Medtronic's Q1 financial results announced

Aug 25 2009

Medtronic, Inc. (NYSE:MDT) today announced financial results for its first quarter of fiscal year 2010, which ended July 31, 2009.

The company reported first quarter revenue of $3.933 billion, a 6 percent increase compared to the $3.706 billion reported in the first quarter of fiscal year 2009. Revenue growth on a constant currency basis was 10 percent after adjusting for a $145 million negative foreign currency translation. This quarter contained 14 weeks, one more week than the first quarter of fiscal year 2009.

As reported, first quarter net earnings were $445 million, or $0.40 per diluted share, both decreasing 38 percent over the same period in the prior year. As detailed in the attached table, adjusting for restructuring and certain litigation charges, and the impact of adopting a new accounting standard for non-cash interest expense on convertible debt, first quarter net earnings and diluted earnings per share on a non-GAAP basis were $883 million and $0.79, an increase of 9 percent and 10 percent, respectively, over the same period in the prior year.

“I am pleased with our solid first quarter performance and the progress it represents toward fulfilling our full year commitments,” said Bill Hawkins, Medtronic chairman and chief executive officer. “I am confident that our efforts to fuel innovation and develop a strong product pipeline positions us well for sustained growth during the remainder of the fiscal year and beyond.”

Revenue outside the United States of $1.542 billion grew 6 percent compared to the same period last year, or 16 percent on a constant currency basis, accounting for 39 percent of Medtronic’s worldwide revenue.

Cardiac Rhythm Disease Management
Cardiac Rhythm Disease Management (CRDM) revenue of $1.337 billion grew nearly 3 percent, or 7 percent after adjusting for an unfavorable $53 million foreign exchange impact. Revenue from implantable cardioverter defibrillators was $775 million, while pacing revenue was $536 million in the quarter. Outside the United States, CRDM revenue grew 10 percent on a constant currency basis, driven by significant growth in Europe and China.

Spinal
Spinal revenue of $915 million grew 7 percent, or 8 percent after adjusting for an unfavorable $17 million foreign exchange impact. Sales of Core Spinal products, which includes Kyphon, increased 11 percent and Spinal revenue outside of the United States increased 24 percent, both on a constant currency basis. Biologics revenue remained flat when compared to the same period last year on a constant currency basis.

CardioVascular
CardioVascular revenue of $689 million grew 9 percent, or 15 percent after adjusting for an unfavorable $37 million currency translation impact. Growth in the CardioVascular business was driven by strong global performance in both the Endovascular and Structural Heart Disease product lines, which grew 41 percent and 16 percent, respectively, on a constant currency basis. The business unit launched the Endeavor® Drug-eluting Stent in Japan during the quarter which helped drive Coronary revenue to $353 million for the quarter.

Neuromodulation
Neuromodulation revenue grew 7 percent to $373 million, or 11 percent after adjusting for an unfavorable $13 million currency translation impact. This growth was fueled by strong sales of the InterStim® Therapy, Activa® Deep Brain Stimulation Therapy and the launch of Activa PC and RC, which are now available in both the United States and Europe.

Diabetes
Diabetes revenue of $295 million grew 10 percent, or 15 percent after adjusting for an unfavorable $14 million currency translation impact, on strong U.S. insulin pump and continuous glucose monitoring (CGM) product sales, as well as sales of consumables in Europe. International sales grew 14 percent on a constant currency basis over the same quarter last year. During the quarter, the business unit launched the Paradigm Veo pump in the United Kingdom and Ireland, the first semi-closed loop product, extending its lead as the only company with a proprietary CGM Sensor Augmented Pump.

Surgical Technologies
Revenue from Surgical Technologies reached $227 million, up 12 percent, or 16 percent after adjusting for an unfavorable $7 million currency translation impact. Revenue in the business unit grew on sales of the monitoring product line, the launch of NIM 3.0 a new nerve integrity monitor and strong ear, nose and throat and neurological power disposable sales. In Europe, sales of navigation equipment used in both brain and spinal surgery procedures were also strong during the quarter.

Physio-Control
Physio-Control reported $97 million in revenue, up 3 percent, or 7 percent after adjusting for an unfavorable $4 million currency translation impact. The launch of the LIFEPAK 15 monitor/defibrillator contributed to revenue growth in the quarter.

“Our solid performance across all businesses demonstrates the strength of our product portfolio and geographic diversity,” said Hawkins. “Our focused efforts to provide innovative solutions to the growing and global challenge of chronic disease are enabling us to bring our therapies to more people than ever before."

Webcast Information
Medtronic will host a webcast today, Aug. 25, at 8 a.m. EDT (7 a.m. CDT), to provide information about its businesses for the public, analysts and news media. This quarterly webcast can be accessed by clicking on the Investor Relations link on the Medtronic home page at www.medtronic.com and this earnings release will be archived at www.medtronic.com/newsroom. Within 24 hours, a replay of the webcast and a transcript of the company’s prepared remarks will be available in the “Events and Presentations” section of the Investor Relations homepage.