MINNEAPOLIS – May 24, 2011 – Medtronic, Inc. (NYSE:MDT) today announced financial results for its fourth quarter and fiscal year ended April 29, 2011.
Medtronic recorded fiscal year 2011 revenue of $15.933 billion, an increase of 1 percent as reported or an increase of 2 percent after adjusting for $12 million of favorable foreign currency impact and approximately $200 million of revenue benefit from the extra week in the first quarter of fiscal year 2010. As reported, fiscal year 2011 net earnings were $3.096 billion, which was flat, or $2.86 per diluted share, an increase of 3 percent. As detailed in the attached table, non-GAAP net earnings and diluted earnings per share for fiscal year 2011 were $3.643 billion and $3.37, an increase of 2 percent and 5 percent, respectively.
The company reported worldwide fourth quarter revenue of $4.295 billion, an increase of 2 percent as reported or flat on a constant currency basis. Revenue growth was driven by emerging technologies, performance in emerging markets, and continued steady growth in key businesses, including Coronary & Peripheral, Structural Heart, Endovascular, Diabetes, and Surgical Technologies.
As detailed in the attached table, fourth quarter net earnings and diluted earnings per share on a non-GAAP basis were $966 million and $0.90, a decrease of 2 percent and an increase of 1 percent, respectively, compared to the same period in the prior year. As reported, fourth quarter net earnings and diluted earnings per share were $776 million and $0.72, a decrease of 19 percent and 16 percent, respectively, compared to the same period in the prior year.
Fiscal year 2011 international revenue of $6.813 billion grew 6 percent both as reported and after adjusting for a $12 million favorable foreign currency impact and the benefit of the extra week in fiscal year 2010. International revenue represented 43 percent of total company revenues for the year. Fourth quarter international revenue of $1.958 billion increased 12 percent or 7 percent on a constant currency basis. Fourth quarter emerging market revenue of $397 million increased 24 percent as reported or 20 percent on a constant currency basis. This included Greater China growth of 24 percent, Latin America growth of 22 percent, India growth of 19 percent, and the Middle East and Africa growth of 19 percent, all on a constant currency basis.
“We saw steady growth across most of our businesses and geographies, which was offset by challenging dynamics in the U.S. implantable cardiac defibrillator (ICD) and Spinal markets,” said Bill Hawkins, Medtronic chairman and chief executive officer. “We continue to advance our industry-leading pipeline, making strategic investments in our emerging technologies and emerging market operations that will drive our performance and position us well for future growth.”
Cardiac and Vascular Group
The Cardiac and Vascular Group at Medtronic is comprised of Cardiac Rhythm Disease Management (CRDM), CardioVascular, and Physio-Control. For the year, the group reported worldwide sales of $8.544 billion, which is flat as reported or an increase of 1 percent after adjusting for foreign currency and the benefit of the extra week in fiscal year 2010.
Fourth quarter Cardiac and Vascular Group sales of $2.322 billion increased 1 percent as reported or declined 1 percent on a constant currency basis. Cardiac and Vascular Group International sales of $1.309 billion increased 11 percent as reported or 7 percent on a constant currency basis. Group performance was driven by double-digit sales growth in AF Solutions, Coronary and Peripheral, Structural Heart, and Endovascular, offset by declines in CRDM implantables.
CRDM fourth quarter revenue of $1.315 billion declined 7 percent as reported or 9 percent on a constant currency basis. ICD revenue of $760 million was down 16 percent on a constant currency basis. After adjusting for a competitor’s stop shipment in the prior year, ICD revenue was down 8 percent on a constant currency basis. Pacing revenue was $506 million in the quarter, flat on a constant currency basis.
The ICD market slowdown in the U.S. was partially offset by the performance of the Protecta ICD, which has been widely adopted in Europe and was recently approved by the U.S. Food and Drug Administration (FDA) late in the fourth quarter. In addition, the FDA recently approved the Revo MRI™ SureScan® pacing system, the first and only pacemaker in the U.S. specifically designed for use in a Magnetic Resonance Imaging (MRI) environment. Protecta and Revo have had good initial market acceptance and are expected to be key growth drivers in the coming fiscal year.
CardioVascular fourth quarter revenue of $879 million grew 16 percent as reported or 13 percent on a constant currency basis. Revenue growth was driven by solid performances in all three businesses, particularly in emerging markets. The Coronary and Peripheral, Structural Heart, and Endovascular businesses grew worldwide revenue 12 percent, 13 percent, and 20 percent, respectively, on a constant currency basis. Growth in CardioVascular was driven by our innovative portfolio of products including the Integrity stent platform, the CoreValve transcatheter heart valve, and the recent U.S. launch of the Endurant stent graft for the treatment of abdominal aortic aneurysms.
