Medtronic reports strong earnings, despite revenue drop

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Medtronic reports strong earnings, despite revenue drop

by Heather Mayer, DOTmed News Reporter | August 25, 2010
Even with a slight drop in revenues for the first quarter of fiscal year 2011, Medtronic, Inc. reported an increase in net earnings Tuesday.

The medical device company, based in Minnesota, posted net earnings of $830 million, or $0.76 per diluted share, an 87 percent increase over the same period last year. The company's worldwide first quarter revenue of $3.773 billion decreased 4 percent from fiscal year 2010 revenues of $3.933 billion. (The company also noted that the first quarter of fiscal year 2011 has just 13 weeks, while last year's had 14.)

Medtronic posted revenue of $1.544 billion outside of the United States, which was flat compared to the same period last year, the company said. International sales accounted for 41 percent of the company's worldwide revenue.

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"A softer global health care market impacted by decreased utilization and increased pricing pressure made for a difficult first quarter," said Bill Hawkins, Medtronic chairman and CEO in prepared remarks.

The company's cardiac and vascular division comprises Cardiac Rhythm Disease Management (CRDM), CardioVascular and Physio-Control. The group reported $2.027 billion in sales, a 5 percent decrease. The group's international sales of $1.042 billion were flat compared to the period last year. The company reported that the group revenue performance was driven by "strong CardioVascular sales offset by weaker sales in CRDM and Physio-Control."

In fact, CRDM revenue of $1.226 billion declined 8 percent. Lower CRDM sales due to slower market growth and increased pricing pressure were marginally offset by continued growth of the AF Solutions business and the launch of the company's Protecta ICD in Europe, the company said.

Due to "uncertain times," Medtronic has lowered its guidance for the 2011 fiscal year, expecting a revenue growth in the range of 2 to 5 percent.