By Matthew Perrone and Marley Seaman, AP Business Writers
Medtronic Inc., the world's largest medical-device company, said Tuesday its fourth-quarter net income rose as it took share of the market for implantable heart devices away from a competitor.
Medtronic said its revenue rose 10 percent, helped by higher sales of implantable defibrillators after rival Boston Scientific suspended U.S. sales of those devices for a month. Boston Scientific halted sales after failing to notify federal regulators about manufacturing changes to some of its devices.
Despite lackluster sales of its spinal and neuromodulation devices, Medtronic forecast 2011 earnings growth of 10 to 13 percent.
"The goal is in that low double digit earnings per share growth," Chief Executive Bill Hawkins told analysts on a conference call. "We will do that as a combination of operational strength and financial strength."
Morgan Stanley analyst David Lewis said the company's guidance will "likely prove good enough for investors."
Nonetheless, its shares fell $1.18, or 2.9 percent, to $39.46 in morning trading Tuesday, dropping along with a broad market decline.
Medtronic, which is based in Minneapolis, said its net income rose to $954 million, or 86 cents per share, in the quarter ended April 30, up from $103 million, or 9 cents per share, a year ago. The prior quarter's results were weighed down by a large license payment.
Medtronic said its adjusted earnings rose to 89 cents per share excluding one-time costs. That is a penny a share more than analysts surveyed by Thomson Reuters expected. The analysts typically exclude one-time items from their estimates.
Revenue rose to $4.2 billion from $3.8 billion a year ago. Analysts expected $4.19 billion in revenue.
Medtronic said its sales of implantable heart devices grew 13 percent to $881 million, and total cardiac rhythm disease management revenue rose 8 percent to $1.41 billion.
The company said it gained between $60 million and $70 million in defibrillator sales during Boston Scientific's absence from the market. The Natick, Mass., company suspended sales of its leading defibrillator lines for a month ending April 15.
Defibrillators are the top-selling franchise for both Medtronic and Boston Scientific.
The devices are surgically implanted in the upper chest, where they monitor the heart for deadly irregular heartbeats and use electrical jolts to shock it back to a normal rhythm. They differ from pacemakers, which use lower-voltage electrical pulses to correct dangerously slow heart rhythms.
Spinal revenue edged down to $880 million in the fourth quarter, while cardiovascular revenue grew 18 percent to $757 million and neuromodulation revenue rose 6 percent to $411 million.
For the year, Medtronic said its net income rose to $3.1 billion, or $2.79 per share, up from $2.07 billion, or $1.84 per share, in fiscal 2009. Revenue rose 8 percent to $15.82 billion from $14.6 billion a year ago.
In the current fiscal year, the company forecast net income of $3.45 to $3.55 per share including acquisition costs. Excluding one-time charges it said its adjusted earnings should grow 10 to 13 percent. Based on its adjusted total of $3.22 per share, that implies a profit of $3.54 to $3.64 per share. It said revenue will rise 5 to 8 percent excluding the effects of foreign currency exchange.
Analysts expect a profit of $3.52 per share and $16.57 billion in revenue in fiscal 2011.
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