Medtronic Inc.'s first-quarter earnings jumped 87% due to a big legal charge a year earlier, but sales declined as a shaky global health-care environment slowed markets and triggered increased pressure on product prices for the company's biggest medical-device businesses.

Medtronic said this pressure increased recently, taking a surprising toll on sales of heart-rhythm devices like defibrillators and products used in spinal surgery.

The company lowered its sales and earnings guidance for the fiscal year running through next April while also downgrading its growth assumptions for markets where it competes.

Shares of the Minneapolis company slid Tuesday, falling 11% to $31.21 in 4 p.m. composite trading on the New York Stock Exchange. They have declined 29% this year.
Shares among Medtronic's biggest competitors, including St. Jude Medical Inc. and Boston Scientific Corp., also slumped.

Considering Medtronic's heft and the fact its fiscal quarter ends a month later than most device makers' reporting periods, the company's degraded sectorwide outlook sent a concerning signal.
“We're somewhat a bellwether for the overall markets,” Bill Hawkins, Medtronic's chairman and chief executive, said in an interview.

For the quarter ended July 30, Medtronic reported earnings of $830 million, or 76 cents a share, up from $445 million, or 40 cents a share, a year earlier.
Excluding items including acquisition-related charges in the recent quarter and a big legal settlement with Abbott Laboratories a year earlier, plus the impact of an extra week of selling time last year, earnings rose to 80 cents a share from 79 cents.
Analysts surveyed by Thomson Reuters had forecast earnings of 80 cents a share in the recent quarter.

Fiscal first-quarter sales declined 4.1% to $3.77 billion, below Wall Street's forecast of $3.95 billion. The year-over-year comparison was affected by the extra selling time in last year's first quarter and unfavorable foreign-currency rates. Excluding these items, Medtronic said sales increased 2%.
In the company's biggest business, for implantable heart-rhythm devices, sales declined 8.3% to $1.23 billion.

Implantable defibrillator sales were down nearly 7% to $722 million overall and down 8.1% to $467 million in the U.S. Sales of these devices, used to shock hearts when potentially deadly rhythm distortions start, were much lower than the average Wall Street estimate cited by Wells Fargo.
Medtronic said heart-rhythm sales were hurt by slower market growth and increased pricing pressure. The company also appeared to give back some defibrillator market-share gains picked up when Boston Scientific temporarily halted domestic sales this spring due to regulatory-paperwork filing issues. Boston Scientific rebounded from that slowdown faster than it initially forecast.

Medtronic's big spinal business, which has struggled for several quarters under pressure from factors like unfavorable medical studies and poor performance in a business it acquired, was once again a sore spot, with sales falling 9.4% to $829 million in the latest quarter.

Weakened procedure growth and increased pricing pressure weighed on recent spinal sales, Medtronic said. The company said results there were also pressured by insurers lengthening waiting times to get preapproval for spinal-fusion procedures, which involve an array of tools used to fuse vertebrae to alleviate pain. Other companies including Johnson & Johnson and Stryker Corp. have also recently cited pushback from insurers as one factor weighing on the market.

Medtronic has been trying to get its spinal business back on track with help from new products, with a goal of returning to market growth rates in the current fiscal year.

The problem now is that the market has slowed precipitously over the last several quarters, so matching market growth isn't as helpful as it once was. J.P. Morgan estimated the global spine market contracted by one percentage point in the second quarter, which compares with double-digit growth four quarters earlier.

Looking ahead, Medtronic said it now anticipates sales will grow by 2% to 5% in the current fiscal year, excluding the impact of currency rates, down from its previous 5% to 8% forecast range. It lowered its full-year earnings forecast to $3.40 to $3.48 a share, down from a prior estimate of $3.45 to $3.55 a share.

Chief Financial Officer Gary Ellis indicated on the earnings conference call that the company expects fiscal-second-quarter sales growth in the lower end of the range forecast for the full year, with better growth expected in following quarters.

Guangzhou Jia Yu medical equipment Limited