Medtronic reported quarterly earnings below Wall Street expectations and gave a disappointing outlook for fiscal 2012, hurt by a slowdown in demand for implantable heart defibrillators and spinal treatments, its biggest product lines.
The company's shares fell 2.7 per cent in premarket trading.
Worldwide sales of devices to treat cardiac rhythm diseases fell 7 per cent in the quarter from a year ago, while sales of spinal devices declined 1 per cent. Medical device sales have suffered in the weak economy as patients who have lost jobs and health insurance deferred medical care.
"We clearly have seen slowing implant rates across the marketplace," Medtronic chief financial officer Gary Ellis said on a conference call with analysts.
US implant procedures for implantable cardioverter defibrillators, or ICDs, declined at a mid- to high-single-digit rate since January compared with a year ago, Ellis said, adding that the market is expected to remain down in 2012.
"My thoughts on the company having its challenges doesn't change with this report," said Edward Jones analyst Aaron Jones.
Medtronic said net income in the fiscal fourth quarter ended April 29th fell to $776 million, or 72 cents a share, from $954 million, or 86 cents a share, a year ago.
Excluding special items, Medtronic reported earnings of 90 cents a share. On that basis, analysts on average expected 92 cents.
Revenue rose 2 per cent to $4.3 billion, driven by strong sales in emerging markets. The average analyst estimate was $4.29 billion.
Worldwide sales of cardiac rhythm management products, including ICDs and pacemakers, fell 7 per cent to $1.32 billion. Spine device sales fell 1 per cent to $875 million.
Cardiovascular device sales, including stents to treat clogged arteries, rose 16 percent to $879 million. Neuromodulation device sales, which include pain treatments, rose 5 per cent to $432 million, and diabetes device sales rose 11 per cent to $368 million.
For fiscal 2012, Medtronic forecast earnings of $3.43 to $3.50 a share, below analysts' expectations, on overall revenue growth in a range of 1 per cent to 3 per cent. It characterised its outlook as cautious, reflecting expected continued weakness in its key device markets.
Reuters
