By Jeanne Whalen

Medtronic PLC reported strong revenue growth in its latest quarter, helped by cardiovascular device sales, an extra week in the quarter and its recent acquisition of Covidien PLC.

Thursday's report marks the second round of results since the device manufacturer's $50 billion acquisition of Covidien closed in January. The deal, which combined two of the world's largest surgical-implant and hospital-supply companies, drew scrutiny over a tax-lowering tactic criticized by U.S. government officials. The acquisition involved Medtronic moving its official headquarters from Minneapolis to Dublin, a so-called inversion deal that lowered the company's tax burden.

Net profit in the quarter fell 6% to $820 million, from $871 million a year earlier, hurt by restructuring charges, higher expenses for R&D and sales and administration, and $481 million in amortization. Excluding these items, earnings rose 3% to $1.02 a share, from 99 cents a share a year earlier.

Revenue in the quarter rose to $7.27 billion, a 70% increase over the previous year's quarter, before Medtronic bought Covidien. On a comparable, constant currency basis--which includes Covidien in the year-earlier results--revenue grew 12%. Revenue was buoyed by strong results in Medtronic's largest division, which sells stents, pacemakers, implantable defibrillators and other cardiovascular devices.

The cardiovascular unit also markets services such as the management of hospital catheterization labs. Medtronic said revenue from services nearly doubled in the quarter.

Sales of surgical tools and diabetes devices, including insulin pumps, were also robust. And revenue was boosted by an extra selling week in the quarter, a quirk of Medtronic's fiscal-year reporting schedule.

Chief Executive Omar Ishrak said he sees strong growth opportunity in the market for stroke treatment. Sales in the company's neurovascular division rose in the double digits percentage-wise in the latest quarter, driven by products such as Solitaire FR, a device designed to decrease disability after a stroke. Medtronic this week said it had paid $150 million to acquire Medina Medical, a privately held California firm developing devices to treat brain aneurysms, which can lead to stroke.

Sales of artificial discs and other products to treat spinal conditions continue to be a weak link in Medtronic's performance. In recent quarters the company has lost market share to competitors that were faster to launch new products, and had some problems with the organization of its sales force, Mr. Ishrak said in an interview. "We have taken measures to correct that and will be driving it more aggressively," he said.

Medtronic is "well on [its] way" to meeting the synergy target of $850 million it set following its acquisition of Covidien, Chief Financial Officer Gary Ellis said. The company took restructuring charges of $67 million in the latest quarter, mostly to cover the cost of laying off employees. Medtronic has eliminated about 500 jobs since acquiring Covidien, and now has about 85,000 employees.

Angela Chen contributed to this article.

Write to Jeanne Whalen at jeanne.whalen@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

September 03, 2015 15:31 ET (19:31 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
Medtronic (NYSE:MDT)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more Medtronic Charts.
Medtronic (NYSE:MDT)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more Medtronic Charts.