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The Minneapolis, Minnesota-based company has recently been losing market share of implantable cardiac defibrillators to rivals such as St. Jude Medical Inc. (STJ | Quote | Chart | News | PowerRating) and Boston Scientific Corp. (BSX | Quote | Chart | News | PowerRating). Instead, the company has pursued a growth strategy that includes acquisitions. Medtronic recently acquired Canadian company CryoCath as well as privately-held Ablation Frontiers, both of which make catheters to treat the heart defect atrial fibrillation.
For the third quarter, the company's net earnings on a reported basis rose to $723 million, or $0.65 per share, from $77 million, or $0.07 per share, in the prior-year quarter.
The results for the latest quarter include in-process research and development charges of $72 million, or $0.06 per share. The year-ago quarter's results include special charges of $47 million, or $0.04 per share, litigation charges of $275 million, or $0.24 per share, and in-process research and development charges of $314 million, or $0.28 per share.
Excluding charges, the company's non-GAAP net earnings for the latest quarter increased 12% to $795 million from $713 million in the year-ago period. On a per share basis, earnings for the quarter rose 13% to $0.71 from $0.63 a year ago. On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $0.70 per share. Analysts' estimates typically exclude special items.
Revenue for the latest quarter increased 3% to $3.49 billion from $3.41 billion in the year-ago quarter, but missed analysts consensus revenue estimate for the quarter of $3.51 billion.
Revenue outside the U.S. increased 1% from the previous-year quarter to $1.32 billion and accounted for 38% of total revenue for the quarter.
Bill Hawkins, chairman and CEO of Medtronic said, "Despite global macroeconomic uncertainties and an unfavorable impact from foreign currency on our business units this quarter, Medtronic continues to deliver growth in a challenging environment. 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."
Revenue from the company's cardiac rhythm disease management unit, by far its biggest business line, declined 4% from the same period last year to $1.17 billion. After adjusting for an unfavorable $38 million foreign exchange impact, revenue for the latest quarter declined 1% from the prior-year period.
Revenue at the company's spinal unit increased 3% from the previous-year quarter to $832 million. Core spinal business grew 5% on further adoption of the company's Legacy, Atlantis and Mast product portfolios.
Revenue in the CardioVascular business grew 10% from a year ago to $565 million. Coronary stent revenue grew 25% and endovascular revenue grew 49% on a constant currency basis.
Neuromodulation revenue climbed 11% from the previous-year quarter to $354 million, driven by growth in pain management, gastro/urology and movement disorder product lines. Diabetes revenue grew 7% from the previous-year quarter to $277 million, helped by strong sales of durable pump and continuous glucose monitoring systems as well as solid performance in markets outside of the U.S.
Surgical technology saw 6% revenue growth to $207 million. 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. Revenue at the company's Physio-Control business declined 4% from the same period last year to $90 million. For the nine months, Medtronic's net earnings on a reported basis climbed to $2.04 billion, or $1.81 per share, from $1.42 billion, or $1.24 per share, in the prior-year period.
On a non-GAAP basis, the company's net earnings for the nine-month period increased to $2.37 billion, or $2.10 per share, from $2.09 billion, or $1.82 per share, a year ago.
Revenue for the nine-month period was $10.77 billion, up from $9.66 billion in the previous-year period.
MDT closed Friday's regular trading session at $32.81, up $0.01 on a volume of 9.33 million shares. In the 52-week period, the stock has been trading in a range of $28.33-$56.97.
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