Updated from 4:36 p.m. EST
third-quarter revenue rose 9% as sales of defibrillators and spinal products grew at double-digit clips, but the overall top line was a disappointment.
Revenue for the quarter ended Jan. 27 rose to $2.77 billion from $2.53 billion in the same period a year ago. The Minneapolis-based medical-device maker posted third-quarter earnings of $669.6 million and 55 cents a share, compared with $544.1 million, or 45 cents a share, a year ago.
According to Thomson First Call, Medtronic matched analysts' consensus profit estimate, but revenue fell short of Wall Street's target of roughly $2.89 billion. The company said revenue took a hit from the effect of foreign currency translations.
Medtronic said sales from its heart-rhythm product line totaled $1.26 billion in the quarter, up 10% from last year. Implantable defibrillator revenue rose 21% to $723 million. Management had been projecting at least 20% growth in its defibrillator line, but some investors were hoping to see
Chief Operating Officer Bill Hawkins said during Medtronic's earnings conference call that the company's share of the worldwide market for cardiac-rhythm devices was 52% to 53%. Medtronic said its Endeavor drug-coated coronary stent, a device used to prop open arteries cleared of blockages, had a market share in the mid- to high-teens.
Medtronic's vascular business recorded sales of $236 million, a 6% increase, but cardiac-surgery revenue of $154 million marked a decline of 6% year over year.
Sales for Medtronic's spinal-care and ear, nose and throat segment increased 17% to $628 million, while the neurological and diabetes division had quarterly revenue of $489 million, up 6%.
"Solid overall growth was again led by our two largest product lines," Art Collins, chairman and chief executive of Medtronic, said in a press release. "These two product lines accounted for about 45% of the corporation's revenue and, on a constant currency basis, they collectively grew 22% compared to the prior year third quarter."
Medtronic updated its guidance for the fiscal year ending in April, saying it should earn $2.20 to $2.23 a share. The company previously issued 2006 guidance of $2.18 to $2.23.
Additionally, Medtronic expects to report earnings of $2.50 to $2.55 in 2007, compared with its previous outlook of $2.45 to $2.55. For 2008, the company expects to earn about $2.88 to $2.98 a share.
Revenue for 2006 will likely be "at the midpoint" of an $11.1 billion to $11.6 billion range, Medtronic said. The company also projected a top line of $12.5 billion to $13 billion in fiscal 2007 and between $14 billion and $15 billion for 2008.
Medtronic's shares fell 1.5% to $54.75 in after-hours trading Tuesday.