartered in Minneapolis, is the world's leading medical technology company, alleviating pain, restoring health and extending life for people with chronic disease. Its Internet address is www.medtronic.com
Medtronic management believes that in order to properly understand Medtronic's short-term and long-term financial trends, investors may wish to consider the impact of foreign currency translation on revenue. In addition, Medtronic management uses results of operations before currency translation to evaluate the operational performance of the Company and as a basis for strategic planning. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with GAAP.
Note: The data in this schedule has been intentionally rounded to the nearest million and therefore the quarterly revenue may not sum to the fiscal year to date revenue.
Source: Medtronic, Inc.
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