Medtronic Q4 Profit Plunges, ’12 Outlook Falls Short
Medical device giant Medtronic, Inc., on Tuesday posted a 19 percent decrease in fourth-quarter earnings, largely due to sluggish implantable cardioverter defibrillator (ICD) sales and costs related to recent layoffs.
Shares of the Fridley-based company's stock were down 1.5 percent to $40.62 in late-morning trading following the announcement.
Net earnings for the quarter that ended April 29 totaled $776 million, or 72 cents a share, an 18.7 percent decline from last year's fourth-quarter earnings of $954 million, or 86 cents per share.
Excluding special items, including charges related to the company's recent layoffs, the company earned 90 cents per share in the fourth quarter. Analysts polled by Thomson Reuters expected earnings of 92 cents per share.
Fourth-quarter revenue increased 2 percent to $4.3 billion, which was in line with analyst estimates of $4.29 billion.
Medtronic CEO Bill Hawkins said that “challenging dynamics in the U.S. [ICD] and spinal markets” accounted for the company's poor performance during the quarter.
ICD sales were down 16 percent during the quarter to $760 million, and sales for the company's spinal products fell 1 percent.
In January, the Heart Rhythm Society announced that it would advise the Department of Justice in its ongoing investigation of ICDs. That investigation has reportedly hindered sales of ICDs.
For the full year, Medtronic reported revenue of $15.93 billion, up 0.7 percent from last year's annual revenue. Net earnings for the full year totaled $3.1 billion, or $2.86 per share, which was nearly unchanged from last year.
The company also on Tuesday announced its earnings guidance for the fiscal year that will end in April 2012, which fell short of analyst predictions. Medtronic said that it expects revenue growth to be between 1 percent and 3 percent and earnings to be in the range of $3.43 per share to $3.50 per share.
Analysts polled by Thomson Reuters expect fiscal 2012 earnings of $3.62 per share.
Earlier this month, Medtronic announced that Omar Ishrak, president and CEO of GE Healthcare Systems, has been chosen to replace William Hawkins as CEO and chairman, beginning June 13.
Medtronic is the world's largest medical device company and Minnesota's seventh-largest public company based on revenue from its previous fiscal year.