Medtronic recorded fiscal year 2008 revenue of $13.515 billion, a 10 percent increase over the $12.299 billion in fiscal year 2007. Currency translation had a positive impact of $400 million for fiscal year 2008. As reported, fiscal year 2008 net earnings were $2.231 billion, or $1.95 per diluted share. As detailed in the attached table, adjusting for special, restructuring, certain litigation and purchased in-process research and development (IPR&D) charges, non-GAAP net earnings and diluted earnings per share were $2.973 billion and $2.60, respectively.
Fiscal fourth quarter revenue increased 18 percent to $3.860 billion from the $3.280 billion reported a year ago. Currency translation had a positive impact of $160 million in the fourth quarter. As reported, fourth quarter net earnings were $812 million, or $0.72 per diluted share. As detailed in the attached table, adjusting for restructuring and IPR&D charges, fourth quarter net earnings and diluted earnings per share on a non-GAAP basis were $884 million and $0.78, respectively.
“Medtronic had a strong close to the year,” said Bill Hawkins, Medtronic president and chief executive officer. “The stabilization of the ICD market, the launch of our Endeavor drug-eluting stent and strong performance in virtually every business and geography provides positive momentum as we begin our new fiscal year.”
Revenue outside the United States of $5.179 billion for the fiscal year grew 18 percent driven by strong revenue growth in all major geographic areas.
Unless otherwise noted, all comparisons made in this news release are on an “as reported basis,” not on a constant currency basis. References to quarterly figures increasing or decreasing are in comparison to the fourth quarter of fiscal year 2007.
Cardiac Rhythm Disease Management
Cardiac Rhythm Disease Management annual revenue of $4.963 billion increased 2 percent and fourth quarter revenue of $1.363 billion increased 6 percent, driven by balanced growth across both the high power and low power product lines. Implantable Cardioverter Defibrillator (ICD) annual revenue of $2.897 billion decreased 1 percent. Fourth quarter ICD revenue of $806 million increased 5 percent. Worldwide annual pacing revenue of $2.008 billion increased 6 percent. Fourth quarter pacing revenue of $540 million increased 7 percent driven by strong implant trends.
Spinal
Spinal annual revenue of $2.982 billion increased 23 percent and fourth quarter revenue of $869 million increased 35 percent, driven by $298 million and $150 million, respectively, in Kyphon revenue. Strong performance in Biologics continued again this quarter with growth of 16 percent. The impact of Kyphon and Biologics offset continued competitive pressures on Core Spinal products in the United States.
CardioVascular
CardioVascular annual revenue of $2.131 billion increased 12 percent and fourth quarter revenue of $643 million increased 22 percent. Coronary stent annual revenue of $710 million increased 27 percent for the year and quarterly revenue increased 56 percent. Growth was driven by the successful launch of the Endeavor drug-eluting stent in the U.S. market in the fourth quarter. Endovascular annual revenue of $285 million increased 10 percent for the year and quarterly revenue increased 6 percent, driven by the strong performance of the thoracic product line. During the quarter the Talent™ AAA Stent Graft received FDA approval and enrollment of the CE mark trial of the Endurant™ next-generation abdominal stent graft was completed outside the United States.
Neuromodulation
Neuromodulation annual revenue of $1.311 billion increased 11 percent and fourth quarter revenue of $381 million increased 17 percent. Adjusting for the impact of the divestitures of the diagnostics related product lines last fiscal year, the Neuromodulation business grew 15 percent annually and 22 percent for the quarter. The increase in annual and quarterly revenue was driven by growth in Neuro Implantables, which is comprised of products for pain management and movement disorders. Pain Management, including implantable neurostimulation and drug-delivery systems, generated annual revenue of $661 million, increasing 14 percent for the year. Pain Management revenue for the quarter increased 20 percent attributable to the launch of RestoreULTRA™ during the quarter. The movement disorders product lines grew 16 percent for the year and 23 percent for the quarter, driven by the continued adoption of the Activa® therapy for Parkinson’s disease. Adjusting for the impact of the divestitures of the gastroenterology and urology diagnostics related product lines last year, gastroenterology and urology annual revenue of $242 million grew 22 percent for the year and quarterly revenue showed strong growth, driven by revenue from the InterStim™ product line for the treatment of overactive bladder.
Diabetes
Diabetes annual revenue of $1.019 billion increased 18 percent and fourth quarter revenue of $275 million increased 20 percent. Fourth quarter results were driven by the continued success of the Paradigm® REAL-Time system. This particularly benefited sales growth in international markets, where this system had not yet been fully launched in the prior year, and increased demand for the transmitters and continuous glucose monitoring (CGM) sensors required to utilize the system's CGM functionality.
Ear, Nose and Throat (ENT)
ENT annual revenue of $780 million increased 17 percent and fourth quarter revenue of $228 million increased 18 percent driven by the successful launch of Fusion, an advanced image guidance surgery system to facilitate sinus surgeries. Nerve monitoring in the United States, and power systems and nerve monitoring disposables outside the United States continued to contribute to strong revenue growth for the year. Medtronic recently announced the integration of its surgical navigation franchise into the ENT business and in order to reflect the expanding scope and focus of this business, the name will change this quarter to Surgical Technologies.
Physio-Control
Physio-Control reported annual revenue of $329 million and fourth quarter revenue of $101 million, a decrease of 15 percent and an increase of 46 percent, respectively. The annual decrease was due to the January 2007 voluntary suspension of U.S. product shipments to address quality system issues at its Redmond, Wash., facility. Recently, Medtronic announced it had reached an agreement on a consent decree with the FDA outlining actions to be taken to resume unrestricted distribution.
In closing Hawkins said, “We continue to identify and execute on a broad set of restructuring and cost reduction initiatives that will allow us to fund new products, serve more patients and generate leveraged earnings growth. Our financial strength will allow us to generate increasingly significant capital and we will focus on continuing to strike the right balance between reinvesting for growth and returning capital to our shareholders.”
Webcast Information
Medtronic will host a webcast today, May 20 at 8 a.m. EDT (7 a.m. CDT), to provide information about its businesses for the public, analysts and news media. This quarterly webcast can be accessed by clicking on the Investor Relations link on the Medtronic home page at www.medtronic.com. This earnings release will be archived at www.medtronic.com/newsroom. Within 24 hours, a replay of the webcast and a transcript of the company’s prepared remarks will be available in the “Presentations and Transcripts” section of the Investor Relations homepage.
About Medtronic
Medtronic, Inc., headquartered in Minneapolis, is the world’s leading medical technology company, alleviating pain, restoring health and extending life for people with chronic disease. Its Internet address is www.medtronic.com
This press release contains forward-looking statements which are subject to risks and uncertainties, such as competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of medical products, government regulation, general economic conditions and other risks and uncertainties described in Medtronic’s Annual Report on Form 10-K for the fiscal year ended April 27, 2007. Actual results may differ materially from anticipated results. Medtronic does not undertake to update its forward-looking statements.
