Medtronic Inc., the world's largest medical device maker, reported fiscal first-quarter earnings Tuesday in line with Wall Street expectations, but weaker global demand for medical implants forced the company to slash 2011 earnings expectations.
The Minneapolis-based company reported weaker-than-expected sales across all its major divisions, including heart-shocking defibrillators, pacemakers and spinal repair products.
Revenue for the period fell 4 percent to $3.77 billion due in part to an unfavorable foreign currency impact and a $200-million benefit from an extra week in the same quarter last year.
Excluding one-time costs, the company earned $868 million, or 80 cents per share.
Those earnings met analyst estimates as polled by Thomson Reuters, though Wall Street expected higher revenue of $3.94 billion. Analysts typically exclude one-time items from their estimates.
"A softer global healthcare market impacted by decreased utilization and increased pricing pressure made for a difficult first quarter," Chairman and CEO Bill Hawkins said in a statement from the company.
In light of the sales slowdown, Medtronic scaled back its estimated 2011 revenue and earnings guidance.
The company said it now expects fiscal 2011 earnings per share to range between $3.40 and $3.48, with revenue growing between 2 percent and 5 percent on a constant currency basis.
In June, Medtronic expected fiscal 2011 earnings of between $3.45 and $3.55 per share with revenue growth ranging between 5 percent and 8 percent.
Medtronic shares fell $3.63, or 10.3 percent, to $31.39 in morning trading. Earlier in trading shares hit a 52-week low of $30.85.
For the first quarter, Medtronic reported global sales of its cardiac and vascular products fell 5 percent to $2.03 billion. Those sales actually increased 1 percent when adjusted for foreign currency and the extra week last year.
The company's cardiac division sells defibrillators and pacemakers, while vascular products include stents, heart valves and other surgical implants.
Sales of the company's spinal products continued to slump, falling 9 percent to $829 million due to growing pricing pressures and weaker procedure growth, the company said.
Spinal devices make up Medtronic's second-largest franchise. Medtronic spent nearly $4 billion to acquire spinal implant maker Kyphon in 2007, though the unit has not performed up to expectations.
Including one-time charges, Medtronic said it earned $830 million, or 76 cents per share in the three months that ended July 30. That compares to net income of $445 million, or 40 cents per share, last year, when restructuring charges and legal fees weighed down performance.