por Lynn Shapiro
, Writer | February 18, 2009
Medtronic's core businesses reported higher profits and revenues with the cardiovascular and neuromodulation business units posting double-digit growth. If the dollar had not hit a low last year, both the company's diabetes and surgical earnings would have reported an earnings spike in the double-digits.
For its fiscal third quarter, ended on Jan. 23, 2009, Minneapolis-based Medtronic posted net income of $723 million, or 65 cents a share, up from $77, or 7 cents a share, excluding legal and merger-related charges. Earnings climbed to 71 cents a share, from $63 cents in the comparable quarter last year, exceeding Wall Street expectations.
Revenues gained 2.6 percent to $3.49 billion, hurt by a $110 million conversion in foreign currency exchange rates. After reporting earnings on Feb 17, Medtronic's shares climbed 5.3 percent, to $34.56, while the broader market fell precipitously.
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Four of Seven Units See Double-Digit Growth
Commenting on results, Bill Hawkins, Medtronic Chairman and CEO, said that "excluding the impact of foreign currency, four of our seven business units reported double-digit revenue growth in the quarter and we continue to focus on delivering meaningful operating leverage."
Cardiac Rhythm Disease Management
Cardiac Rhythm Disease Management (CRDM) reported revenue of $1.169 billion, a 4 percent decrease for the quarter or 1 percent after adjusting for an unfavorable $38 million foreign exchange rate. Worldwide implantable cardioverter defibrillator revenue was $694 million. Worldwide pacemaker revenue was $457 million.
In February, the CRDM business announced the acquisition of Ablation Frontiers, which, when combined with the previously announced acquisition of CryoCath Technologies, positions CRDM as a leader in the atrial fibrillation market. Coronary stent revenue grew 25 percent and endovascular revenue rose 49 percent.
Revenue in the Cardiovascular business grew to $565 million, an increase of 10 percent or 16 percent with an unfavorable $27 million foreign exchange impact. Coronary stent revenue grew 25 percent and endovascular revenue grew 49 percent on a constant currency basis. The commercial launch and availability of five new angioplasty products on a rapid exchange delivery system in the U.S. fueled growth in the cardiovascular business.
Spinal revenue of $832 million grew 3 percent or 4 percent after adjusting for an unfavorable $11 million foreign exchange rate hit. In the quarter, the core business grew 5 percent on further adoption of its Legacy, Atlantis and MAST product portfolios. The Biologics business also stabilized in the quarter.
Diabetes revenue of $277 million rose 7 percent or 12 percent after adjusting for an unfavorable $12 million foreign exchange impact. Diabetes revenue grew on strong sales of durable pump and continuous glucose monitoring systems as well as solid performance in markets outside of the United States.
Surgical Technologies revenue of $207 million grew 6 percent or 10 percent after adjusting for an unfavorable $8 million foreign exchange impact. Sales of Navigation equipment including the Fusion Image Guidance Surgery System and O-Arm® Imaging System continue to be strong in addition to positive growth in service revenue associated with the equipment, also driving this business.
Neuromodulation revenue of $354 million grew 11 percent or 13 percent after adjusting for an unfavorable $9 million foreign exchange impact. Growth in pain management, gastro/urology and movement disorder product lines continues to drive this business.