Medical device maker Medtronic’s profit beats estimates

Medical device maker Medtronic reported a better-than-expected quarterly profit yesterday, helped by higher sales in all of its divisions, and the Dublin-based company raised the lower-end of its full-year profit forecast.

The world’s largest stand-alone medical device maker also said it expected fiscal 2016 revenue to increase by a high mid-single digit percentage. It had earlier forecast growth of 4-6 per cent.

Medtronic, known for its pacemakers, said it now expected an adjusted profit of $4.33-$4.40 per share for 2016.

An improving US economy and the impact of the Affordable Care Act – popularly known as Obamacare – has increased the number of surgical procedures, boosting demand for Medtronic’s products.

Sales generated by surgical products provider Covidien, which Medtronic bought in January in a corporate inversion for nearly $50 billion, contributed about a third of the company's total revenue in the second-quarter to October 30th.

Repair

Medtronic said device sales in the United States increased 6 per cent and accounted for more than half of the its revenue in the latest quarter.

The company’s newest devices, which are used to repair the aortic valve and clear clogged arteries in the legs, posted the biggest gains for the quarter, rising 81 per cent to $404 million. The increase also made the company’s cardiac and vascular group, its largest, the biggest gainer for the previous three months.

Revenue rose 62 per cent to $7.06 billion, including sales from Covidien, matching the average analyst estimate. The company’s adjusted profit of $1.03 per share beat the average analyst estimate by three US cents.

Net profit fell to $520 million from $828 million a year earlier. The drop in profit was mainly due to higher restructuring charges.

– (Reuters/ Bloomberg)