Shares of Covidien plc (NYSE:COV) rose more than 4 percent this morning after the company announced a third-quarter profit bump of 47.0 percent and a top-line boost of 14.1 percent.
Wall Street liked the 22 percent sales boost added by the Mansfield, Mass.-based health products maker’s workhorse medical device segment during the three months ended June 24, which powered the surge. Even better, Covidien bested both its own forecast and The Street’s expectations.
“We delivered another strong quarter, and, for the fourth quarter in a row, results significantly exceeded our own expectations,” president & CEO Joe Almeida said in prepared remarks. “These results were spurred by the performance of our largest business segment, medical devices, which again reported substantial growth that was led by excellent increases for vascular and energy products. We continued to benefit from several successful new product launches and from market share gains in an increasingly competitive global healthcare marketplace.”
Covidien reported profits of $535 million, or $1.07 per diluted share, on sales of $2.93 billion for the three months ended June 24. That’s compared with net income of $364 million, or 72 cents diluted EPS, on sales of $2.56 billion during the same period last year.
Excluding one-time items, adjusted diluted EPS was $1.01 for the quarter — analysts had expected earnings of 95 cents per share (with a high estimate of 97 cents), according to MarketWatch.
The medical device division, which accounted for 68 percent of total revenues during the quarter, reported sales of $1.99 billion, up from $1.63 billion during Q3 2010. Acquisitions, new products and higher sales volumes drove the growth, the company said. Sales in the U.S. were up 28 percent for the division to $874 million; overseas sales of $1.11 billion were up 18 percent.
Covidien’s pharmaceutical division posted a sales decline of 1 percent to $500 million, largely due to the sale of its U.S. radiopharmacy business last year and lower sales for its specialty pharma unit.
The medical supplies operation posted Q3 sales of $441 million, up 3 percent, paced by higher sales of med-surg and nursing care products.
The company said it bought back nearly 5 million shares of its own stock during the quarter.
“In the last 12 months, we have returned over $1 billion in cash to shareholders through dividends and share buybacks, representing more than 50 percent of our free cash flow,” Almeida noted. “Our overall Company performance remains on plan, and we are confident we will have a strong finish to the fiscal year.”
Covidien also said it expects the restructuring plan it launched during the quarter to subtract about $275 million pre-tax by the end of fiscal 2014. The changes are aimed at saving up to $225 million a year, according to the company.
COV shares were trading at $52.30 in mid-day activity, up 4.1 percent.