Medtronic Inc. reported a 26 percent decline in fiscal second-quarter profit Tuesday as legal fees overwhelmed virtually flat sales of the company's heart pacing implants.
Despite the profit decline, results were in line with Wall Street expectations and the company reiterated earnings expectations for the fiscal year.
The world's largest medical device maker said revenue edged up less than 2 percent on a reported basis to $4.1 billion for the period ended Oct. 26. Results were hurt by $118 million due to unfavorable currency exchange rates and $245 million in pretax legal fees.
Those and other charges pressured results to $646 million, or 63 cents per share, down from $871, or 82, cents per share, a year earlier. Excluding those charges, the company would have earned $902 million, or 88 cents per share.
That matched the average estimate of analysts polled by FactSet, who also predicted revenue of $4.05 billion.
Medtronic has struggled to maintain earnings growth amid sluggish sales of its two leading products: heart defibrillators and spinal implants.
Sales of the company's cardiac rhythm business declined 3 percent to $1.23 billion for the period. The unit sells implantable defibrillators, which fell 3 percent, and pacemakers, which declined 6 percent.
Sales for the company's stent division increased 14 percent to $429 million.
Medtronic said revenue from its spinal division fell 7 percent to $782 million. The division has been hurt by ongoing revelations about the company's handling of its protein bone graft Infuse. Last month a Senate investigation concluded that the company helped write and edit medical journal articles about the graft that downplayed its risks. InFuse contains a genetically engineered protein that can stimulate bone growth.
The Food and Drug Administration approved InFuse in 2002 for use in spinal, oral and dental graft procedures, but most of the time it has been used off-label in neck surgeries and other procedures. Those uses can lead to problems swallowing, breathing and speaking.
Looking ahead, the Minneapolis company said it still expects to earn $3.62 to $3.70 per share for the full year on revenue growth of 3 to 4 percent on a constant currency basis. Based on fiscal 2012 revenue of $16.184 billion, Medtronic pegs revenue for this year between $16.67 billion and $16.83 billion.
Analysts expect full-year earnings per share of $3.66 on reported revenue of $16.44 billion, according to FactSet.
Shares of Medtronic rose 82 cents, or 2 percent, to $42.63 in midday trading.