Medtronic (NYSE:MDT) said this morning that its fiscal 3rd-quarter earnings climbed 30.7% on sales growth of nearly 4% without any contribution from Covidien, which it acquired for $50 billion just after the quarter ended.
Fridley, Minn.-based Medtronic said profits grew 28.2% to $977 million, or 98¢ per share, on sales growth of 3.7% to $4.32 billion for the 3 months ended Jan. 23. Adjusted to exclude 1-time items, earnings per share were $1.01; on Wall Street, analysts were looking for adjusted EPS of 97¢ on sales of $4.25 billion for the quarter.
"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 3 legacy Medtronic groups contributed to our robust performance," chairman & CEO Omar Ishrak said in prepared remarks. "Our teams are executing on meaningful product launches around the world, and our customers are responding to our differentiated healthcare solutions that seek to demonstrate both clinical and economic value."
Medtronic said it expects to report combined Medtronic/Covidien sales growth of 4% to 6% on a constant-currency basis for its fiscal 4th quarter. During a conference call with analysts, CFO Gary Ellis said that if exchange rates hold for the dollar, the impact would be a $420 million to $480 million reduction in reported 4th-quarter sales.
Ellis predicted fiscal 2016 constant-currency sales growth in the mid-single-digits.
“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 said. "Our combination of extensive and innovative capabilities truly makes us a partner of choice to hospitals, payers and governments as we focus on a shared commitment to address universal healthcare needs – improving clinical outcomes, expanding access, and optimizing cost and efficiency."
Divisional numbers
Medtronic said its cardiac rhythm & heart failure business put up sales of $1.27 billion, up 7% as reported and 12% on a constant-currency basis.
"That’s pretty strong growth given the market dynamics we are in," Edward Jones analyst Jeff Windau said.
Here’s how sales broke down (reported and constant-currency bases):
- Total revenues: $4.32 billion (+3.7%, +7.5% cc)
- Cardiac & vascular: $2.22 billion (+5%, +10 cc%)
- Cardiac rhythm & heart failure: $1.27 billion (+7%, +12% cc)
- Coronary & structural heart: $373 million (+3%, +8% cc)
- Aortic & peripheral: $218 million (-10%, +5% cc)
- Restorative therapies: $1.65 billion (+2%, +5% cc)
- Spine: $740 million, (-1%, +2% cc)
- Core: $543 million (-2%, +1% cc))
- Interventional: $75 million (-3%, flat cc)
- BMP: $122 million (8%, 9% cc)
- Neuromodulation: $487 million (+2%, +5% cc)
- Surgical Technologies: $418 million (+8%, +11% cc)
- Spine: $740 million, (-1%, +2% cc)
- Diabetes: $449 million, (+3%, +6% cc)
- Cardiac & vascular: $2.22 billion (+5%, +10 cc%)
The news sent MDT shares to a 52-week high of $78.08 today. The stock was up 3.6% to $78 even in early-afternoon trading today.
Material from Reuters was used in this report.