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Medtronic Q3 Adj Profit Meets View, Tightens 2014 EPS Outlook Range

Medtronic Q3 Adj Profit Meets View, Tightens 2014 EPS Outlook Range
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Medical device maker Medtronic, Inc. (MDT: Quote) reported Tuesday a profit for the third quarter that decreased 23 percent from last year, hurt primarily by acquisition related charges. Adjusted earnings per share for the quarter matched analysts' expectations, while quarterly revenues topped their estimates by a whisker. The company also tightened its earnings guidance range for the full-year 2014, while maintaining annual revenue growth forecast.

"In Q3, our overall organization once again delivered balanced growth, with strong performances in some areas offsetting challenges in other parts of our business. We remain focused on building a track record of operational execution to deliver consistent and reliable results," Chairman and CEO Omar Ishrak said.

The Minneapolis, Minnesota-based company reported net earnings of $762 million or $0.75 per share for the third quarter, lower than $988 million or $0.97 per share in the prior-year quarter.

Excluding charges, the company's adjusted net earnings for the quarter was $916 million or $0.91 per share, compared to $946 million or $0.93 per share in the year-ago quarter.

On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.91 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 3.4 percent or 4.4 percent in constant currency to $4.16 billion from $4.03 billion in the same quarter last year, and topped nineteen Wall Street analysts' consensus estimate of $4.15 billion by a whisker.

International revenues for the quarter grew 2 percent or 4 percent on a constant currency basis, to $1.90 billion, and accounted for 46 percent of Medtronic's worldwide revenues. Revenues from emerging markets increased 10 percent or 12 percent on a constant currency basis, to $521 million from last year.

Revenues for Medtronic's cardiac and vascular group, which includes the Cardiac Rhythm Disease Management (CRDM), Coronary, Structural Heart, and Endovascular businesses, grew 1 percent or 2 percent in constant currency, to $2.12 billion from last year.

Revenues for CRDM unit, by far its biggest business line, edged up 1 percent or up 2 percent in constant currency, to $1.18 billion, with revenues from Implantable Cardioverter Defibrillators or ICDs, remaining flat or up 1 percent in constant currency, to $655 million from last year.

Revenues for the restorative therapies group, which includes the Spine, Neuromodulation, Diabetes, and Surgical Technologies businesses, grew 4 percent or 5 percent in constant currency, to $1.61 billion from last year., with core spine revenues declining 1 percent, while neuromodulation revenues grew 7 percent from last year.

Diabetes group revenues grew 16 percent to $436 million from a year ago.

Looking ahead to fiscal 2014, the company now expect adjusted earnings in a range of $3.81 to $3.83 per share, compared to the previous forecast in the range of $3.80 to $3.85 per share, while maintaining its revenue growth guidance in the range of 3 to 4 percent on a constant currency basis.

Street is currently looking for full-year 2014 earnings of $3.82 per share on revenues of $17.01 billion.

The company also continues to expect revenue growth in the range of 3 to 4 percent on a constant currency basis for the fourth quarter.

MDT closed Friday's regular trading session at $56.88, up $0.32 on a volume of 5.15 million shares. In the past 52-week period, the stock has been trading in a range of $43.51 to $60.93.

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by RTT Staff Writer

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