Medtronic Profit Tops Estimates, Despite Recall

-NY Times

11/20/2007- Medtronic said yesterday that second-quarter earnings fell 2 percent from a year ago as the recall of a component used with its implantable devices to treat abnormal heart rhythms hurt revenue.

Last month Medtronic suspended sales of the Sprint Fidelis family of leads, or wires that link the heart to an implantable cardioverter defibrillator, or I.C.D., saying the equipment may have contributed to five patient deaths.

With about 50 percent of the market, Medtronic is the largest maker of implantable cardioverter defibrillators, which are lifesaving devices that can shock a racing heartbeat back to normal rhythm.

For the second quarter, which ended Oct. 26, net income was $666 million, or 58 cents a share, compared with $681 million, or 59 cents a share, in the period a year ago.

That beat analysts’ average forecast of net earnings of 55 cents a share, according to Reuters Estimates.

Medtronic’s second-quarter revenue rose 2 percent, to $3.12 billion from a year ago, but sales of its implantable cardioverter defibrillators declined 16 percent, to $639 million.

Quarterly revenue from the company’s overall cardiac rhythm disease management business, which also includes pacemakers, fell 8 percent, to $1.15 billion.

Sales of implantable cardioverter defibrillators have declined since 2005 after a series of defibrillator recalls — mostly by Guidant, which was later acquired by Boston Scientific — slowed demand from cardiologists and their patients.

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