Medtronic reports record first quarter revenues of $2.7 billion
20 August 2005
Minneapolis, USA. Medtronic recorded first quarter fiscal year 2006
(ended July 29, 2005) revenues of $2.690 billion, a 15% increase over the
$2.346 billion recorded in the first quarter of fiscal year 2005.
Reflecting the weaker dollar, foreign currency translation had a positive
effect on first quarter revenues of $26.0 million compared to the prior year
first quarter. Before purchased in-process research and development (IPR&D)
charges, first quarter net earnings of $615.9 million, or $0.50 per diluted
share, increased 16 percent over net earnings of $529.7 million and $0.43
per diluted share recorded in the same period last year. After IPR&D
charges, first quarter actual earnings were $320.6 million or $0.26 per
- Diluted Earnings Per Share (EPS), Before IPR&D Charges, of $0.50 Grew
- Implantable Cardioverter Defibrillator (ICD) Revenues Grew 30%;
Estimated Worldwide ICD Market Share Increased
- Spinal Continued Track Record of Strong Growth with Revenues Up 24%
- Diabetes Revenues Increased 19%
- Early Acceptance of Endeavor(TM) Drug Eluting Stent Following CE Mark
Approval is Positive
"Medtronic entered this fiscal year with very solid momentum and we are
pleased to see that momentum continue through the first quarter," said Art
Collins, chairman and chief executive officer of Medtronic. "Together, our
ICD, Spinal and Diabetes businesses represented more than 50 percent of our
overall revenues and collectively grew more than 25 percent over the same
quarter last fiscal year."
"In addition to strong growth in our largest businesses, Medtronic
recently received CE Mark approval for the Endeavor stent for use in most
markets outside the United States, and we are very encouraged by market
acceptance of Endeavor thus far," added Collins.
Factors to consider when reviewing financial performance
In the quarter, Medtronic recorded pre-tax, IPR&D charges totalling $363.8
million related to the acquisition of Transneuronix, Inc.; a patent
cross-licensing agreement with NeuroPace, Inc.; and the purchase of
intellectual property from Gary K. Michelson, M.D. and Karlin Technologies,
Cardiac Rhythm Management Business
Cardiac Rhythm Management quarterly revenues were $1.268 billion,
representing growth of 16 percent over the same period last fiscal year.
ICD revenues were $718 million in the quarter, a 30 percent increase over
the same period last fiscal year. This quarter represents the first time in
Medtronic's recent history where ICD revenues grew sequentially from a
fourth quarter to a first quarter. The overall worldwide ICD market remains
strong, growing an estimated 26 percent over the same period last year. ICD
revenue gains underscore the strength of Medtronic's ICD product line and
sales and support teams. Market share gains in the quarter also reflect, in
part, the changing competitive dynamics in the marketplace. Quarterly pacing
revenues were $446 million in the quarter, down 1 percent over the same
period last year. This reflects a continuing trend by physicians to utilize
pacing and ICD combination devices (CRT-Ds) in lieu of pacemakers.
Medtronic's Emergency Response Systems business reported a 10 percent
revenue increase over the same period last fiscal year. Highlights included:
- U.S. introduction of the EnTrust(TM) family of ICDs commenced after
FDA approval. These single- and dual-chamber ICDs use pacing to
painlessly stop abnormally fast and potentially life-threatening
heartbeats that can lead to sudden cardiac arrest (SCA), while
concurrently preparing to deliver a shock if needed.
- Medtronic's InSync Sentry(TM) CRT-D system, with OptiVol(TM) Fluid
Status Monitoring, continued to be well received by physicians and now
represents the majority of Medtronic CRT-D units sold worldwide. The
OptiVol feature, unique to Medtronic, monitors and detects fluid
accumulation in the thoracic cavity (lungs and heart), which can serve
as an early warning of heart failure and can limit costly
- The European Society of Cardiology (ESC) announced its new guidelines
for the treatment of heart failure. These guidelines further validated
the benefits of ICDs and CRT-Ds and recognized these devices as standard
- Following FDA approval, the dual-chamber EnRhythm(TM) Pacemaker, the
first pacemaker to include Managed Ventricular Pacing (MVP(TM)) to
significantly reduce unnecessary pacing in the heart's right ventricle
(lower chamber), entered into a limited market launch. Initial physician
reaction has been extremely positive.
- The Medtronic CareLink(R) Network continued to expand as the total
number of clinics on the system now exceeds 600 with approximately
43,000 patients being monitored.
