Boston Sci recall boosts Medtronic

An unexpected recall by a competitor helped Medtronic Inc. break the $4 billion revenue mark in the past quarter, a first in the Fridley-based medical technology giant's 61-year history.

Earnings surged more than 800 percent, but that was mostly because of one-time charges taken a year earlier. Still, earnings per share beat Wall Street's expectations by a penny.

Medtronic said Tuesday that Boston Scientific's monthlong pullback of its entire line of heart defibrillators helped it gain between $60 million and $70 million in sales of its own versions of the heart-shocking device during the fiscal fourth quarter.

Last month, Natick, Mass.-based Boston Scientific recalled all its defibrillators because of a recordkeeping error with the Food and Drug Administration. The company, whose defibrillator division is based in Arden Hills, said on Friday that it has resumed distribution of the recalled product lines.

The third major player in the defibrillator market, Little Canada-based St. Jude Medical Inc., earlier this month reported a surge in sales of the products during its first quarter partly due to Boston Scientific's problem.

But Medtronic said it did particularly well. "I would say we gained about two-thirds of what was available there," Medtronic CEO William Hawkins III said during a Tuesday conference call with Wall Street analysts.

Overall, Medtronic reported a 10 percent increase in sales for the quarter, which ended April 30.

"This is another solid quarter that caps off another very strong year," Hawkins said.

Fourth-quarter sales in the Mounds View-based cardiac rhythm disease management business, which includes defibrillators and pacemakers, were $1.4 billion, up 8 percent.

Sales of implantable cardioverter defibrillators, $30,000 devices that ward off sudden cardiac arrest, were $881 million, up 10 percent.

In an interview, Hawkins said he was hopeful that a warning letter the division received last year from the FDA taking issue with the way the company reported problems with devices to the regulatory agency could be resolved quickly.

"We responded in December, and now we're waiting to hear back [from the FDA]," he said.

But sales from other businesses, diabetes and cardiovascular, reported double-digit increases.

Morgan Stanley analyst David Lewis characterized the results as "mixed." Lewis, in a note to investors Tuesday, also said cardiac rhythm product sales were "better as expected but probably not quite as strong as consensus hoped."

For fiscal 2011, the company said it expects revenue growth in the range of 5 percent to 8 percent, and earnings per share of $3.45 to $3.55, including 5 cents of dilution related to two acquisitions.

Excluding that impact, and accounting for an extra week in fiscal 2010, earnings-per-share growth is expected to be in the range of 10 percent to 13 percent. Analysts were expecting earnings of $3.52 a share.

Medtronic shares closed Tuesday at $39.95 a share, down 69 cents.