reported financial results for its second quarter of fiscal year 2012,
which ended October 28, 2011.
The company reported worldwide second quarter revenue of $4.132 billion,
compared to the $3.903 billion reported in the second quarter of fiscal
year 2011, an increase of 6 percent as reported or 3 percent after
adjusting for a $123 million favorable foreign currency impact. As
reported, second quarter net earnings were $871 million, or $0.82 per
diluted share, an increase of 54 percent and 58 percent, respectively,
over the same period in the prior year. As detailed in the attached
table, second quarter net earnings and diluted earnings per share on a
non-GAAP basis were $898 million and $0.84, an increase of 1 percent and
2 percent, respectively, over the same period in the prior year.
expenses, Medtronic would have earned $898 million, or 84 cents per
share, in Q2 2012.
The Street was only looking for earnings of 82 cents per share on
revenue of $4.07 billion.
of $1.832 billion increased 14 percent as reported, or 6 percent on a
constant currency basis. International sales accounted for 44 percent of
Medtronic’s worldwide revenue in the quarter. Emerging market revenue of
$414 million increased 21 percent as reported, or 19 percent on a
constant currency basis.
“I'm pleased we delivered another quarter of consistent growth in a
difficult environment,” said Omar Ishrak, Medtronic chairman and chief
executive officer. “A majority of our businesses, and nearly all of our
geographies, contributed to this growth. As we continue to focus on
innovation, globalization, and execution, I see tremendous opportunities
for growth in the future.”
Cardiac and Vascular Group The Cardiac and Vascular Group at Medtronic is comprised of Cardiac
Rhythm Disease Management (CRDM), CardioVascular, and Physio-Control.
The group had worldwide sales in the quarter of $2.207 billion,
representing an increase of 5 percent as reported or 1 percent on a
constant currency basis. Cardiac and Vascular Group International sales
of $1.213 billion increased 12 percent as reported or 4 percent on a
constant currency basis. Group revenue performance was driven by Pacing,
AF Solutions, Coronary, Structural Heart, Endovascular and Peripheral
sales offset by weaker sales in implantable cardioverter defibrillators
(ICDs) and Physio-Control.
CRDM second quarter revenue of $1.268 billion increased 2 percent as
reported or declined 2 percent on a constant currency basis. Second
quarter revenue from ICDs was $708 million, down 8 percent on a constant
currency basis, while pacing revenue was $511 million, an increase of 4
percent on a constant currency basis. Lower ICD sales due to declining
procedure volumes were partially offset by continued growth of the AF
Solutions and Pacing businesses.
CardioVascular revenue of $830 million grew 12 percent as reported or 8
percent on a constant currency basis. Revenue growth was driven by solid
performance in Structural Heart and Endovascular. The Coronary,
Structural Heart, Endovascular and Peripheral businesses grew worldwide
revenue 3 percent, 8 percent, and 20 percent, respectively, on a
constant currency basis. In Structural Heart, transcatheter valves
continued to show strong growth. Endovascular revenue was driven by
continued growth from the U.S. launch of the Endurant stent graft for
the treatment of abdominal aortic aneurysms (AAA) and growth in
Peripheral, including drug-eluting balloons in international markets.
Physio-Control revenue of $109 million was flat as reported or down 3
percent on a constant currency basis. On November 17, 2011, the company
entered into a definitive agreement under which affiliates of Bain
Capital will acquire Physio-Control and related entities for cash in a
transaction value estimated at $487 million. The transaction is expected
to close in the first calendar quarter of 2012.
Restorative Therapies Group
The Restorative Therapies Group at Medtronic is comprised of Spinal,
Neuromodulation, Diabetes, and Surgical Technologies. The group had
worldwide sales in the quarter of $1.925 billion, representing an
increase of 6 percent as reported or 4 percent on a constant currency
basis. Restorative Therapies Group International sales of $619 million
increased 18 percent as reported or 10 percent on a constant currency
basis. Group revenue was led by solid performances in Diabetes and
Surgical Technologies, as well as improved growth in Neuromodulation,
offset by continued challenges in Spinal.
Spinal revenue of $839 million declined 1 percent as reported or 3
percent on a constant currency basis. International sales for the Spinal
business increased 17 percent as reported or 8 percent on a constant
currency basis. Core Spinal revenue of $631 million, which includes core
metal constructs, interspinous process decompression devices (IPDs), and
balloon kyphoplasty (BKP) products, declined 3 percent on a constant
currency basis. Biologics revenue of $208 million declined 4 percent on
a constant currency basis, driven by declines in the sales of INFUSE,
partially offset by revenue growth from Other Biologics products.
Neuromodulation revenue of $421 million increased 9 percent as reported
or 6 percent on a constant currency basis. Growth continues to be driven
by strong sales of InterStim Therapy, and Activa PC and RC Deep Brain
Stimulation (DBS) systems for movement disorders. The RestoreSensor
spinal cord stimulator with its proprietary AdaptiveStim™ technology
continues to perform well in Europe, and will be launching in the U.S.
and Japan in the third quarter.
Diabetes revenue of $367 million grew 13 percent as reported or 10
percent on a constant currency basis. Growth in the quarter was driven
by strong sales of durable pumps and continuous glucose monitoring (CGM)
products. The Enlite™ CGM sensor is performing well in Europe, and the
company recently announced the start of its U.S. IDE study for approval
of this next generation sensor.
Surgical Technologies revenue of $298 million grew 22 percent as
reported or 20 percent on a constant currency basis. Excluding its new
Advanced Energy business, Surgical Technologies revenue grew 11 percent
on a constant currency basis. Revenue growth was well balanced across
the businesses’ core platforms of Power, Navigation, Monitoring,
Imaging, and Hydrocephalus Management. In August, Medtronic completed
the acquisitions of Salient Surgical Technologies, Inc. and PEAK
Surgical, Inc., which will further leverage Medtronic’s strength in
Surgical Technologies and drive growth in this business.
The Company today updated its revenue outlook and reiterated its diluted
earnings per share (EPS) guidance for fiscal year 2012.
For the second half of fiscal year 2012, the Company expects revenue
growth from continuing operations to remain in the range of 1 to 3
percent on a constant currency basis.
For fiscal year 2012, the Company continues to expect diluted EPS in the
range of $3.43 to $3.50, which includes approximately $0.04 to $0.06 of
dilution from the Ardian acquisition. After adjusting for Ardian
dilution and 10 cents of one-time tax benefits received in fiscal year
2011, fiscal year 2012 diluted EPS growth is expected to be in the range
of 6 percent to 9 percent.
EPS guidance excludes any unusual charges or gains that might occur
during the fiscal year and the impact of the non-cash charge for
convertible debt interest expense. The guidance provided only reflects
information available to Medtronic at this time.
“We’ve aligned our organization to drive market leading execution and we
continue to focus on extending our mission globally to expand growth,”
said Ishrak. “Our commitment to developing innovative medical devices
that add clinical value for our patients and economic value for our
customers will continue to drive all that we do.”