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|Medtronic Reports Second Quarter Earnings|
MINNEAPOLIS – November 20, 2012 – Medtronic, Inc. (NYSE: MDT) today announced financial results for its second quarter of fiscal year 2013, which ended October 26, 2012.
The Company reported worldwide second quarter revenue of $4.095 billion, an increase of 5 percent on a constant currency basis after adjusting for a $118 million unfavorable foreign currency impact, or a 2 percent increase as reported. Including a one-time, non-cash $245 million pre-tax charge related to certain litigation in our Structural Heart business, second quarter net earnings as reported were $646 million, or $0.63 per diluted share, a decrease of 26 percent and 23 percent, respectively, over the same period in the prior year. After adjusting for this charge and other items detailed in the attached table, second quarter net earnings and diluted earnings per share on a non-GAAP basis were $902 million and $0.88, flat and an increase of 5 percent, respectively, over the same period in the prior year.
Second quarter international revenue of $1.806 billion increased 8 percent on a constant currency basis or 1 percent as reported. International sales accounted for 44 percent of Medtronic’s worldwide revenue in the quarter. Emerging market revenue of $464 million increased 18 percent on a constant currency basis or 14 percent as reported and represented 11 percent of Company revenue.
“Our second quarter performance reflects the results of our ongoing focus to deliver consistent and dependable growth in a changing healthcare environment,” said Omar Ishrak, Medtronic chairman and chief executive officer. “Our growth was broad-based across several businesses and geographies, driven by continued stabilization of our end markets and the ongoing successful execution of new product launches.”
Cardiac and Vascular Group
CRDM revenue of $1.227 billion was flat on a constant currency basis or a decline of 3 percent as reported. Second quarter revenue from Implantable Cardioverter Defibrillators (ICDs) was $689 million, flat on a constant currency basis, while Pacing revenue was $480 million, a decline of 2 percent on a constant currency basis. Continued growth of the AF Solutions business partially offset weaker Pacing sales. The Company gained global share in ICDs, Pacing, and AF Solutions.
Coronary revenue of $429 million grew 19 percent on a constant currency basis or 14 percent as reported. Sales of drug-eluting stents increased 39 percent on a constant currency basis, driven by the continued success of the Resolute® Integrity® drug-eluting stent in the United States and a strong launch in the quarter of the product in Japan.
Structural Heart revenue of $271 million grew 6 percent on a constant currency basis or 2 percent as reported. Growth was driven by solid sales of the CoreValve® transcatheter aortic heart valves in international markets.
Endovascular revenue of $210 million grew 17 percent on a constant currency basis or 12 percent as reported. The Endurant® abdominal aortic stent continues to drive growth in Japan, along with the Endurant II in the U.S. and Europe. The peripheral stent portfolio, including the Complete® SE vascular stent, continued to drive global growth.
Restorative Therapies Group
Spine revenue of $782 million declined 5 percent on a constant currency basis or 7 percent as reported. Core Spine revenue of $649 million decreased 2 percent on a constant currency basis. While the Core Spine business slightly declined year-over-year, the business modestly grew on a sequential basis. New products and therapies continue to gain broad surgeon acceptance. The Company continues to differentiate its Spine business through its focus on enabling technologies, including imaging, navigation, and powered surgical instruments. BMP revenue of $133 million declined 19 percent on a constant currency basis.
Surgical Technologies revenue of $344 million grew 17 percent on a constant currency basis or 15 percent as reported. After adjusting for the acquisitions of PEAK Surgical and Salient Surgical Technologies, organic revenue growth was 13 percent on a constant currency basis or 12 percent as reported. Surgical Technologies revenue growth was driven by strong capital equipment sales, including continued demand for navigated spine procedures using the StealthStation® S7® and O-Arm®.
Neuromodulation revenue of $454 million increased 10 percent on a constant currency basis or 8 percent as reported. Growth was driven by the RestoreSensor® spinal cord stimulator with its proprietary AdaptiveStim® technology, solid growth in the number of new implants of Activa® deep brain stimulation therapy systems, and strong sales of InterStim® Therapy for both urinary and bowel indications.
Diabetes revenue of $378 million grew 6 percent on a constant currency basis or 3 percent as reported. Growth in the quarter was driven by strong sales of continuous glucose monitoring (CGM) products. The Paradigm® Veo™ insulin pump with its low glucose suspend technology, together with the Enlite™ CGM sensor, had solid growth in international markets.
Revenue Outlook and Earnings per Share Guidance
In closing, Ishrak said, “We were encouraged by our balanced Q2 results, which outperformed the MedTech market. However, we remain focused on delivering this kind of performance consistently over an extended period of time. By implementing our growth strategies, we will position ourselves to be a leader in creating long-term value in healthcare.”
This press release contains forward-looking statements related to product growth drivers, market position, strategies for growth, and Medtronic’s future results of operations, which are subject to risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of medical products, government regulation and general economic conditions and other risks and uncertainties described in Medtronic’s periodic reports on file with the Securities and Exchange Commission. Actual results may differ materially from anticipated results. Medtronic does not undertake to update its forward-looking statements.
Cindy Resman, Public Relations, 763-505-0291
Jeff Warren, Investor Relations, 763-505-2696