Medtronic plc reported partial fourth-quarter revenue results Tuesday and they signal a good future for the combined medtech company.
Medtronic reported its first quarterly earnings results Tuesday since the $50 billion megadeal with Covidien closed and though partial, the the general consensus appears to that the future "bodes well" for the Irish company.
Medtronic had sales of $7.3 billion in the fourth quarter, up 60% from the same period a year ago -— where Medtronic Inc. garnered $4.6 billion in revenue — on the strength of its cardiac rhythm management division, CoreValve sales and the standalone Covidien group.
Wall street analysts had expected higher revenues but Medtronic beat those consensus revenue forecasts by $228 million.
"" am very encouraged by our strong preliminary fourth quarter revenue performance especially as it is the first quarter that reflects the combined results of Medtronic and Covidien," said Omar Ishrak, Medtronic chairman and chief executive officer, in a news release. "In addition to making solid progress on our integration of Covidien, these preliminary revenue results reflect disciplined execution across our three core strategies of therapy innovation, globalization, and economic value."
Analysts were pleased by the results.
"Medtronic reported [fourth-quarter] top-line revenue that was good, in fact better than expected, boding well for the future Medtronic/Covidien organization," wrote Joanne Wuensch, an analyst with BMO Capital Markets, in a research note Tuesday.
Another commented that Medtronic's shares would finally come up to the level of the broader medtech market.
"[Medtronic] has underperformed the broader group and we feel this quarter’s results should increase confidence in the [Medtronic] story and the company’s ability to generate sustainable mid-single-digit revenue growth, supported by [its] stand-alone product cycle, and [more than] 10% [earnings per share] growth once cost savings from the [Covidien] acquisition kick in," wrote Glenn Novarro, an analyst with RBC Capital Markets.
Medtronic did not provide profit numbers Tuesday but said it expects the earnings per share will come toward the upper half of its previous guidance of $1.08-$1.13 per but noted that those do not include a variety of charges that it will take including restructuring charges. Full fiscal 2015 results will be reported June 2.
While most of Medtronic's business segments performed better than expected, including the Covidien group, Medtronic's Spine business continues to be under pressure. Revenue declined 5% to $743 million in the quarter and Novarro believes that the company is losing share in the spine market to smaller pure-play manufacturers such as Nuvasive and LDR Holding Corporation.
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