Friday, September 04, 2015
Medtronic Plc, the world's largest standalone medical device maker, reported a 70 percent rise in quarterly revenue, helped by higher sales across its business lines, in part due to the acquisition of surgical products provider Covidien Plc.
An improving U.S. economy and the impact of the affordable care act has driven an increase in the number of surgical procedures, boosting demand for Medtronic's products, the company said.
Medtronic said it is well positioned to benefit from the Medicare bundle payment program, which aims to link payments for multiple services during an episode of care rather than pay providers separately for each service.
The $50 billion Covidien deal, which closed in January, helped expand the range of products Medtronic offers hospitals, as well as cut its tax burden.
Medtronic's revenue rose to $7.27 billion in the first quarter, which included an extra week, from $4.27 billion a year earlier.
Sales in its cardiac and vascular business, which makes pace-makers, heart valves and stents, climbed 14 percent to $2.57 billion in the quarter ended July 31.
In the United States alone, sales jumped about 33 percent.
Sales of ICDs, used to treat irregular heartbeat, increased in the high single digit percentage range, adjusting for the extra week, Evercore ISI analyst Vijay Kumar said.
The growth was in stark contrast to the soft results reported by the company's peers, Kumar noted.
Medtronic's revenue from the minimally invasive therapies group, created after the Covidien deal, raked in sales of $2.46 billion, challenging the cardiac business as the company's top revenue contributor.
The company's diversified position allows them to expect a "sort of double-digit type" growth in emerging markets, Chief Executive Omar Ishrak said in a conference call.
"We had low double-digit growth in China which actually is better than what we've been seeing in most quarters last year," he said. "We feel that we've outperformed the overall market."
The company's adjusted profit rose 47 percent to $1.46 billion, or $1.02 per share, in the first quarter.
Analysts on average had expected earnings of $1.01 per share on revenue of $7.06 billion, according to Thomson Reuters I/B/E/S.
Medtronic reiterated its fiscal 2016 profit forecast of $4.30-$4.40 per share, including a 40-50 cents impact from currency fluctuations.
It also reaffirmed its forecast of 4-6 percent revenue growth on a constant currency basis in 2016.
The company's stock was little changed at $71.42 in midday trade.
reuters.com