Vascular revenues of $205 million for the quarter represented a 5 percent
growth over the same period last fiscal year. Highlights included:
- The Endeavor Drug Eluting Coronary Stent received CE Mark approval at
quarter end. A simultaneous launch of the Endeavor stent has been
initiated in more than 40 countries around the world. Initial market
acceptance has been very positive.
- The company announced that it intends to release ENDEAVOR I 24-month
and ENDEAVOR II 12-month clinical trial results at the European Society
of Cardiology (ESC) meeting in Stockholm, Sweden, on September 4, 2005.
Also, ENDEAVOR III 8/9-month trial results will be presented at the
Transcatheter Cardiovascular Therapeutics (TCT) conference in
Washington, D.C. on October 17, 2005.
- Balanced growth was seen across coronary balloon catheters, guide
catheters and guide wires, which collectively grew 19 percent over the
same period last year. The Driver(R) bare metal coronary stent continued
to perform well in markets outside the United States.
- Endovascular product lines, including the AneuRx(R) and Talent(TM)
Stent Grafts for the treatment of abdominal and thoracic aortic
aneurysms (AAA/TAA), grew 12 percent worldwide and maintained market
Cardiac Surgery Business
Cardiac Surgery revenues of $166 million in the quarter grew 3 percent
over the same period last fiscal year. Highlights from the quarter included:
- The Mosaic(R) and Mosaic(R) Ultra Heart Tissue Valves continued to
drive demand for Medtronic's tissue heart valve product line.
- Cardiac Surgery Technologies (CST) revenues grew 11 percent, led by
growing market acceptance of the Cardioblate(R) BP Surgical Ablation
Systems, which were enhanced by the introduction of the new Cardioblate
- Perfusion Systems' revenues declined 1 percent in the quarter as a
result of an overall decline in Coronary Artery Bypass Graft (CABG)
Spinal, ENT and Navigation Businesses
Spinal / Ear, Nose and Throat (ENT) / Navigation revenues for the quarter
were $589 million, representing 22 percent growth over the same period last
fiscal year. Spinal revenues of $504 million increased 24 percent over the
same period last fiscal year and continued a track record of strong growth.
- The CD HORIZON(R) LEGACY(TM) family of products, the MAST(TM) family
of minimally invasive surgical tools and the CAPSTONE(TM) Vertebral Body
Spacer products used in spinal fusion procedures all showed continued
strong growth and surgeon acceptance.
- INFUSE(R) Bone Graft revenue growth reflected continuing acceptance in
both spinal and acute tibial fracture procedures.
- In markets outside the United States, Medtronic's portfolio of dynamic
stabilization products, which includes the DIAM(TM) System, the
MAVERICK(TM) and O-MAV(TM) Artificial Lumbar Discs and the PRESTIGE(R)
LP and BRYAN(R) Cervical Discs, continued to gain momentum and
collectively moved into the number one market position in Europe.
- Several innovative new products were introduced, including the
MYSTIQUE(TM) Resorbable Graft Containment Plating System and the
VERTEX(R) Max Reconstruction System for cervical stabilization and the
CD HORIZON(R) ENGAGE(TM) Spinal System for thoracolumbar stabilization.
Neurological and Diabetes Businesses
Neurological and Diabetes quarterly revenues of $463 million increased 13
percent over the same quarter one year ago. Total Neurological revenues were
$290 million in the quarter, a 10 percent growth over the same quarter last
year. Diabetes revenues were $174 million, a 19 percent increase over the
same quarter last fiscal year. Highlights from the quarter included:
- The SynergyPlus+(TM) Neurostimulation System received FDA approval.
SynergyPlus+ offers physicians and chronic pain patients the option to
choose among multiple settings designed specifically for pain associated
with different daily tasks, such as standing, walking or laying down.
- The RESTORE(TM) Rechargeable Neurostimulation System, introduced in
April 2005, reported solid growth.
- On July 1, 2005, Medtronic acquired Transneuronix, Inc., a privately
held medical device company focused on the treatment of obesity via
stimulation of the stomach by gastric electrical pacing technology.
Medtronic announced that it is nearing completion of the SHAPE Trial, a
200-patient pivotal clinical trial that will be used to support
submission to FDA for U.S. market approval.
- Medtronic entered into a patent cross-licensing agreement with
NeuroPace, Inc., a privately held medical device company specializing in
the detection, treatment and monitoring of epilepsy and other
neurological disorders via responsive brain stimulation.
- FDA approval of the Guardian(R) RT Continuous Glucose Monitoring
System was received in July, with a limited market release beginning in
late September. The Guardian RT System is a continuous glucose
monitoring system that displays glucose values every five minutes and
alerts patients when glucose levels become too high or too low.