In a market that's down 4%, seeing sales fall just 3% is a good thing. I guess.
Issues with defibrillators made by St. Jude, and previously by Boston Scientific
The rest of Medtronic's fiscal first quarter looked fairly decent. Neuromodulation and diabetes devices helped keep revenue growth in the positive as did Johnson & Johnson's
One segment won't have any new devices to grow revenue in the immediate future. The FDA has a problem with Medtronic's implantable pumps that deliver painkillers. The company has tried to resolve the situation for nearly five years, but the FDA said its plan isn't good enough. Until the issue is resolved, the FDA won't approve any devices belonging to that class. Medtronic said that won't have any financial impact, but these things have a way of dragging out longer than expected.
Turning to the bottom line, the medical-device maker's earnings weren't too shabby with adjusted EPS up 8% year over year. Some of the higher bottom-line growth came from keeping expenses in check, but most of it was from share repurchases that lowered the denominator in the EPS calculation.
Returning cash to shareholders through buybacks and dividends -- Medtronic recently upped its dividend again -- is certainly a good thing, but investors need to keep an eye on the revenue line as well. It's easy for medical devices to fall out of favor with doctors because something better comes along or doctors decide the device is potentially doing more harm than good.
So far, Medtronic seems to be weathering the defibrillator storm well enough.
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