|Medtronic CEO Omar Ishrak|
Medtronic ($MDT) CEO Omar Ishrak has long said he wants his company to get 20% of its revenue from emerging markets by 2016, and the device giant made some headway last quarter on the way to $4 billion in total revenue.
The company's emerging markets revenue swelled 20% in the fiscal third quarter, part of a 3% sales jump that made for $988 million in net earnings, good for a 6% increase over the prior year. Markets such as India and China now account for about 12% of Medtronic's business, and Ishrak said the company will continue to focus on those high-growth areas to balance out slumps in other units.
"Several businesses and regions contributed to our steady growth this quarter, and we are focused on effectively managing headwinds and tailwinds to deliver balanced and consistent overall performance," Ishrak said in a statement.
Among those tailwinds are continued struggles for the cardiac rhythm disease management and spinal units, Medtronic's largest businesses. CRDM sales declined 2% on the quarter to $1.2 billion, and spinal revenue fell 4% to $753 million. In CRDM, Medtronic is trying to even out flat and negative trends in ICDs and pacemakers with a focus on its growing atrial fibrillation business, and the company expects a suite of new products to help stabilize the spine unit this year.
Otherwise, the devicemaker's businesses remain on the up-and-up, headlined by 16% growth in the coronary unit, which brought in $445 million thanks in part to the international success of the Resolute Integrity drug-eluting stent. Neuromodulation grew 7% to $447 million, and surgical technologies improved by 10% to reach $350 million.
On the emerging markets side, Medtronic has spent billions to build its presence overseas, buying Chinese orthopedics outfit Kanghui Holdings for $816 million in the fall and working to get its stents adopted in India. Kanghui is already meeting Medtronic's performance expectations, Ishrak told investors on a conference call, and the company is preparing to jump into the Chinese structural heart market after buying a $66.2 million stake in local outfit LifeTech Scientific.
"Emerging market growth, meaningful product launches on high-growth platforms and market stabilization are all key factors to building a dependable business that can deliver consistent mid-single-digit revenue growth," Ishrak said.