Medtronic's earnings plunge 54% due to litigation charge

Medtronic CEO Omar Ishrak

Medtronic's ($MDT) 54% year-over-year earnings drop in the fourth fiscal quarter of 2014 is severe no doubt, but largely due to a one-time, pretax $746 million litigation charge. It covers the now-settled patent dispute with Edwards Lifesciences ($EW) over Medtronic's CoreValve TAVR and the comparatively small $22 million settlement of product liability claims related to its Infuse Bone Graft.

Overall Q4 earnings were $448 million on revenues of $4.6 billion, a 3% increase year over year.

"We remain focused on delivering consistent and dependable growth across all of our businesses through our three growth vectors: new therapies, emerging markets and independent services and solutions," said CEO Omar Ishrak in a statement.

Interestingly, Medtronic's diabetes group bucked the trend and reported 13% revenue growth to $460 million. Primarily due to Medicare's competitive bidding mail order program, competitors Johnson & Johnson ($J&J) and Abbott ($ABT) reported decreases in U.S. diabetes care sales of about 30%, but Medtronic's diabetes group reported a year-over-year sales increase of 15% in the U.S. to $270 million. The group's revenue was unchanged compared to the prior quarter.

Medtronic attributed the strong performance to the launch of the MiniMed 530G System in the U.S., saying it has gained more than 5 percentage points of domestic market share in the insulin pump market and 6 percentage points of share in continuous glucose monitoring.

The cardiac and vascular group had sales of $2.4 billion, an increase of 1%. Highlights include the launch of the MRI-compatible ICD, the Evera MRI, in Europe. In addition, due to the patent settlement with Edwards the CoreValve TAVR no longer faces the threat of an injunction.

The company's spine, neuromodulation and surgical technologies unit had sales of $1.7 billion, representing an increase of 2%. Spine sales declined 3% to $786 million, but were offset by 9% growth in the surgical technologies revenue and 4% growth in neruomodulation sales.

International revenues accounted for 47% of Medtronic's sales and rose 5% to $2.1 billion.

Fiscal year 2014 revenue of $17 billion represents a 4% increase over FY 2013.

- read the release

Related Stories:
Medtronic and Edwards Lifesciences settle the score in ongoing patent feud
Medtronic settles some Infuse Bone Graft claims for $22M
Medtronic kicks off U.S. trial for MRI-safe ICD

Virtual Clinical Trials Summit

Virtual Clinical Trials Summit: The Premier Educational Event Focused on Decentralized Clinical Trials

In this virtual environment, we will look at current and future trends for ongoing virtual trials, diving into the many ways companies can improve patient engagement and trial behavior to enhance retention with a focus on emerging technology and harmonized data access across the clinical trial system.