Medtronic's (MDT) - Get Free Report third-quarter profit plunged 89% as charges battered the bottom line, but the medical-device company beat estimates on an adjusted basis amid a rebound in sales of its implantable cardioverter defibrillators.
The Minneapolis-based company reported earnings of $77 million, or 7 cents a share, for the quarter ended Jan. 25, down from $710 million, or 61 cents a share, a year earlier.
The latest quarter's earnings were hit by 56-cents-a-share in charges related to last year's acquisition of Kyphon, as well as the settlement of lawsuits.
Factoring those charges out, Medtronic earned $713 million, or 63 cents a share. Analysts polled by Thomson Financial expected earnings of 61 cents a share on this basis.
Medtronic's revenue rose 12% to $3.41 billion, topping Wall Street's estimate of $3.34 billion.
Revenue within the company's cardiac rhythm disease management division climbed 3% to $1.22 billion as the company transitioned its supply of the tiny wires for implantable cardioverter defibrillators, or ICDs. Medtronic turned to its older Quattro leads last year after its Fidelis line of the tiny insulated wires was found to have the potential to fracture.
ICD revenue climbed just 2% to $726 million, but that marked a sharp improvement over the prior quarter, when the Fidelis recall sent sales sliding 16% year over year. On its last quarterly earnings call, the company predicted flat to low single-digit ICD growth in the U.S. and mid- to upper-single-digit growth outside the U.S. for fiscal 2008.
Elsewhere, worldwide pacing systems revenue increased 4% in the third quarter to $478 million. Spinal revenue grew 35% to $808 million, aided by $147 million in Kyphon revenue.
Neuromodulation sales increased 10%, diabetes sales grew 14% and ear nose and throat product sales rose 15%.
Cardiovascular sales -- including coronary stents, or mesh tubes to prop open clogged arteries -- rose 7% to $512 million. After the quarter ended, Medtronic received Food and Drug Administration approval for its Endeavor drug-eluting coronary stent system.
Medtronic said on its conference call Tuesday that the launch of the Endeavor stents, in addition to ICD recovery, should help 2008 earnings.
Shares of the company recently were up 45 cents, or 0.9%, to $49.57.