Medtronic, Inc. just announced a massive drop in its net earnings for fourth-quarter ended April 25th.
The announced drop of 54 percent involved fourth-quarter net earnings of $448 million—$.44 per share—over the prior year’s $969 million and $.95 per share. A one-time, non-cash $746 million pre-tax certain litigation charge over Medtronic’s global deal with Edwards Lifesciences Corp. and its InFuse product liability settlement are included, according to RTT News.
The non-GAAP, net earnings, adjusting for this charge, came to $1.135 billion—$1.12 per share—for the most recent quarter, wrote RTT News. Based on a Thomson Reuters poll of 21 analysts, they expected to see—on average—$1.12 earnings per share for the quarter. RTT News noted that one-time items are typically excluded from analyst estimates.
InFuse is a genetically engineered, synthetic, recombinant human Bone Morphogenetic Protein (rhBMP-2), which received U.S. Food and Drug Administration (FDA) for very specific uses. InFuse has not been approved for use on the cervical (upper) spine; however, despite this, the bone graft product is widely used in these off-label procedures. On July 1, 2008, the FDA issued a notification warning of serious complications tied to use of InFuse in cervical spinal fusions. Complications noted include excessive swelling in the neck, compressed airways, swallowing and breathing difficulties, and nerve damage. The FDA specifically noted that it received reports of “life-threatening complications associated with” InFuse when used off-label in the cervical spine. The FDA reiterated that, “these products are not approved by FDA for this use.” Lawsuit allegations brought over InFuse involve patients who were implanted with InFuse during off-label procedures and who claim to suffer from significant complications that include bone overgrowth and neuropathy.
The FDA also indicated that it received at least 40 reports of complications associated with off-label InFuse use in cervical spine fusion that took place within two days and two weeks after the InFuse procedure. The reports were received between 2003-2004 to June 2008. “[w]hen airway complications occurred, medical intervention was frequently necessary. Treatments needed included respiratory support with intubation, anti-inflammatory medication, tracheotomy and, most commonly, second surgeries to drain the surgical site,” the agency indicated.
Medtronic’s marketing of InFuse has long been the focus of mounting controversy over the way in which InFuse research was conducted, including that research was Medtronic-funded. Medtronic has also been accused of promoting InFuse off label, of minimizing InFuse’s risks, and of overstating the benefits of InFuse benefits. These accusations have led to a Senate probe, the FDA warning, and independent studies.