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Medtronic quarterly profit beats on strength in surgical products

By Saumya Joseph and Manojna Maddipatla
Omar Ishrak, CEO of Medtronic, speaks during an IBM keynote address at the 2016 CES trade show in Las Vegas, Nevada, January 6, 2016. REUTERS/Steve Marcus

By Saumya Joseph and Manojna Maddipatla

(Reuters) - Medtronic Plc beat analysts' estimates for quarterly profit on Tuesday, boosted by sales of its surgical products, and the largest U.S. standalone medical device maker raised the upper end of its full-year earnings forecast.

The company has been building its minimally invasive and robotic surgery device businesses through acquisitions to make up for slowing growth in its top-earning unit that makes stents and heart pumps.

The minimally invasive therapies business, which makes surgical instruments such as those used to treat hernias and kidney disease, brought in revenue of $2.12 billion in the third quarter, above estimates of $2.08 billion.

Medtronic said its robotic spine surgery system, Mazor X, which the company added through its purchase of Mazor Robotics, witnessed strong sales since its launch in January.

Mazor X also helped the restorative therapies unit, which makes medical devices and implants to treat neurological disorders and conditions affecting the spine, beat analysts' estimates for quarterly revenue.

"Generally speaking, robotics is an important and growing field ... over time it will help Medtronic better penetrate its existing customer base and perhaps attract new ones," said Edward Jones analyst John Boylan.

Company executives during the post-earnings conference call also highlighted the potential of its upcoming cardiac, robotic surgery and diabetes devices to power sales.

"When launched, all of these new products are expected to create multiple new multibillion-dollar growth opportunities," Chief Executive Officer Omar Ishrak said.

Most of the products are expected to launch in the later half of next year.

The quarter was good, but investors are focusing more on the upcoming strong pipeline of products, said analyst Boylan.

The cardiac and vascular unit, which makes pace-makers, heart valves and stents, reported revenue of $2.79 billion, in line with analysts' estimate, according to IBES data from Refinitiv.

The company competes with Boston Scientific Corp and Edwards Lifesciences Corp for a bigger share of the lucrative transcatheter heart valves market.

Medtronic said it expects full-year earnings to be in the range of $5.14 to $5.16 per share, up from the prior forecast of $5.10 to $5.15 per share. Analysts had expected $5.12 per share.

The company now expects 2019 organic revenue growth of 5.25 percent to 5.5 percent, but said a strong dollar would impact full-year revenue by about $425 million to $475 million. It previously forecast organic revenue growth to range between 5.0 percent and 5.5 percent.

Excluding items, the company earned $1.29 per share, beating expectations of $1.24.

Revenue rose 2.4 percent to $7.55 billion and beat analysts' estimate of $7.52 billion.

Shares rose 1.7 percent to $93.88 in morning trading.

(Reporting by Manogna Maddipatla and Saumya Sibi Joseph in Bengaluru; Editing by Arun Koyyur and Sriraj Kalluvila)