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UPDATE 2-Medtronic profit falls on charges for blood pressure device

Susan Kelly
Tuesday, 18 Feb 2014 | 10:19 AM ET

Feb 18 (Reuters) - Medtronic Inc on Tuesday reported a lower quarterly net profit after it took charges for an experimental blood pressure device that failed to prove effective in a clinical study.

Earnings before special items met analysts' expectations on slightly higher revenue as stronger sales of diabetes devices and other products offset weakness in pacemakers.

Medtronic shares fell 2.3 percent to $55.56 in morning trading on the New York Stock Exchange.

"Though third-quarter results did come basically in line with expectations overall, Medtronic did deliver lower-than-expected results in certain key product lines," Leerink analyst Danielle Antalffy said in a note to clients.

Net earnings fell to $762 million, or 75 cents a share, in the third quarter ended Jan. 24 from $988 million, or 97 cents a share, a year earlier.

Medtronic recorded pretax charges of $200 million, primarily for a blood pressure treatment known as a renal denervation system. The company is still evaluating its long-term plans for the device, which it continues to sell in Europe.

Excluding the charges and other one-time items, Medtronic earned 91 cents a share, in line with the analysts' average estimate, according to Thomson Reuters I/B/E/S.

Revenue rose 3 percent to $4.16 billion, edging past Wall Street expectations of $4.15 billion.

Medtronic's sales of implantable cardioverter defibrillators, which manage irregular heart rhythms, were flat at $655 million. Pacemaker sales fell 4 percent to $439 million.

Medtronic competes against Boston Scientific Corp and St Jude Medical Inc in the heart rhythm management market, which is struggling to recover after several years of declining sales.

Sales of structural heart products, which include replacement valves, rose 3 percent to $281 million.

The company gained U.S. regulatory approval in January for its CoreValve, which is implanted in a less-invasive procedure than traditional open-heart surgery. It has become the first such device to compete against Edwards Lifesciences Corp's Sapien valve in the United States.

Medtronic is training physicians on the procedure.

Spinal product sales slipped 1 percent to $744 million. Sales of diabetes products climbed 16 percent to $436 million.

Sales in emerging markets increased 10 percent to $521 million.

Medtronic tightened its fiscal 2014 earnings forecast to a range of $3.81 to $3.83 a share, compared with its previous outlook of $3.80 to $3.85 and analysts' estimates of $3.82. It said it still expected revenue growth of 3 percent to 4 percent.

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