Medtronic Q3 Results Top Estimates

(RTTNews) - Medical device maker Medtronic plc (MDT), which acquired smaller rival Covidien Ltd., reported Tuesday a profit for the third quarter, that increased 28 percent from last year, reflecting lower costs and expenses as well as sales growth. Adjusted earnings per share and quarterly net sales topped analysts' expectations. The company provided sales growth forecast for the fourth quarter.

Medtronic completed its acquisition of Covidien in a cash and stock deal valued at about $49.9 billion on January 26. The deal was agreed upon in mid-June. The company noted that the integration activities are underway.

"Q3 was a strong quarter, with revenue growth well above our outlook range for the fiscal year and exceeding our mid-single digit baseline goal. All three legacy Medtronic groups contributed to our robust performance," Chairman and CEO Omar Ishrak said.

The Dublin, Ireland-based company reported net earnings of $977 million or $0.98 per share for the third quarter, higher than $762 million or $0.75 per share in the prior-year quarter.

Excluding items, adjusted net earnings for the quarter was $1.01 billion or $1.01 per share, compared to $916 million or $0.91 per share in the year-ago quarter.

On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $0.97 per share for the quarter. Analysts' estimates typically exclude special items.

Worldwide net sales for the quarter increased 3.7 percent or 7.5 percent in constant currency, to $4.32 billion from $4.16 billion in the same quarter last year, and topped nineteen Wall Street analysts' consensus estimate of $4.25 billion.

U.S. revenues for the quarter grew 8 percent to $2.46 billion, and international revenues decreased 2 percent to $1.86 billion, and accounted for 43 percent of Medtronic's worldwide revenues. On a constant currency basis, international revenues increased 7 percent. Revenues from emerging markets increased 6 percent or 12 percent on a constant currency basis, to $542 million from last year.

Revenues for Medtronic's cardiac and vascular group, which includes the Cardiac Rhythm Disease Management (CRDM), Coronary, Structural Heart, and Endovascular businesses, grew 5 percent or 10 percent in constant currency, to $2.22 billion from last year.

Revenues for CRDM unit, by far its biggest business line, improved 7 percent to $1.27 billion, with revenues from Implantable Cardioverter Defibrillators or ICDs, declining 1 percent to $650 million from last year. CRDM revenue was up 12 percent and revenue from ICDs grew 4 percent in constant currency.

Revenues for the restorative therapies group, which includes the Spine, Neuromodulation, Diabetes, and Surgical Technologies businesses, grew 2 percent or 5 percent in constant currency, to $1.65 billion from last year., with core spine revenues declining 1 percent, while neuromodulation revenues grew 2 percent from last year.

Diabetes group revenues grew 3 percent or 6 percent in constant currency, to $449 million from a year ago.

Total costs and expenses decreased 16 percent to $3.12 billion from $3.21 billion last year.

Looking ahead to the fourth quarter, the company expects constant currency revenue growth in the range of 4 to 6 percent on a combined pro forma basis. This includes both the legacy Medtronic and Covidien businesses, for the remainder of fiscal year 2015. Street is currently looking for revenues of $7.09 billion for the quarter.

"The close of our acquisition of Covidien was a significant milestone for our industry and uniquely positions Medtronic to help lead the transformation of healthcare systems around the world," Ishrak added.

MDT closed Friday's regular trading session at $75.26, up $0.80 on a volume of 9.01 million shares. In the past 52-week period, the stock has been trading in a range of $55.30 to $77.39.