Medtronic shows strong growth of 19%

21 August 2008

Medtronic, Inc. (NYSE:MDT) has recorded a revenue of $3.706 billion for the first quarter of fiscal year 2009 (ended July 25, 2008), an increase of 19% over the same period last year.

The share price has risen sharply to over 56 on the announcement, but has still not reached the peak of 58 achieved around October last year. However, it has grown fairly steadily since its steep drop at the end of 2007 and the low of almost 44 in December.

“We were pleased to see our momentum continue from fourth quarter to this quarter, which positions us well for the remainder of the fiscal year,” said Bill Hawkins, Medtronic chief executive officer. “In addition to the strong revenue growth driven by our diversified product portfolio, we were pleased to see continued progress in our efforts to deliver operating leverage as demonstrated by a 25% increase in operating income.”

Revenue outside the United States of $1.457 billion grew 24% led by the Diabetes, Spinal and Surgical Technologies businesses. Revenue outside the US accounted for 39% of Medtronic’s revenue this quarter.

Revenue in the CardioVascular, Neuromodulation, and Surgical Technologies product lines each grew more than 15% in the quarter. Spinal revenue grew 33% to $859 million, but had the contribution of the recent acquisition of spinal products company Kyphon.

CardioVascular revenue grew 30% to $631 million, driven by strong global performance across the drug-eluting stent and Endovascular product lines. Coronary vascular revenue of $349 million grew 41% globally and 173% in the United States, driven by the continued success of the newly approved Endeavor drug-eluting stent in the US. Revenue from Endovascular products increased 26% on the strength of thoracic products in markets outside the US and two new product launches in the US.

Neuromodulation revenue grew 20% to $348 million, Diabetes revenue grew 12% to $269 million and Surgical Technologies grew 17% to $202 million.

The Cardiac Rhythm Disease Management (CRDM) sector is the largest earner for Medtronic with revenue of $1.303 billion, but showed the lowest increase of 6%. The slow growth in this sector led Medtronic to cut 1100 jobs in May.

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