Medtronic Earnings Up Nearly 6%, but Sales Fall

(Reuters) Medtronic’s third-quarter earnings rose nearly 6 percent, but sales of major heart and spine devices fell, and European sales weakened in January, the company reported Tuesday.
European markets generate about a quarter of Medtronic’s total revenue.Omar Ishrak, the company’s chairman and chief executive, called the quarter “challenging.” Still, he referred to signs of improvement in cardiac rhythm management and spine devices, the company’s largest businesses, partly because of an increase in procedures, and because Medtronic increased its share of those markets.Mr. Ishrak said price pressure continued, especially in cardiac rhythm management, but he predicted it would subside as Medtronic introduced implantable defibrillators and pacemakers this year.Medtronic, which also makes heart stents, heart valves and insulin, reiterated its outlook for the fiscal year, calling for diluted earnings per share of $3.66 to $3.70 on revenue growth of 3 to 4 percent.The company said its net income increased to $988 million, or 97 cents a share, in its third quarter, which ended on Jan. 25, from $935 million, or 88 cents a share, a year earlier.Excluding onetime items, mainly related to acquisitions, earnings were 93 cents a share. On that basis, analysts on average were expecting 91 cents.Michael Weinstein, a JPMorgan Chase analyst, said the better-than-expected earnings stemmed mainly from the extension of the research and development tax credit, which was not uniformly reflected in Wall Street models. It added 3 cents a share in the quarter.Revenue rose 4 percent to $4.03 billion.Sales of implantable heart defibrillators fell to $654 million from $674 million, while sales of pacemaker system declined to $459 million from $467 million. And sales of spinal products fell to $753 million from $784 million.Growth in emerging markets, where revenue increased 20 percent to $475 million, offset the weakness in Europe.