An 18 percent uptick in revenues from its medical devices segment drove a 7.2 percent sales boost for Covidien plc (NYSE:COV) during the first quarter of fiscal 2010, despite increases in sales, marketing and research & development spending.
The Mansfield, Mass.-based medical device monolith posted sales of $2.75 billion during the three months ended Dec. 25, 2009, compared with $2.56 billion during the same period last year. Net income for the quarter rose to $412 million (82 cents per diluted share), up 6.7 percent compared with $386 million (76 cents per diluted share) during the three months ended Dec. 26, 2008.
The gains came despite increased spending on sales & marketing and research & development. Selling, general and administrative expenses rose 14.1 percent to $834 million, while Covidien‘s R&D spend rose 7.5 percent to $101 million.
Sales for Covidien’s medical devices segment surged to $1.69 billion, compared with $1.43 billion during the first quarter of fiscal 2009. Sales in the U.S. were up 13.7 percent to $681 million, compared with $599 million during the same period last year. First-quarter revenues from international sales jumped 21.1 percent to$1.01 billion, compared with $833 million during Q1 2009. Here’s how sales broke down within the division:
|Q1 2010 ($m)||Q1 2009 ($m)||% change|
|Soft Tissue Repair Products||$219||$193||13.5%|
|Oximetry & Monitoring Products||$180||$148||21.6%|
|Airway & Ventilation Products||$209||$178||17.4%|
Covidien said the boost for its energy devices business comprised a "sharp" increase in vessel sealing product sales, offset by slow sales of "capital-related hardware products." Its oximetry and monitoring product line benefitting from its $210 milion acquisition of Aspect Medical Systems, which closed in November, 2009.
Including $96 million from sales of oxycodone hydrochloride extended-release tablets, a generic Oxycontin equivalent that Covidien agreed to stop selling per the settlement of a patent infringement lawsuit with Perdue Pharma LP, pharmaceuticals sales were $616 million the first quarter, down 12 percent from $697 million during the first quarter 2009. , including favorable foreign exchange of about 2 percentage points to the 2010 quarterly results and Oxy ER contributing $96 million in sales to the year-ago quarter. Excluding sales of the painkiller, pharmaceuticals revenues rose 2.5 percent.
Sales for Covidien’s medical supplies division rose 2 percent to $443 million, up from $435 million during Q1 2009.
The company said it expects fiscal 2010 sales to rise by 6 percent to 9 percent, excluding oxycodone hydrochloride sales from 2009. Covidien boosted its guidance for the medical devices division, predicting a sales jump of 10 percent to 13 percent, compared with its prior expectation of a 9 percent to 12 percent increase.