The flurry of moves Covidien plc (NYSE:COV) made in 2010 are starting to pay off for the Mansfield, Mass.-based medical products conglomerate.
New business from its $2.6 billion ev3 acquisition helped Covidien double its vascular unit’s sales during the three months ended March 25, posting revenues of $333 million, up 103 percent over the same period last year. And Covidien saw strong increases in sales of energy devices from the $250 million Somanetics buyout it consummated last July. That division reported a 17 percent increase over Q2 2010.
The uptick helped sales of Covidien’s largest segment, its medical device unit, jump 16 percent to $1.88 billion, compared to the $1.62 billion during the same period last year. Domestic sales were particularly strong, jumping 25 percent during the quarter.
The increases jibe with estimates from CFO Charles Dockendorff last fall, who said the device unit would see an overall 10 percent to 13 percent uptick from the shopping spree. Covidien officials said the company will continue to look for tuck-in acquisitions to fill out its device unit over the coming years.
“The growth of the device franchise is a key driver for Covidien,” incoming CEO Jose Almeida told investors during an earnings call this morning. “We’re going to do it both organically and inorganically,” he said.
Almeida, the former medical device chief who was tapped to replace the retiring Richard Meelia in the corner office in Mansfield, said any new buyouts would be aimed at fleshing out its current product portfolio rather than exploring new platforms.
Covidien’s overall business, including pharmaceutical and medical supplies, posted net income of $455 million on $2.8 billion in sales, a 16 percent increase from a $413 million profit on $2.55 billion in revenues for the same period last year.
Covidien increased its 2011 sales guidance, from 6 percent to 9 percent to 8 percent to 11 percent (including foreign exchange rates). COV shares were up 2 percent through midday trading, to $54.85.