Medtronic Q2 Results Meet View, Lifts 2015 Revenue Outlook

(RTTNews) - Medical equipment maker Medtronic Inc. (MDT) on Tuesday reported an 8 percent decline in profit for the second quarter from last year, reflecting higher one-time charges that offset growth in sales.

However, both revenue and adjusted earnings per share for the quarter matched analysts' estimates. The company reiterated its fiscal 2015 earnings outlook and now forecasts sales at the top end of its prior outlook range.

Omar Ishrak, chairman and CEO of Medtronic, said, "Our second quarter performance was strong and well balanced across our businesses and geographies."

Medtronic's net earnings for the second quarter declined to $828 million or $0.83 per share from $902 million or $0.89 per share in the prior-year quarter. The decline in net earnings for the quarter was due to a charitable cash donation of $100 million pre-tax that the company made to the Medtronic Foundation.

In addition, the company recorded acquisition-related expenses of $61 million in the latest quarter primarily related to the acquisition of Covidien, compared to litigation charges of $24 million in the prior-year period.

Excluding these, adjusted earnings for the quarter were $0.96 per share, compared to $0.91 per share in the same period last year. On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.96 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter grew 4 percent to $4.37 billion from $4.19 billion in the same period last year. Revenue growth was 5 percent on constant currency basis. Analysts were looking for revenue of $4.37 billion.

U.S. revenue for the quarter grew 5 percent from the year-ago period to $2.46 billion.

International revenue rose 3 percent to $1.91 billion and increased 5 percent on a constant currency basis. International sales accounted for 44 percent of Medtronic's worldwide revenue in the quarter. Emerging market revenue climbed 10 percent to $554 million.

Segment-wise, revenue grew 4 percent in Cardiac and Vascular Group to $2.29 billion, driven by growth in Low Power, Structural Heart, and AF & Other. This was partially offset by declines in Coronary and High Power.

In Restorative Therapies Group, revenue grew 3 percent to $1.65 billion, amid growth in Neuromodulation, Surgical Technologies and BMP.

Diabetes revenue for the quarter increased 9 percent from last year to $430 million. Strong adoption of the company's MiniMed 53F0G with Enlite in the U.S. combined with 27 percent growth in emerging markets, resulted in solid growth in insulin pumps and strong double-digit growth in continuous glucose monitoring.

The MiniMed 530G with Enlite is the first and only system that automatically stops insulin delivery if glucose levels fall below a predetermined threshold.

Medtronic's total costs and expenses for the quarter rose 8 percent to $3.34 billion from $3.08 billion in the previous year.

Looking ahead to fiscal 2015, Medtronic reaffirmed its outlook for adjusted earnings per share in a range of $4.00 to $4.10.

The company now forecasts full-year revenue growth in a range of 4 to 5 percent on a constant currency basis, which is at the upper end of its prior outlook range of 3 to 5 percent growth on a constant currency basis.

Analysts expect the company to report earnings of $4.05 per share on 4.2 percent growth in revenues to $17.71 billion.

Medtronic said in June that it agreed to acquire smaller rival Covidien Plc (COV) in a cash and stock deal valued at about $42.9 billion. The deal will help Medtronic shift base to Ireland and save it from paying high U.S. corporate taxes.

Medtronic noted today that the Covidien acquisition remains on schedule to close in early calendar year 2015.

MDT closed Monday's trading at $69.19, up $0.24 or 0.35 percent on a volume of 5.33 million shares.