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Accelerating Finanical Growth

This year's featured leaders illustrate medtech's ability to adapt and thrive in an ever-changing business environment.

COVER STORY

(click to enlarge)
Share price for Covidien Ltd. (NYSE: COV; Hamilton, Bermuda) from its spin-out from Tyco International in June 2007 through early November 2008, versus the S & P 500.

Covidien recently completed its first year as a publicly held company following its spin off from Tyco International in mid-2007. Since the spin off, the company has transformed itself into an innovative, growth-oriented medical products manufacturer.

Prior to its spin-out, Covidien indicated that fiscal 2008 would be an investment year, with earnings likely to be below those of 2007. For fiscal 2008 (Covidien has a September 30 fiscal year end), net sales grew 11% to $9.9 billion, with double-digit increases in its three largest segments, medical devices, imaging solutions, and pharmaceutical products.

Sales outside the United States increased a strong 18%, aided by favorable foreign exchange, while domestic sales increased 6%. Gross margin improved 1.6 percentage points to 53.6%.

As planned, the company significantly increased investments in selling, marketing, and research and development, which should drive its future growth. These incremental investments resulted in Covidien's adjusted operating income margin of 21.1% being somewhat below the prior year's 21.5%. Adjusted, non-GAAP earnings per share were $2.70 for fiscal 2008 versus $2.63 for 2007.

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