UPDATE 2-Medtronic profit up as heart device sales revive
(Adds CEO, analyst comments, adds byline)
By Susan Kelly
Nov 19 (Reuters) - Medtronic Inc reported higher quarterly earnings on Tuesday as stronger sales of its implantable devices to treat abnormal heart rhythms offset weakness in its spinal products business.
The maker of pacemakers, insulin pumps and other medical devices said most of its businesses were performing in line with or better than the overall market.
Demand for implantable cardioverter defibrillators, or ICDs, one of the company's biggest product lines, is stabilizing after several years of declining sales due to economic weakness, Medtronic said.
But the spinal products business remains under pressure, dragged down by a sharp decline in sales of bone growth stimulator Infuse, which is used in spine surgery. Studies have shown use of the bone growth product offers little benefit over conventional surgery and may have harmful side effects.
"Medtronic turned in a solid, albeit mixed performance," said JPMorgan analyst Michael Weinstein.
The Minneapolis-based company earned $902 million, or 89 cents a share, in the fiscal second quarter, ended Oct. 25, compared with $646 million, or 63 cents a share, a year earlier. Revenue rose 2.4 percent to $4.2 billion.
Excluding special items, earnings were 91 cents a share. On that basis, analysts' average estimate was 90 cents, according to Thomson Reuters I/B/E/S.
Sales of ICDs, which treat irregular heart rhythms, increased 3 percent to $713 million. Spinal product sales fell 5 percent to $746 million.
Medtronic competes against Boston Scientific Corp and St Jude Medical in the ICD market. Pricing for the devices was flat in the quarter, but that's an improvement from the 4 to 5 percent declines of a year ago, Medtronic said.
Leerink Swann analyst Danielle Antalffy said the U.S. ICD market grew 3.4 percent in the quarter, the first quarter of growth since early 2010.
"This is encouraging for all ICD manufacturers, including Boston Scientific and St Jude," she said.
Medtronic's sales of structural heart products, which include replacement heart valves, rose 4 to $281 million. The company's CoreValve is sold in Europe and is expected to launch next year in the United States, where it will compete with Edwards Lifesciences Corp's Sapien heart valve.
Sales in emerging markets, which have been a bright spot and area of focus for Medtronic, rose 11 percent to $513 million, but sales growth in those markets slowed due to weaker economies in Russia and China. Medtronic officials believe medical device sales will soon pick up again.
"We expect this to rapidly start to re-accelerate. There are patients everywhere who need attention from existing therapies," Medtronic Chief Executive Omar Ishrak said on a conference call with analysts.
Medtronic reiterated its full-year fiscal 2014 forecast for earnings of $3.80 to $3.85 a share, with revenue growth of 3 to 4 percent.
Its shares were down 15 cents at $58.16 in morning trading on the New York Stock Exchange. (Reporting by Susan Kelly in Chicago; Editing by Jeffrey Benkoe and John Wallace)
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