Medtronic’s Q4 Spine Results Dip

Medtronic Inc.recently reported fourth quarter fiscal 2014 results reflected operational revenue growth of 3.3 percent year-over-year to about $4.57 billion, driven by growing acceptance of new products and robust sales in emerging markets. Profit in the fourth quarter of 2014 dropped to $448 million, compared with $969 million during the same quarter in 2013

Medtronic reported that revenue rose to $17 billion in fiscal 2014, which ended April 25, compared with $16.59 billion in 2013. Net earnings fell 10 percent to $3.06 billion in 2014.

The company’s largest divisions, Cardiac Rhythm Disease Management and Cardiovascular, continued to grow in low single digits driven by sales growth of more than 50 percent in Atrial Fibrillation and 9 percent in the Structural Heart business. Other businesses such as Neuromodulation, Surgical Technologies and Diabetes also registered robust revenue growth, which offset declines in the company’s Spinal division.

International sales accounted for 47 percent of total revenues for the medical device maker, driven by 14 percent year-over-year growth in emerging markets.

Spine revenue declined 2 precent year over year to $786 million due to flat sales in the core spine business and a decline in balloon kyphoplasty procedures (BKP) and bone morphogenetic proteins products, the company said. Excluding BKP, Spinal division sales improved by 1 percent compared with the year prior. The company’s procedural innovation and “surgical synergy program” is driving surgical equipment and spinal implant sales and helping regain acceptance in the U.S. spine market, company officials noted.

Spinal sales are expected to get a further boost in the coming quarters as the company is planning a summer launch of its Prestige LP next-generation cervical disc in the U.S. market this year.

The company’s overall results for the quarter, however, were negatively affected by a patent agreement with Edwards Lifesciences over the companies’ heart valves. Results for Q4 included a one-time change of $750 million related to the patent agreement with Edwards about transcatheter heart valves as well as a separate product liability settlement for the company’s Infuse. bone graft product.

Edwards Lifesciences, an Irvine, Calif.-based maker of heart devices, said Medtronic will pay the company annual royalty payments of at least $40 million based on sales of Medtronic’s CoreValve product for eight years.

“We are pleased to reach an agreement that preserves physician choice while also recognizing Edwards’ leadership in pioneering the transcatheter heart valves that are chosen most often by physicians worldwide,” Michael Mussallem, Edwards’ chairman and CEO, said in a written statement.

Medtronic also will settle 950 claims related to Infuse. As part of the settlement, the company did not admit liability. The company said in a written statement this month that it expects a special charge of up to $140 million related to the Infuse settlements.

“There are tremendous opportunities ahead as we transform Medtronic from being primarily a device provider today into the premier global medical technology solutions partner of tomorrow,” Medtronic Chairman and CEO Omar Ishrak said in a written statement.