Medtronic Tops Estimates On Heart Device Sales

(RTTNews) - Medical device maker Medtronic plc (MDT), which acquired smaller rival Covidien Ltd., reported Tuesday a small loss for the fourth quarter compared to a profit last year, despite sales growth, hurt by charges, amortization and tax adjustments.

However, both adjusted earnings per share and quarterly net sales topped analysts' expectations due to robust sales of its heart devices.

The company provided earnings and sales growth forecast for the full-year 2016, both below Street view.

"I am encouraged by our strong fourth quarter performance, the first quarter that reflects the combined results of Medtronic and Covidien. In addition to making solid progress on our integration of Covidien, these results reflect disciplined execution across our three core strategies of therapy innovation, globalization, and economic value," Chairman and CEO Omar Ishrak said.

The Dublin, Ireland-based company reported a net loss of $1 million or breakeven per share for the fourth quarter, compared to net income of $448 million or $0.44 per share in the prior-year quarter.

Excluding non-recurring items, adjusted net earnings for the quarter was $1.68 billion or $1.16 per share, compared to $1.19 billion or $1.18 per share in the year-ago quarter.

On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $1.11 per share for the quarter. Analysts' estimates typically exclude special items.

Worldwide net sales for the quarter surged 60 percent to $7.30 billion from $4.57 billion in the same quarter last year, and topped twenty-one Wall Street analysts' consensus estimate of $7.19 billion.

Including prior year Covidien revenues and excluding a $483 million negative foreign currency impact, sales grew only 7 percent on a comparable basis from last year's $7.26 billion.

U.S. Revenue of $4.1 billion for the quarter grew 8 percent on a comparable basis, and 67 percent as reported.

Fourth quarter non-U.S. developed market revenue of $2.32 billion increased 5 percent, or 48 percent as reported.

Emerging market revenue of $923 million increased 11 percent, or 62 percent as reported, and represented about 13 percent of company revenue.

Revenues for Medtronic's cardiac and vascular group, which includes the Cardiac Rhythm & Heart Failure, Coronary & Structural Heart, and Aortic & Peripheral Vascular divisions, grew 10 percent to $2.60 billion from last year on both a comparable, constant currency basis and as reported.

Cardiac Rhythm & Heart Failure (CRHF) revenue of $1.398 billion grew 11 percent, or 4 percent as reported.

Revenues for minimally invasive therapies group (MITG), formerly Covidien, includes both the Surgical Solutions division and the Patient Monitoring & Recovery division, grew 6 percent to $2.39 billion from last year.

Revenues for the restorative therapies group, which includes the Spine, Neuromodulation, Surgical Technologies, and Neurovascular divisions, grew 7 percent or 5 percent in constant currency, to $1.85 billion from last year.

Diabetes group revenues grew 2 percent or 8 percent in constant currency, to $467 million from a year ago.

Looking ahead to fiscal 2016, the company expects cash earnings in a range of $4.30 to $4.40 per share, which includes an expected $0.40 to $0.50 negative foreign currency impact. It also projects full-year underlying operational revenue growth in the range of 4 to 6 percent, and estimates an incremental 1.0 to 1.5 percent of full-year revenue growth due to the extra selling week in the first quarter of fiscal year 2016.

These revenue growth rates are on a comparable, constant currency basis, and exclude an estimated $1.3 to $1.5 billion negative foreign currency impact based on current exchange rates.

Street is currently looking for full-year 2016 earnings of $4.45 per share on annual revenue growth of 3.1 percent to $28.59 billion.

"As we look ahead to fiscal year 2016, we remain focused on consistently delivering on our strategic and financial commitments," Ishrak added.

MDT closed Monday's regular trading session at $76.70, down $0.37 on a volume of 6.53 million shares. In the past 52-week period, the stock has been trading in a range of $58.32 to $79.50.