Covidien ($COV) grew medical device sales slightly at the end of its 2013 fiscal year. But overall net income dropped as the company continued to adjust to a future without pharmaceuticals and dove into a massive restructuring plan.
Covidien booked $372 million in net income during its fiscal 2013 fourth quarter, down from $461 million over the same period in fiscal 2012. That number stems, in part, from the spinoff of Covidien's pain management drugs and medical imaging diagnostics on July 1 into a new company dubbed Mallinckrodt ($MNK). But even without the pharmaceutical revenue stream, Covidien said it generated $2.56 billion in net sales during the fourth quarter, about 2% higher versus just under $2.5 billion in sales generated last year.
For the fiscal year, Covidien said it produced more than $10.2 billion in net sales and $1.7 billion in net income, versus over $9.8 billon in net sales and $1.9 billion in net income in fiscal 2012.
Covidien's 2013 fourth-quarter medical device sales performed moderately well. The division reached the $2.13 billion mark, 3% higher than $2.06 billion in sales in the 2012 fourth quarter. Executives credited new products, plus sales increases in stapling products, soft tissue repair and oximetry and monitoring devices with driving the improvements. Medical supply sales, on the other hand, remained stagnant.
In September, Covidien disclosed a restructuring program designed to save $250 million to $300 million annually. It calls for lots of stark changes through 2018, including an undisclosed number of job cuts, some plant closures and an accelerated move to outsource. Part of that move, Covidien said at the time, came from meeting "the challenge of operating as a smaller company" in the wake of its Mallinckrodt spinoff.
José E. Almeida, Covidien's chairman, president and CEO, said in a statement that the fourth quarter reflected "a solid performance" and that the company "finished 2013 in line with our expectations."
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