* Oper profit 85 cents/share, in line with Street view
* Heart defibrillator sales outpace industry but still weak
* FDA posts warning letter over plant violations
* Shares dip 0.2 pct in afternoon
By Debra Sherman
Aug 21 Medtronic Inc said sales of its
heart defibrillators outpaced the global industry but remained
weak, disappointing some investors who hoped the company would
win more business after a product recall from rival St. Jude
Medtronic, the world's largest stand-alone maker of medical
devices, said the global market for implantable defibrillators,
known as ICDs, was beginning to stabilize after several sluggish
years due to a weak economy and heightened scrutiny over their
use. The devices, which correct irregular heart rhythms, are one
of its biggest revenue-generators.
Chief Executive Omar Ishrak estimated the total worldwide
market for the devices fell 4 percent in the latest quarter.
Medtronic performed slightly better, with company defibrillator
sales down 3 percent.
"We're pretty satisfied with what we're doing in ICDs. Our
share in Europe is at a three-year high," Ishrak said in an
"We are gaining share. We can't say whether it's because of
(St. Jude's issues). And we feel good about the fact that the
market is stabilizing," he said.
Medtronic shares were down 0.2 percent at $41.35 on Tuesday
afternoon. Earlier in the day the shares rose to $41.75, the
highest level since mid-2011.
Danielle Antalffy, an analyst with Leerink Swann, attributed
the modest stock decline to disappointment that the company did
not benefit more from the problems that rival St. Jude has had
with its defibrillator leads - the wires that carry electricity
from the device to the heart.
"We are seeing signs of improvement. Maybe the improvement
wasn't quite as good as people had hoped," said Debbie Wang, an
analyst with Morningstar.
In the United States, Ishrak said that the ratio of the
number of leads sold to the number of defibrillators sold has
rebounded to the levels before the company recalled its Fidelis
lead in 2009. The ratio is one indicator of doctors' willingness
to use Medtronic leads with Medtronic's defibrillators.
FDA WARNING LETTER
Separately, the U.S. Food and Drug Administration said on
Tuesday it had sent a warning letter to Medtronic in July.
The letter said that some neurological devices manufactured
at its Minnesota plant violated manufacturing and quality
regulations, which could lead to patient injuries, and that the
company needs to take immediate action to correct the
Ishrak said he does not expect that corrections at the plant
will have a material financial impact and that the company would
work as quickly as possible to fix the problems.
Medtronic, which also makes heart pacemakers, insulin pumps
and products used for spinal procedures, said net earnings for
its fiscal first quarter ended July 27 rose to $864 million, or
83 cents per share, from $821 million, or 77 cents per share, in
the year-ago period.
Excluding one-time items, earnings were 85 cents per share,
matching the average Wall Street estimate, according to a survey
by Thomson Reuters I/B/E/S.
Revenue increased to $4.01 billion from $3.95 billion.
The company left its full-year profit forecast unchanged at
$3.62 to $3.70 per share. "We want to be very conservative,"
In the latest quarter, emerging-market revenue made up 11
percent of Medtronic's overall sales in the quarter, well below
the company's goal of 20 percent. Ishrak called the result a
"It was more execution than the market," he said, adding
that emerging market governments continue to invest in
healthcare, and Medtronic's 20 percent goal remains intact.
Revenue from its cardiac rhythm management unit fell 5
percent to $1.19 billion as hospitals purchased fewer devices,
instead using those already on their shelves.
Revenue from its Restorative Therapies Group, including its
spine, neuromodulation, diabetes and surgical technologies
businesses, rose 5 percent to $1.89 billion.