Medtronic Inc. (MDT), the world’s biggest maker of heart-rhythm devices, said fourth-quarter sales of pacemakers and defibrillators rose, surprising analysts who expected shrinking demand to continue. The shares climbed to their highest value in almost five years.
Defibrillator sales gained 1.5 percent to $755 million in the three months ended April 26, the first increase since the same quarter in 2010. Revenue from pacemakers climbed 2.6 percent to $505 million, the first gain since the Minneapolis-based company introduced an MRI-safe device at the end of 2011.
The increased sales helped boost the quarter’s revenue 3.8 percent to $4.46 billion from $4.3 billion a year earlier, the company said in a statement today. Profit excluding one-time items of $1.10 a share beat by 7 cents the average of 24 analysts’ estimates compiled by Bloomberg.
“Overall, they gained pretty substantial market share in defibrillators and pacemakers,” said Jason McGorman, an analyst at Bloomberg Industries in Princeton, New Jersey, in a telephone interview. “They were the only company that grew ICD revenue year-over-year. People were expecting low- to mid-single digit sales declines for U.S. ICDs, because that’s what the trend has been for the overall market.”
Medtronic rose 6.6 percent to $53.20 at 10:10 a.m. New York time after earlier reaching $53.83, its highest intraday price since September 2008. The shares had increased 35 percent in the past 12 months through yesterday.
The company forecast earnings of $3.80 to $3.85 a share for fiscal 2014, bracketing the $3.84 a share average of 24 analysts’ estimates compiled by Bloomberg.
Net income for the quarter fell to $969 million, or 95 cents a share, from $991 million, or 94 cents, a year earlier, Medtronic said.
The company gained share in all of its businesses, Chief Executive Officer Omar Ishrak said in a telephone interview. Demand for spinal products and defibrillators in the U.S. both increased for the first time in 4.5 years, he said.
“This is noteworthy, especially as these businesses have been an impediment to our overall growth profile,” he said. “This is another step in establishing credibility and delivering consistently over an extended period of time.”
While the markets for heart rhythm devices and spinal products have stopped declining, they haven’t resumed expanding, Ishrak said. Medtronic was able to grow in the areas because of the introduction of new products and the reorganization of the sales force, he said.
The company’s cardiovascular group reaches out to physicians, hospitals and administrators in a more coordinated manner, he said.
“We’re working with them on a much more consolidated basis, and it’s driving over business,” he said. “They can see the clinical and economic value that these products create.”
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