Medtronic tops earnings expectations
Terry Fiedler
Star Tribune
Tuesday, August 21, 2001
Medtronic turned in 17 percent growth in first-quarter earnings per share, excluding special charges, led by a rebound in defibrillator sales and strong
revenue growth in its vascular and neurological and spinal businesses.
The Fridley-based company earned $342 million, or 28 cents a share, before charges, beating analysts' consensus by a penny a share. Revenue in the quarter
ended July 27 was up 11 percent to $1.46 billion.
The company took a $35.1 million charge for a previously announced restructuring and a $27 million charge for a previously announced arbitration award
to Boston Scientific Corp.
"Whatever clouds started to form in the fourth quarter are dissipating with the [quarter's] news," said U.S. Bancorp Piper Jaffray analyst Thomas
Gunderson.
"It's a good quarter," said Prudential Securities analyst Sandra Hollenhorst. "They had good growth in all of their business units."
Medtronic CEO Art Collins, who became the company's top executive at the turn of the fiscal year, said the company was particularly "encouraged by the
uptick in the defibrillator market."
Implanted defibrillators, devices that shock hearts that beat too quickly back into rhythm, represent a $2 billion-plus worldwide market, and are regarded as
a medical-device bellwether.
Medtronic stock came under pressure when it reported 6 percent defibrillator sales growth last quarter after years of 20 percent-plus growth rates.
Medtronic's first-quarter defibrillator sales were up 12 percent on a constant currency basis. Medtronic credited the acceptance of its latest generation of
products for the increased sales growth.
"It's very good that it's back in double digits," Hollenhorst said, "and it will be interesting to see the reports of other companies in that space to see whether it
is a market response or Medtronic's products."
Sales in Medtronic's cardiac rhythm management business, which includes defibrillators and pacemakers, were up 10 percent on a constant currency basis to
$668.9 million.
Revenue in the company's vascular business, which includes coronary stents and balloon catheters, was up 21 percent to $264.4 million. Revenue in the
neurological, spinal and ear, nose and throat business increased 20 percent to $399.4 million.
The company will create another business unit this month with the completion of the acquisition of insulin pump manufacturer MiniMed Inc. Hollenhorst
estimated that MiniMed would contribute about $400 million in annual sales.
Gunderson also said the company might receive final Food and Drug Administration for its new congestive heart failure device, the InSync, by the end of
the quarter. He expects the device to generate $100 million to $120 million in revenue during its first year on the U.S. market.
-- Terry Fiedler is at tfiedler@startribune.com . |
