Medtronic profit to undershoot analyst estimates after Covidien deal

Medical device group Medtronic forecast full-year profit that trailed analysts' estimates, reflecting the impact of the company's $49.9 billion acquisition of Irish-based Covidien.

The world’s biggest maker of heart-rhythm devices forecast adjusted earnings of $4.30 to $4.40 a share for fiscal 2016, which ends in April. Analysts had projected $4.46.

The purchase of Covidien in January moved Medtronic’s domicile from the United States. to Ireland to save money on taxes.

The deal also gives the medical-device maker a wider array of products, which the company has said it will use to work more comprehensively with hospitals to control costs.

In the quarter that ended in April – its first full period since the Covidien deal – Medtronic reported a better-than-expected adjusted quarterly profit, helped by higher sales of its heart devices.

Sales in the cardiac and vascular business, under which the company sells defibrillators, pacemakers, heart valves and stents, rose 10 per cent to $2.6 billion in the fourth quarter.

Medtronic said on Tuesday revenue from its minimally invasive therapies group, which it acquired as part of the Covidien deal, increased 6 per cent to $2.38 billion.

The strong performance was largely driven by sales of surgical devices and patient monitoring units, the company said.

Medtronic had a profit of $1.16 a share, excluding one-time items, compared with the $1.12 average of estimates compiled by Bloomberg. The net loss was $1 million in the quarter, the company said in a statement.

Fourth-quarter sales rose 7 per cent to $7.3 billion, in line with the preliminary figure Medtronic had reported in May. – Bloomberg/Reuters