Company officials say business units stable, despite quarterly profitability hit from failed product trial
SANTA ROSA — Medtronic, Inc. (NYSE: MDT) on Tuesday reported global fiscal third-quarter sales for its Santa Rosa-based Cardiac and Vascular group of $2.119 billion, up 1 percent from a year before.
The Minneapolis-based company as a whole, however, reported that net profit for the third quarter, ended Jan. 24, dropped 23 percent to $762 million, or 75 cents per diluted share. That was attributed largely to the discontinuation of a high blood pressure treatment that failed to make it out of trial.
Companywide revenues grew 3 percent over the year, though, reaching $4.136 billion.
“In Q3, our overall organization once again delivered balanced growth, with strong performances in some areas offsetting challenges in other parts of our business,” Omar Ishrak, chairman and chief executive officer, said in a statement. “We remain focused on building a track record of operational execution to deliver consistent and reliable results.”
The Cardiac and Vascular Group includes the Cardiac Rhythm Disease Management, Coronary, Structural Heart, and Endovascular businesses. Revenue performance was driven by growth in structural heart, endovascular, implantable cardioverter defibrillators (ICDs).
Group international sales reached $1.211 billion, up 3 percent after adjusting for currency changes or 1 percent as reported.
Cardiac Rhythm Disease Management revenues for the quarter reached $1.184 billion, up 1 percent as reported. Revenue from ICDs was $655 million, an increase of 1 percent on a constant-currency basis. Revenues from heart-pacing products were $439 million, down 2 percent on a constant-currency basis.
Coronary revenue declined 2 percent to $436 million as reported. Sales of drug-eluting stents increased 5 percent after adjusting for changes in currency, driven by global share gains of the Resolute Integrity drug-eluting stent.
Structural Heart revenue of $281 million grew 3 percent as reported, driven by strong international results from the CoreValve transcatheter aortic heart valve. The company received U.S. Food and Drug Administration approval for this product for extreme-risk patients late in the fiscal third quarter.
Endovascular revenue was $218 million, 3 percent as reported.
Across the company, third-quarter international revenue was $1.898 billion, up 2 percent as reported. Such sales accounted for 46 percent of Medtronic’s worldwide revenue in the quarter. Emerging-market revenue of $521 million increased by 10 percent as reported and represented 13 percent of company revenue.
Medtronic on Tuesday tightened its guidance, expecting fourth-quarter and full-year revenue growth of 3 percent to 4 percent, after adjusting for changes in currency. The company said it now expects fiscal year 2014 diluted earnings per share in the range of $3.81 to $3.83. That is said to take into account roughly 6 percent growth in non-GAAP earnings per share after adjusting for certain tax benefits that Medtronic received in fiscal 2013, as well as higher levels of interest expense and U.S. medical device excise tax in fiscal 2014.
The price of Medtronic shares had rebounded by the end of trading Tuesday to $56.19 a share, down 69 cents, or 1.21 percent, from Friday, after plummeting to $55.30 shortly after the session opened Tuesday. Medtronic reported quarterly results before the session opened.
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