Medtronic’s Q2 earnings drop 26%

Medtronic has announced a drop in net earnings for its second quarter of fiscal year 2013, which ended Oct. 26, despite a slight increase in sales.

The company reported worldwide second quarter revenue of $4.1 billion, an increase of 2 percent as reported. Including a one-time, non-cash $245 million pre-tax charge related to certain litigation in its structural heart business, second quarter net earnings as reported were $646 million, a decrease of 26 percent over the same period in the prior year.   

Second quarter international revenue of $1.81 billion increased 1 percent. International sales accounted for 44 percent of Medtronic’s worldwide revenue in the quarter. Emerging market revenue of $464 million increased 14 percent, and represented 11 percent of the company’s revenue.

The cardiac and vascular group includes the cardiac rhythm disease management (CRDM), coronary, structural heart and endovascular businesses. The group had worldwide sales in the quarter of $2.14 billion, representing an increase of 2 percent. The group international sales of $1.17 billion were flat compared with last year’s second quarter. “The group revenue performance on a constant currency basis was driven by solid growth in coronary, endovascular, structural heart and AF [atrial fibrillation] solutions, partially offset by declines in Pacing,” the company reported. 

CRDM revenue of $1.23 billion was a decline of 3 percent. Second quarter revenue from implantable cardioverter-defibrillators (ICDs) was $689 million, while Pacing revenue was $480 million. Medtronic reported that continued growth of the AF solutions business partially offset weaker pacing sales.

Coronary revenue of $429 million grew 14 percent over the previous year’s second quarter. Sales of drug-eluting stents increased, driven by  the Resolute Integrity drug-eluting stent in the U.S. and its launch in Japan.

Structural heart revenue of $271 million grew 6 percent on a constant currency basis or 2 percent as reported.  Growth was driven by “solid sales” of the CoreValve transcatheter aortic heart valves in international markets, according to the company.

Endovascular revenue of $210 million grew 12 percent as reported. The Endurant abdominal aortic stent continues to drive growth in Japan, along with the Endurant II in the U.S. and Europe. The peripheral stent portfolio, including the Complete SE vascular stent, continued to drive global growth.

Diabetes revenue of $378 million grew 3 percent as reported, driven by “strong sales” of continuous glucose monitoring (CGM) products, the company said. The Paradigm Veo insulin pump with its low glucose suspend technology, together with the Enlite CGM sensor, had solid growth in international markets.