Medtronic’s quarterly revenue increases following slew of acquisitions
For the first quarter of fiscal year 2016, Medtronic’s revenue increased 12 percent compared with the same time period last year thanks to an extra week in the quarter and its acquisition of Covidien, according to earnings results announced by the company.
Medtronic estimated the extra week contributed to an additional 6 percentage points in constant currency revenue. For the quarter, Medtronic had worldwide sales of $7.3 billion, including $4.1 billion in the U.S.
In January, Medtronic completed its acquisition of Covidien for nearly $50 billion. The deal gave the combined company a portfolio that includes cardiac, spinal, diabetes and surgical offerings.
After the acquisition, Medtronic now has more than 85,000 employees in more than 160 countries. The official headquarters are now in Dublin, Ireland, to take advantage of favorable corporate tax rates, but the operational headquarters remain in Minneapolis.
For the quarter, net income decreased 6 percent to $820 million and diluted earnings per share decreased 34 percent to $0.57 per share. Revenue increased in all of Medtronic’s groups: cardiac and vascular; minimally invasive therapies; restorative therapies; and diabetes.
The cardiac and vascular group includes the cardiac rhythm and heart failure, coronary and structural heart and aortic and peripheral vascular divisions. The group's worldwide revenue increased 15 percent to $2.6 billion, including $1.4 billion in cardiac rhythm and heart failure, which is the company's largest division.
Covidien's products are part of the minimally invasive therapies group. Revenue for that group increased 11 percent to $2.5 billion.
Since the Covidien deal, Medtronic has purchased or agreed to acquire several smaller companies, including Medina Medical, Twelve, CardioInsight, Aptus Endosystems and RF Surgical Systems.
Medina Medical is developing a device to treat cerebral brain aneurysms, while Twelve is developing a transcatheter mitral valve replacement device. CardioInsight has an FDA-approved noninvasive cardiac system that maps electrical disorders of the heart, Aptus Endosystems has products for endovascular aneurysm repair, and RF Surgical Systems has a system that detects surgical gauze, sponges and towels through blood, dense tissue and bone.
For fiscal year 2016, Medtronic expects a 4 percent to 6 percent increase in revenue on a comparable, constant currency basis and diluted non-GAAP earnings per share of $4.30 to $4.40.
"We are confident that our three growth strategies - therapy innovation, globalization, and economic value - will further strengthen the market-leading competitive position of our combined organization," Medtronic chairman and CEO Omar Ishrak said in a news release. "Our strong innovation pipeline and focus on value-based healthcare initiatives are aimed at ensuring Medtronic remains the partner of choice for hospitals, payers and governments around the world."
Executive Editor
Tim Casey joined TriMed Media Group in 2015 as Executive Editor. For the previous four years, he worked as an editor and writer for HMP Communications, primarily focused on covering managed care issues and reporting from medical and health care conferences. He was also a staff reporter at the Sacramento Bee for more than four years covering professional, college and high school sports. He earned his undergraduate degree in psychology from the University of Notre Dame and his MBA degree from Georgetown University.