Q3 2011 Earnings Call
February 22, 2011 8:00 am ET
Gary Ellis - Chief Financial Officer, Principal Accounting Officer and Senior Vice President
William Hawkins - Chairman and Chief Executive Officer
Jeff Warren - Investor Relations
Matthew Dodds - Citigroup Inc
David Roman - Goldman Sachs Group Inc.
Robert Hopkins - Lehman Brothers
Michael Weinstein - JP Morgan Chase & Co
Glenn Novarro - RBC Capital Markets, LLC
Derrick Sung - Bernstein Research
Kristen Stewart - Deutsche Bank AG
Frederick Wise - Leerink Swann LLC
David Lewis - Morgan Stanley
Bruce Nudell - UBS Investment Bank
Joanne Wuensch - BMO Capital Markets U.S.
Previous Statements by MDT
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Good morning. My name is Darla, and I will be your conference operator today. At this time, I would like to welcome everyone to the Medtronic's Q3 Earnings Release Conference Call. [Operator Instructions] Thank you. Mr. Jeff Warren, you may begin your conference.
Thanks, Darla. Good morning, and welcome to Medtronic's Third Quarter Conference Call and Webcast. During the next hour, Bill Hawkins, Medtronic Chairman and Chief Executive Officer; and Gary Ellis, Chief Financial Officer, will provide comments on the results of our fiscal year 2011 third quarter, which ended January 28, 2011. After our prepared remarks, we'll be happy to take your questions.
First, a few logistical comments. Earlier this morning, we issued a press release containing our financial statements and our revenue-by-business summary. You should also note that some of the statements made during this call may be considered forward-looking statements and that actual results might differ materially from those projected in any forward-looking statement. Additional information concerning factors that could cause actual results to differ is contained in our periodic reports filed with the SEC, therefore, we do not undertake to update any forward-looking statement. In addition, the reconciliations of any non-GAAP financial measures are available on the Investors portion of our website at medtronic.com.
Finally, unless we say otherwise, references to quarterly results, increasing or decreasing, are in comparison to the third quarter of fiscal year 2010. And all revenue growth rates are given on a constant-currency basis. And with that, I'm now pleased to turn the call over to Medtronic Chairman and Chief Executive Officer, Bill Hawkins.
Good morning, and thank you, Jeff. This morning, we reported third quarter revenue of $4 billion, which represents growth of 3% both on an as reported and a constant-currency basis. Q3 non-GAAP earnings of $922 million and diluted earnings per share of $0.86 expense increased 8% and 12% respectively. Our Q3 growth reflects the difference new innovative products are making. Q3 also reflects another quarter of relative stability as Medtronic continues to grow in line with our markets. We remain confident that as the global macroeconomic environment improves, so too will our markets as the underlying demand for innovative medical solutions to treat chronic diseases is only going to grow.
As I look across the company, I'd like to highlight three areas where we continue to focus. First, we have built and are executing on a very robust pipeline of differentiated value-added technology to drive share in our core markets and growth in new markets. Second, Medtronic is increasingly well positioned and executing on our plans to capture the tremendous growth opportunities in emerging markets. And finally, we are leveraging our size and scale to deliver superior financial performance. The healthcare world is changing and Medtronic is well positioned to take advantage of these trends.
So starting with our pipeline. Our focus on innovation remains our principal strategy for growth. We are committed to executing our pipeline to drive share in our core markets and growth in new markets. Spinal is a good example of this where we are starting to realize the benefits of the investments we make to reinvigorate this important business. We are ramping up the launch of Solera, our new flagship posterior fixation system. During this first phase of Solera's launch, we are excited about the positive surgeon feedback we continue to receive on the advantages of this more durable, versatile and smaller profile system. Solera, when integrated with our neuro monitoring, navigation and imaging platforms, is changing the way spine surgery is performed. Navigated spine procedures allow for extremely precise placement of spinal implants while performing minimally invasive surgery, which should lead to improved accuracy and enhanced patient safety.
This differentiated technology is something only Medtronic is doing and it is starting to change the basis of competition in the spine market. The Solera launched builds on the recent introduction of two other posterior fixation platforms, VERTEX SELECT and that TSRH 3Dx. But these systems are only a portion of our new spinal products.
Over the coming months, we will be launching several new products including our new Atlantis Vision Elite anterior cervical plate, the T2 ALTITUDE Expandable Corpectomy System, HA-coated TSRH 3Dx OSTEOGRIP Screws and the new DLIF instrument sets. When you combine all of our innovative technologies with the outstanding service and support of our field force, we are reasserting our market leadership. Although we are still early in this product launch cycle, we are starting to see improved growth in market share performance. We are back in our growth mode with a differentiated growth trajectory versus the other large players in the space. Breakthrough innovation is by no means limited to our Spinal business.
In Cardiovascular, we are seeing our new highly deliverable Integrity stent platform take share in both the drug-eluting and bare-metal stent markets. In fact, in our addressable markets, where both Integrity bare-metal stents and Resolute Integrity DES are available, we have achieved the number one position in total stent share. In drug-eluting stents, our recently launched RESOLUTE Integrity has been very well received, resulting in two percentage points of share gains in international markets this quarter. In bare-metal stents, the success of Integrity has pushed us to the number one global position. Our bare-metal stent share is nearly nine percentage points in the U.S. this quarter on the strength of Integrity.
In Endovascular, Endurant, our market-leading abdominal stent graft in Europe, is now launching in the U.S. ahead of schedule. Endurant is off to a fantastic start and we are focusing on extending our U.S. market leadership.