Endeavor stent helps Medtronic to strong profit for quarter

Thanks in part to strong U.S. sales of its Endeavor heart stent and a recovering market for heart-shocking defibrillators, Medtronic Incorporated's fiscal fourth-quarter profit beat Wall Street expectations.

Shares rebounded Tuesday on the news, closing at $48.96, up $1.08.

The Fridley-based medical technology company said net income for the quarter ended April 25 was $812 million, or 72 cents per share, flat when compared with the same period last year. Adjusting for restructuring and other charges, fourth-quarter earnings were $884 million, or 78 cents a share. Wall Street analysts were expecting the company to earn 72 cents per share.

Revenue for the quarter increased 18 percent to $3.9 billion.

"We like quality companies like Medtronic, with their diversified businesses, and we were positively surprised to see such solid growth across most of Medtronic's portfolio of businesses," said Edward Jones analyst Aaron Vaughn.

Stent sales, spurred by the U.S. launch of the Endeavor drug-coated heart stent in February, increased 56 percent in the quarter.

Part of a $4 billion worldwide market, drug-coated stents are metal mesh struts that prop open clogged arteries. Coated with a drug, arteries are less likely to reclog, a fairly common conundrum for doctors.

Medtronic CEO Bill Hawkins said in an interview that he expects Endeavor to perform similarly in the United States as it has in markets abroad where it has 20 to 30 percent of the market. "I'm a big believer in our products and I think Endeavor is a unique [drug-coated stent]," he said. "If I had to have a stent I would want one."

Meanwhile, sales of one of the company's stalwart products -- the implantable cardioverter defibrillator -- increased 5 percent to $806 million.

Some analysts said Tuesday that the results might signal a tentative recovery in a $5.5 billion defibrillator market that has been wracked by a series of safety recalls in recent years. In October, Medtronic recalled a popular wire used in its defibrillator system called Sprint Fidelis. Five deaths were linked to the product.

"The company seems to have eliminated the Sprint Fidelis lead setback," wrote Stanford Group analyst Jan David Wald in a note to investors Tuesday.

Most of the company's remaining businesses reported double-digit increases in revenue in the quarter, including:

• The Neuromodulation business, up 17 percent to $381 million.

• The Diabetes division, up 20 percent to $275 million.

• Ear, Nose and Throat unit, up 18 percent to $228 million.

• Physio-Control, the external defibrillator business, up 46 percent to $101 million.

Janet Moore • 612-673-7752