It turns out that mother’s little helper can give big companies a boost too. Or at least temporarily dull the pain of a deep recession.
Covidien’s subsidiary Mallinckrodt Inc. agreed last September to stop selling the painkiller after the second quarter to settle a patent infringement lawsuit with Perdue.
The expiring agreement helped pad Covidien’s second-quarter sales to the tune of $260 million during the three months ended March 31, about half of the $519 million the company made in its pharmaceutical division during the quarter — a 117 percent increase over the same period last year.
Covidien posted total sales of $2.7 billion for the quarter, up 11 percent from $2.4 billion during the second quarter of 2008. The increase pushed operating income to $527 million, up 30 percent from $405 million during the same period last year.
But company officials warned that results for the rest of 2009 will not be as robust, predicting flat or declining sales for the year.
And Covidien had a large tax and legal nut to pay off, as the quarterly results included a one-time charge of $183 million to settle the company’s portion of shareholder settlements and all remaining outstanding litigation from the Tyco International implosion and the resulting Dennis Kozlowski scandal. Covidien was spun off from Tyco in 2007.
The company paid an eye-popping 65 percent effective tax rate for the quarter, a number Covidien officials said they were working to bring down significantly in the coming months.
Covidien’s medical device division reported quarterly sales of $1.7 billion, essentially unchanged from the same period last year. Sales of laparoscopic instruments and vessel repair products showed strong growth and the company’s soft tissue repair division posted vigorous sales of the hernia mesh repair product it acquired last year in its buyout of Andover-based Tissue Science Ltd.
But the imaging solutions division took a hit as quarterly sales declined to $276 million, down 9 percent compared with $304 million for the same period last year.
Officials said the results were “below expectations,” adding that plans are underway to increase profitability over the long term.
Too bad there’s no pill for that.