WASHINGTON (AP) - Medtronic Inc., the world's largest medical device maker, reported higher-than-expected earnings Tuesday as sales of newer devices helped make up for an ongoing slump in its best-selling heart and spine implants.
For more than a year Medtronic has reported weaker sales of its two leading franchises, heart defibrillators and spinal implants, which account for about 40 percent of total sales. Tighter hospital budgets, reduced procedures and safety concerns have led doctors to implant fewer devices. Those trends continued in the most recent period, with combined sales of the devices falling 5 percent.
But overall revenue rose 3 percent in the second fiscal quarter to $4.13 billion, helped by sales of heart valves, stents and other upgraded products, the Minneapolis-based company reported.
"I was pleased to see the strong performances in many of our businesses, as our new products are taking share and protecting pricing," said Chief Executive Omar Ishrak. Those products include the company's Revo pacemaker, the first device of its kind that can be used with an MRI scanner, and the Resolute drug-eluting stent, a next-generation device used to prop open arteries.
For the most recent quarter, the company reported net income of $871 million, or 82 cents per share, up 54 percent from $566 million, or 52 cents per share, a year ago. Results in the year-ago period were weighed down by a massive legal settlement related to defective heart defibrillators.
Excluding one-time expenses, the company would have earned $898 million, or 84 cents per share, in the most recent period.
Those results topped analyst expectations for earnings of 82 cents per share on revenue of $4.07 billion. Analysts had speculated Medtronic might scale back its full-year revenue guidance, but the company said it still expects earnings of between $3.43 and $3.50 per share for fiscal 2012.
Medtronic shares rose $1.48, or 4.5 percent, to close at $34.75 Tuesday. They have moved haltingly higher since dipping to a 52-week low of $30.18 in early August. Their high for the past year was $43.33 in mid-May.
Revenue in Medtronic's portfolio of cardiovascular devices increased 1 percent to $2.21 billion, with sales of pacemakers and heart valves making up for weaker sales of implantable heart defibrillators. Revenue from those heart-zapping devices, used to treat heart failure, fell 8 percent to $708 million. Medtronic and other device makers have seen profits drop since the Department of Justice began investigating alleged overuse of defibrillators in January.
The company reported 8 percent higher sales of its drug-eluting stents with revenue of $830 million. Medtronic said its share of the global market for the devices increased to roughly 19 percent, aided by the launch of Resolute in Europe and other international markets. U.S. approval is expected in 2012.
Revenue from the company's spine business fell 3 percent to $839 million. In June that business took a major publicity blow after a medical journal alleged that the company downplayed the risks of its InFuse spinal repair protein. The implant, which is approved to treat degenerative spinal disk disease, had sales of approximately $800 million in the last fiscal year. But Medtronic said Tuesday sales declined 16 percent in the last quarter.
Medtronic said sales of diabetes treatments and surgical tools helped offset weak spinal sales.
International sales rose 6 percent to $1.83 billion, accounting for 44 percent of total sales for the quarter.
With more than 40,000 employees working across dozens of businesses, Medtronic has long been the largest company in the medical device sector. But last week the company said it would get a bit smaller by shedding its Physio-Control unit, which makes heart monitors and external defibrillators. Ishrak said Medtronic decided to sell the unit to Bain Capital LLC for $487 million because "the synergies were really not that strong and they were working in an area where we really didn't have any other kind of presence." Ishrak added that the company has no other plans to sell off businesses.
"Right now when we look at these businesses we find that in almost every area they will do better as part of Medtronic," Ishrak said in an interview with The Associated Press.