Tuesday, medical device maker Medtronic Inc. (MDT) reported 11% rise in first-quarter profit, helped by double-digit revenue growth in six of its seven businesses. Excluding certain one-time charges, adjusted earnings per share grew 16%, topping the analysts' consensus. Looking ahead, Medtronic said it expects the progress to continue through the balance of fiscal year 2009.
Minneapolis, Minnesota-based company's net earnings for the first quarter were $747 million, higher than $675 million recorded a year ago. On a per share basis, earnings grew 12% to $0.66 from last year's $0.59.
The 2009-quarter results included restructuring charges of $66 million or $0.06 per share, while prior-year's results included restructuring charges of $11 million or $0.01 per share, and IPR&D charges of $25 million or $0.02 per share.
On a non-GAAP basis, net earnings rose 14% to $813 million from $711 million last year, and earnings per share increased to $0.72 from $0.62 in the year-ago quarter.
On average, 22 analysts polled by First Call/Thomson Financial expected the company to report earnings of $0.69 per share for the quarter.
In the sequential fourth quarter, net income was $812 million or $0.72 per share on a reported basis, and $884 million or $0.78 per share on an adjusted basis.
First quarter net sales climbed 19% to $3.71 billion from prior year's $3.13 billion, and beat analysts' consensus estimate of $3.67 billion. Currency translation had a positive impact of $157 million to revenue in the quarter. Meanwhile, quarterly net sales declined from $3.86 billion recorded in the preceding quarter.
Among the company's peers, St. Jude Medical Inc. (STJ) in mid-July reported a 49% jump in its profit for the second quarter driven by 20% rise in revenues on strong ICD sales both in the U.S. and globally. The St. Paul, Minnesota-based company's second quarter adjusted net earnings were $209 million or $0.60 per share on net sales of $1.136 billion.
In July, another peer Boston Scientific Corp. (BSX) reported a 14.8% fall in its profit for the second quarter hurt by charges for restructuring, acquisitions and divestitures. However, adjusted profit grew 25% growth despite a 2.3% fall in sales. The Natick, Massachusetts-based Boston Scientific reported net income of $98 million or $0.07 per share, adjusted net income of $304 million or $0.20 per share, and net sales of $2.024 billion for the quarter.
Medtronic noted that its first-quarter revenue in each of the CardioVascular, Neuromodulation, and Surgical Technologies product lines rose more than 15% in the quarter. Revenue outside the United States grew 24% year-over-year to $1.46 billion, accounting for 39% of total net sales, led by the Diabetes, Spinal and Surgical Technologies businesses.
Among divisions, Cardiac Rhythm Disease Management, or CRDM, revenue rose 6% year-over-year to $1.30 billion, helped by more than 5% rise in implantable cardioverter defibrillators, or ICDs, revenues and 7% increase in Pacing revenue. Outside the United States, CRDM revenue grew 19%, driven by 23% growth of the ICD product lines.
Spinal revenue climbed 33% from last year to $859 million, including Kyphon, which contributed $161 million in revenue. Excluding Kyphon, revenue increased 8%, helped by 16% growth in Biologics.
CardioVascular revenue grew 30% on strong global performance across the drug-eluting stent and Endovascular product lines. Coronary vascular revenue increased 41%, with 173% rise in the United States, driven by the continued success of the Endeavor drug-eluting stent in the U.S.
Neuromodulation revenue rose 20% in the quarter on sales of pain management products. Revenue from Gastroenterology/Urological products grew 23%. Revenue from Diabetes products rose 12% on sales of consumables, with 31% rise in international sales.
The company's quarterly revenue from Surgical Technologies incerased 17%, helped by monitoring, image-guided surgery systems and navigation equipment.
Bill Hawkins, Medtronic's chief executive officer commented, "We were pleased to see our momentum continue from fourth quarter to this quarter, which positions us well for the remainder of the fiscal year. Broad-based sustainable growth and operating margin improvement are in line with our recently announced initiatives that we believe will drive consistent, superior value creation. We delivered on our commitments again this quarter, and we expect progress will continue through the balance of this fiscal year."
While announcing the fourth-quarter results, the company had said it expects fiscal 2009 earnings per share in a range of $2.94-$3.02 on revenue in a range of $15.0 billion-$15.5 billion. The company noted that the earnings per share outlook exclude the effect of any special or extraordinary charges that may impact its continuing operations. Analysts now expect the company to report earnings for the year of $2.98 per share on revenues of $15.31 billion.
MDT closed Monday's regular trading session at $53.44, down $0.63, on a volume of 6.3 million shares. In the pre-market activity, shares incresaed $0.83 or 1.55% to $54.27.
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