 |
| Covidien CEO José E. Almeida |
Covidien ($COV) is celebrating third quarter earnings buoyed by strong sales, with its surgical solutions unit and progress in emerging markets generating an sizeable increase in cash flow.
The Irish devicemaker posted profits of $306 million for the third quarter of fiscal 2014 on net sales of $2.69 billion--a 4% increase from the previous year's earnings period. CEO José E. Almeida attributed part of the company's sales success to its Surgical Solutions unit, which netted sales of $1.31 billion, an 8% jump from last year's numbers.
"We delivered solid performance in the third quarter, returning to double-digit EPS growth," Almeida said in the company's earnings statement. "This performance reflects significant increases in advanced surgical, aided by global market share gains in vessel sealing and stapling. Substantial growth in both our gastrointestinal and interventional lung offerings, as well as productivity improvements, also contributed to this positive result."
Almeida mentioned the company's acquisition of endoscopic pill maker Given Imaging as one driver behind surgical growth. In February, Covidien closed its acquisition of the Israeli device outfit for $860 million, absorbing Given's GI solutions portfolio in the process. The company expects the transaction to bring between $40 million and $50 million per quarter in incremental revenue, Covidien executives said at the time of the deal.
Covidien's dedication to emerging markets could also be paying dividends, as the company posted high single digit growth for Q3 2014--$415 million up 8% from the same period last year. During Friday's earnings call, Almeida said he was pleased with the company's progress in China and Brazil and that it would continue to see "good progress" in the Middle East. Covidien recently unveiled a new training center in Turkey to educate local clinicians and amp up R&D.
Meanwhile, the company continues to ride high off its pending merger with Medtronic ($MDT). In June, Medtronic announced that it would purchase Covidien for $42.9 billion in cash and stock, moving its domicile to Ireland and reaping the benefits of the company's considerably lower tax rate. Minneapolis-based Medtronic emphasized that the deal was not made solely for tax inversion purposes, and said the combined company would make a $10 billion technology investment in the U.S. over the next 10 years.
- read Covidien's earnings statement