The health care industry may be relatively recession-proof, but that's not stopping companies such as Medtronic from posting bleak outlooks.
Shares of the medical device maker fell a steep 11.5%, or $4.12, to $32.30, on Tuesday morning. That's down 43.3% from its 52-week, late-August high of $56.97.
"Our results in challenging economic times reflect the benefit of a globally diversified product portfolio," said Medtronic Chairman Bill Hawkins. "As we look to the remainder of our fiscal year, our focus will be on maximizing the potential of new product launches, leveraging growth in markets outside the U.S. and continuing to deliver meaningful operating leverage."
The Minneapolis-based company's fiscal second quarter was propped up by growth outside the U.S. that benefited from a weak dollar and favorable foreign exchange rates. Revenue outside the States grew 18.0%, to $1.4 billion, including a $65.0 million positive benefit of currency translation.
Medtronic's cardiac rhythm unit, which makes pacemakers and defibrillators, grew 9.1%, to $1.2 billion, while the spinal business grew 30.2%, to $859.0 million. The company's cardiovascular unit, which produces stents--mesh-wire tubes that are implanted in the chest to help keep arteries open--grew 21.6%, to $596.0 million. Medtronic also experienced growth in its neuromodulation sector, diabetes unit and surgical technologies units.
The company earned $571.0 million, or 51 cents per share, compared with profits of $666.0 million, or 58 cents per share, in the year-prior period. Sales rose 16.1%, to $3.6 billion, for the fiscal second quarter that ended Oct. 24. Earnings were negatively impacted by $176.0 million, or 15 cents per share, resulting from litigation with stent rival Johnson & Johnson. Analysts surveyed by Thomson Financial expected, on average, earnings of 71 cents per share on revenues of $3.7 billion.
Based on an anticipated $300.0 million to $400.0 million negative revenue impact, due to a strengthening dollar, the company projected fiscal year 2009 revenue of $14.6 billion to $15.0 billion, adjusted from previous guidance of $15.0 billion to $15.5 billion.‹
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