Physio-Control fourth quarter revenue of $128 million decreased 4 percent as reported or 6 percent on a constant currency basis. After adjusting for the one-time benefit from pent-up demand upon resuming unrestricted global shipments in the fourth quarter last year, Physio-Control revenue grew 6 percent on a constant currency basis. Physio-Control had a solid quarter in both Pre-Hospital and Automated CPR on the strength of the LIFEPAK 15 monitor/defibrillator and LUCAS chest compression system, respectively.
Restorative Therapies Group
The Restorative Therapies Group at Medtronic is comprised of Spinal, Neuromodulation, Diabetes, and Surgical Technologies. For the year, the group reported worldwide sales of $7.389 billion, which increased 2 percent as reported or 3 percent after adjusting for foreign currency and the benefit of the extra week in fiscal year 2010.
Fourth quarter Restorative Therapies Group sales of $1.973 billion increased 4 percent as reported or 2 percent on a constant currency basis. Restorative Therapies Group International sales of $649 million increased 13 percent as reported or 7 percent on a constant currency basis. Group revenue performance was led by steady growth in the Diabetes, Surgical Technologies, and Neuromodulation businesses, offset by softer sales in Spinal.
Spinal fourth quarter revenue of $875 million decreased 1 percent as reported or 2 percent on a constant currency basis. International sales for the Spinal business were up 12 percent as reported or 6 percent on a constant currency basis. Solid performances from the Solera posterior fixation system, Atlantis Vision Elite cervical plate, and the Osteotech acquisition were offset by declines in Interspinous Process Decompressions Systems (IPDs) and balloon kyphoplasty (BKP).
Neuromodulation fourth quarter revenue of $432 million increased 5 percent as reported or 4 percent on a constant currency basis. The RestoreSensor spinal cord stimulator continues to demonstrate solid performance in Europe and Canada. Revenue was also driven by InterStim® Therapy for overactive bladder and urinary retention. The company received U.S. approval for InterStim® Therapy for bowel control in the fourth quarter.
Diabetes fourth quarter revenue of $368 million grew 11 percent as reported or 9 percent on a constant currency basis. Growth in the quarter was driven by strong sales of continuous glucose monitoring products as well as solid performance of insulin pumps, including Revel in the U.S. and Veo in international markets.
Surgical Technologies revenue surpassed $1 billion ($1.036 billion) for the year, the first time the business has achieved that milestone. For the fourth quarter, Surgical Technologies recorded $298 million in sales, representing 9 percent growth as reported, or 7 percent growth on a constant currency basis. After adjusting for the fiscal year 2010 divestiture of the Ophthalmic business, sales growth was 9 percent on a constant currency basis. Strong growth was seen across all major product lines due to thawing of U.S. hospital capital budgets and increasing demand for new capital equipment technology upgrades.
“We continue to expand our leadership in chronic disease management by advancing our pipeline of differentiated products, reinforcing our commitment to quality throughout the organization, and leveraging our size and scale to deliver market-leading performance,” said Hawkins. “As we restructure our business for growth and fully launch a number of innovative medical devices, I am confident that Medtronic, under incoming chairman and chief executive officer Omar Ishrak’s leadership, is well positioned to deliver sustainable growth in fiscal year 2012 and beyond.”
Medtronic will host a webcast today, May 24, at 8 a.m. EDT (7 a.m. CDT), to provide information about its businesses for the public, analysts and news media. This quarterly webcast can be accessed by clicking on the Investors link on the Medtronic home page atwww.medtronic.com and this earnings release will be archived atwww.medtronic.com/newsroom. Within 24 hours, a replay of the webcast and a transcript of the company’s prepared remarks will be available in the “Events & Presentations” section of the Investors portion of the Medtronic website.
Medtronic, Inc., headquartered in Minneapolis, is the world’s leading medical technology company – alleviating pain, restoring health and extending life for people with chronic disease. Its Internet address is www.medtronic.com.
This press release contains forward-looking statements related to expected product introductions, product growth drivers and results of Medtronic’s future operations, which are subject to risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of medical products, government regulation and general economic conditions and other risks and uncertainties described in Medtronic’s periodic reports on file with the Securities and Exchange Commission. Actual results may differ materially from anticipated results. Medtronic does not undertake to update its forward-looking statements.Unless otherwise noted, all comparisons made in this news release are on an “as reported basis,” and not on a constant currency basis; references to quarterly figures increasing or decreasing are in comparison to the fourth quarter of fiscal year 2010; and references to annual figures increasing or decreasing are in comparison to fiscal year 2010.