By Angela Chen
Covidien PLC said earnings jumped 28% on sales growth in its
core surgical products segment, ahead of the company's merger with
medical-device maker Medtronic Inc.
Earnings beat expectations, sending shares up 1.6% in premarket
trading.
Ireland-based Covidien agreed last year to be acquired by U.S.
company Medtronic for $42.9 billion, in a deal that would allow
Medtronic to set up shop in Ireland, where it would enjoy a lighter
tax load. Medtronic shareholders approved the acquisition in early
January, putting the deal on track to close within the next two
months.
In a move to address new rules set by the U.S. Treasury,
Medtronic last year said it would raise $16 billion in debt to
finance part of the deal. That will make the merger more expensive
for Medtronic, but it allows the deal to move ahead.
Overall, Covidien, which makes medical supplies such as
operating-room equipment and generic drugs, posted earnings of $511
million, or $1.12 a share, for the quarter ended in December, up
from $398 million, or 87 cents a share, a year earlier.
Excluding restructuring charges and other items, per-share
earnings from continuing operations were $1.11, up from $1 a share
a year ago.
Sales rose to $2.69 billion from $2.64 billion.
Analysts surveyed by Thomson Reuters had projected earnings of
$1.05 a share on revenue of $2.72 billion.
Sales for the company's medical devices segment edged up 1% to
$2.28 billion, though unfavorable foreign currency slowed sales
growth by five percentage points. The medical supplies segment had
5% sales growth. The largest product category, surgical solutions,
grew 4.1%.
Respiratory and patient-care sales fell about 1% to $945
million, while vascular-therapies sales ticked up about 1% to $428
million.
Shares of Covidien have been up about 51% in the past 12 months
through Wednesday's close.
Write to Angela Chen at angela.chen@dowjones.com
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