Medtronic, Inc. (Medtronic) has reported its first quarter of fiscal 2010 results. Revenue for the first quarter of fiscal 2010 was $3.93 billion, up 6%, compared to the $3.71 billion in the year-ago quarter. As reported, first quarter net earnings were $445 million, or $0.40 per diluted share, both decreasing 38% over the same period in the prior year.
Revenue growth on a constant currency basis was 10% after adjusting for a $145 million negative foreign currency translation. This quarter contained 14 weeks, one more week than the first quarter of fiscal year 2009.
As detailed in the attached table, adjusting for restructuring and certain litigation charges, and the impact of adopting a new accounting standard for non-cash interest expense on convertible debt, first quarter net earnings and diluted earnings per share on a non-GAAP basis were $883 million and $0.79, an increase of 9% and 10%, respectively, over the same period in the prior year.
“I am pleased with our solid first quarter performance and the progress it represents toward fulfilling our full year commitments,” said Bill Hawkins, Medtronic chairman and chief executive officer. “I am confident that our efforts to fuel innovation and develop a strong product pipeline positions us well for sustained growth during the remainder of the fiscal year and beyond.”
Revenue outside the US of $1.542 billion grew 6% compared to the same period last year, or 16% on a constant currency basis, accounting for 39% of Medtronic’s worldwide revenue.
Cardiac Rhythm Disease Management (CRDM) revenue of $1.337 billion grew nearly 3%, or 7% after adjusting for an unfavorable $53 million foreign exchange impact. Revenue from implantable cardioverter defibrillators was $775 million, while pacing revenue was $536 million in the quarter. Outside the United States, CRDM revenue grew 10 percent on a constant currency basis, driven by significant growth in Europe and China.
Spinal revenue of $915 million grew 7%, or 8% after adjusting for an unfavorable $17 million foreign exchange impact. Sales of Core Spinal products, which includes Kyphon, increased 11% and Spinal revenue outside of the US increased 24%, both on a constant currency basis. Biologics revenue remained flat when compared to the same period last year on a constant currency basis.
CardioVascular revenue of $689 million grew 9%, or 15% after adjusting for an unfavorable $37 million currency translation impact. Growth in the CardioVascular business was driven by strong global performance in both the Endovascular and Structural Heart Disease product lines, which grew 41% and 16%, respectively, on a constant currency basis. The business unit launched the Endeavor Drug-eluting Stent in Japan during the quarter which helped drive Coronary revenue to $353 million for the quarter.
Neuromodulation revenue grew 7% to $373 million, or 11% after adjusting for an unfavorable $13 million currency translation impact. This growth was fueled by strong sales of the InterStim Therapy, Activa Deep Brain Stimulation Therapy and the launch of Activa PC and RC, which are now available in both the United States and Europe.
Diabetes revenue of $295 million grew 10%, or 15% after adjusting for an unfavorable $14 million currency translation impact, on strong U.S. insulin pump and continuous glucose monitoring (CGM) product sales, as well as sales of consumables in Europe. International sales grew 14% on a constant currency basis over the same quarter last year. During the quarter, the business unit launched the Paradigm Veo pump in the United Kingdom and Ireland, the first semi-closed loop product, extending its lead as the only company with a proprietary CGM Sensor Augmented Pump.
Revenue from Surgical Technologies reached $227 million, up 12%, or 16% after adjusting for an unfavorable $7 million currency translation impact. Revenue in the business unit grew on sales of the monitoring product line, the launch of NIM 3.0 a new nerve integrity monitor and strong ear, nose and throat and neurological power disposable sales. In Europe, sales of navigation equipment used in both brain and spinal surgery procedures were also strong during the quarter.
Physio-Control reported $97 million in revenue, up 3%, or 7% after adjusting for an unfavorable $4 million currency translation impact. The launch of the LIFEPAK 15 monitor/defibrillator contributed to revenue growth in the quarter.
“Our solid performance across all businesses demonstrates the strength of our product portfolio and geographic diversity,” said Hawkins. “Our focused efforts to provide innovative solutions to the growing and global challenge of chronic disease are enabling us to bring our therapies to more people than ever before.