Medtronic Profit Rises, Helped by Lower Expenses
August 25 2016 - 8:30AM
Dow Jones News
Medtronic PLC on Thursday said quarterly sales fell across most
of its segments, though the medical-device maker's profit grew
thanks to a drop in expenses, including a lower tax burden.
Medtronic reported a fiscal first-quarter profit of $929
million, or 66 cents a share, compared with $820 million, or 57
cents a share, a year ago. Excluding items, the company earned
$1.03 a share, compared with $1.02 a year ago. Analysts polled by
Thomson Reuters expected earnings of $1.01 a share.
Revenue fell 1% to $7.17 billion, in line with expectations. The
company blamed the decline on an extra week included in the
prior-year period. Excluding the extra week and currency effects,
revenue rose 5%, the company said.
Medtronic's results come as its competitors have seen revenue
bolstered as demand shores up at home and abroad. In July,
competitor Boston Scientific Corp. raised its profit outlook for
the year after reporting better-than-expected quarterly revenue,
helped in part by cardiovascular, and St. Jude Medical Inc. posted
double-digit revenue growth as it launched new products. St. Jude
recently agreed to a $25 billion tie up with Abbott
Laboratories.
Medical-device makers are operating in an increasingly
competitive market, with hospital customers that have grown in size
and are pushing back on the prices they are willing to pay. But
like many firms across the health-care sector, medical-device
makers have responded to cost pressures by trying to beef up to
increase their negotiating leverage and pricing power.
In late June, Medtronic said it would buy HeartWare
International Inc. for $1.1 billion, adding more products that
treat heart failure to its portfolio. Medtronic's results have been
buoyed in recent quarters from its acquisition of Covidien, which
closed in early 2015.
In the latest quarter, Medtronic's minimally-invasive therapies
group, formerly the Covidien Group, posted a sales decrease of 1%
to $2.42 billion, or a mid-single digit increase on an adjusted
basis, helped by "above-market growth" in surgical solutions. Sales
for the cardiac and vascular segment fell 2% to $2.52 billion, but
they rose in the mid-single digits on an adjusted basis.
The restorative-therapies group's revenue fell 2%, while sales
in the diabetes group rose 2%.
Medtronic's bottom line was helped by a lower income-tax
provision and effective tax rate in the quarter, while its net
interest expense fell 6.2%.
Medtronic shares, inactive premarket, have added 6.9% over the
past three months.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
August 25, 2016 08:15 ET (12:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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