Medtronic Q2 Profit Up 40%, Results Beat View; Reiterates Outlook

(RTTNews) - Medical device maker Medtronic, Inc. (MDT) on Tuesday reported a 40 percent increase in profit for the second quarter from last year, reflecting revenue growth amid continued strength in emerging markets and fewer one-time charges.

Both revenue and adjusted earnings per share for the quarter beat analysts' expectations. Looking ahead, the company reiterated its financial outlook for fiscal 2014.

Omar Ishrak, Medtronic chairman and chief executive officer said, "Our second quarter revenue growth was in-line with our outlook for the year, and we are performing at or better than the market in almost every one of our business lines. This quarter also represented another quarter where our overall organization delivered consistent, dependable growth, with strong performances in some areas offsetting challenges in other parts of our business."

The Minneapolis, Minnesota-based company reported net earnings for the second quarter of $902 million or $0.89 per share, up from $646 million or $0.63 per share in the prior-year quarter.

Excluding charges, adjusted net earnings for the quarter were $919 million or $0.91 per share, compared to $902 million or $0.88 per share in the year-ago quarter. On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.90 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 2 percent or 3.3 percent in constant currency after adjusting for a $38 million negative foreign currency impact, to $4.19 billion from $4.10 billion in the same quarter last year. Analysts had a consensus revenue estimate of $4.18 billion.

Total costs and expenses for the quarter declined 5 percent from last year to $3.08 billion.

International revenues for the quarter grew 3 percent or 9 percent on a constant currency basis, to $1.87 billion, and accounted for 45 percent of Medtronic's worldwide revenues. Revenues from emerging markets increased 11 percent on a reported basis or 13 percent on a constant currency basis, to $513 million.

Revenues for Medtronic's cardiac and vascular group, which includes the Cardiac Rhythm Disease Management or CRDM, Coronary, Structural Heart, and Endovascular businesses, grew 3 percent, or 4 percent in constant currency, from last year to $2.20 billion.

Revenues for the CRDM unit, by far its biggest business line, grew 4 percent on a reported basis, or 5 percent in constant currency, to $1.27 billion. Meanwhile, revenues from Implantable Cardioverter Defibrillators or ICDs, increased 4 percent in constant currency, to $713 million.

Revenues for the restorative therapies group, which includes the Spine, Neuromodulation, Diabetes, and Surgical Technologies businesses, grew 1 percent, or 2 percent in constant currency, from the prior-year period to $1.60 billion.

Spine revenues declined 5 percent on a reported basis, or 3 percent in constant currency, while Neuromodulation revenue grew 6 percent on both a constant currency and a reported basis from last year.

Diabetes group revenues grew 4 percent on a reported basis, and 3 percent on a constant currency basis, from the prior-year quarter to $393 million.

Looking ahead to fiscal 2014, Medtronic reiterated its outlook for adjusted earnings in a range of $3.80 to $3.85 per share, on projected revenue growth in the range of 3 to 4 percent on a constant currency basis. Street is currently looking for earnings of $3.83 per share for the year on revenues of $16.96 billion.

Ishrak said, "As we look ahead, we are on the verge of bringing a number of new therapies to market over the coming quarters. Innovative therapies have fueled growth in our industry for decades and will remain a central element to our success."

MDT closed Monday's regular trading session at $58.31, down $0.24 on a volume of 3.65 million shares.