Despite a troubled economy and hiccups with the Fidelis lead, med-tech giant Medtronic (Minneapolis) reported an 8% increase over the $13.55 billion in fiscal year 2008, during an investor's conference call yesterday morning.
In a separate communication that was not discussed during the conference call, the company also reported that it would lay off some 1,500 to 1,800 employees, in an effort to streamline operations (See Restructuring roundup p. 6), a measure that has been speculated on for nearly a month now (Medical Device Daily, April 28, 2009).
"Although we have clearly felt the impact from Fidelis over the last 18 months we are now back on the offensive having stabilized our shared position and strengthened our overall product line," Bill Hawkins, chairman/CEO of Medtronic said during the call.
Medtronic recorded fiscal year 2009 revenue of $14.6 billion. Currency translation had a negative impact on revenue of $100 million for the fiscal year. As reported, fiscal year 2009 net earnings were $2.29 billion, or $2.04 per diluted share an increase of 3% and 5% respectively.
Fourth quarter revenue decreased nearly 1% to $3.83 billion from the $3.86 billion reported a year ago. Revenue growth on a constant currency basis was 5% after adjusting for the negative $211 million impact of currency translation in the fourth quarter. As reported, fourth quarter net earnings were $250 million, or 22 cents per diluted share.
"Reflecting on fiscal 2009, we delivered on our financial commitments despite the unforeseeable shifts in the economic climate," Hawkins said. "We strengthened our core business and made solid progress advancing our pipeline, while increasing our focus and discipline on driving innovation and improving R&D productivity across the company."
Medtronic saw its biggest gains in its Cardiovascular Division and its Spinal and Biologics units.
According to the company, the Cardiovascular Division's annual revenue of $2.44 billion increased 14%; 15% on a constant currency basis.
The company went on to say that fourth quarter revenue of $644 million was flat compared to a year ago, but grew 8% after adjusting for an unfavorable $50 million currency translation impact. Coronary annual revenue of $1.29 billion increased 16% on a constant currency basis. Endovascular annual revenue of $398 million increased 42% on a constant currency basis. Fourth quarter Endovascular revenue of $117 million increased 67% on a constant currency basis, driven by the strong performance of both the Talent Abdominal Aortic Aneurysm (AAA) and Talent Thoracic aneurysm product lines. The acquisitions of CoreValve (Irvine, California) and Ventor (Netanya, Israel) were also completed in the quarter, positioning Medtronic in a leadership role in the transcatheter valve therapy marketplace, it said (MDD, April, 13, 2009).
Spinal and Biologics annual revenue of $3.4 billion increased 14% on both an actual and constant currency basis, driven by $609 million in Kyphon revenue. Revenue growth was driven by core spinal products which increased 5% on a constant currency basis. Biologics revenue in the fourth quarter was $215 million.
The unit that had the smallest growth was the Cardiac Rhythm Disease Management division. The unit saw annual revenue of $5.01 billion increased 1%; 2% on constant currency basis. Fourth quarter revenue of $1.3 billion decreased 5%, but grew 1% after adjusting for an unfavorable $83 million currency translation impact. ICD annual revenue of $2.96 billion increased 3% over fiscal year 2008 on a constant currency basis. Worldwide annual pacing revenue of $1.98 billion decreased 1% compared to last year. The company suffered from numerous reports of lead failures which led to a lead recall issued in mid-October 2007 (MDD, Oct. 16, 2007).
Most recently a published report in the Heart Rhythm Society (Washington) journal HeartRhythm shows that there could be a higher rate of failure for the Sprint Fidelis Leads, than previous studies have revealed (MDD, Feb. 26, 2009).
Despite the issues with the Fidelis the company said that it would continue to move forward and still had strong portfolio of products to carry it through.
"We believe we have the most exciting portfolio of products and therapies in the industry. Our relentless focus on execution and innovation position us as an important part of the solution to address the burden of global chronic disease," Hawkins said.