correction: corrects headline to say the company reports its second quarter
Healthcare products company Covidien Ltd. (COV) reported Friday a profit for the second quarter that declined from last year, hurt by lower margins and restructuring charges and costs. Adjusted earning per share from continuing operations topped analysts' expectations, while quarterly revenues missed their estimates. The company also said it will announce its full-year 2013 guidance om May 3 which will reflect the spin-off of its pharmaceuticals segment.
"Our second-quarter performance was paced by broad-based top-line growth and an increase in earnings per share. Once again, in our Medical Devices segment, strong results in stapling, vessel sealing and neurovascular products were the key drivers of our growth. We also delivered a significant sales increase in Pharmaceuticals, led by the excellent performance of both generic and branded products," Chairman, President and CEO José Almeida said in a statement.
The Dublin, Ireland-based company reported net income of $439 million or $0.92 per share for the second quarter, lower than $497 million or $1.02 per share in the prior-year quarter. Income from continuing operations for the quarter declined to $441 million or $0.93 per share from $491 million or $1.01 per share in the year-ago quarter.
Excluding special items, adjusted income from continuing operations was $535 million or $1.12 per share, compared to $510 million or $1.05 per share in the corresponding quarter a year ago.
On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $1.09 per share for the second quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter increased 5 percent to $3.10 billion from $2.95 billion in the same quarter last year, but missed eighteen Wall Street analysts' consensus estimate of $3.12 billion by a whisker. Excluding foreign exchange impact, sales increased 7 percent.
Total domestic sales for the quarter were $1.71 billion, up 5 percent from the prior-year quarter, and international sales grew 6 percent to $1.39 billion from the year-ago quarter.
Medical devices sales increased 4 percent from last year to $2.09 billion, pharmaceutical products' sales grew 13 percent from the prior-year quarter to $573 million, and sales for medical supplies edged up 1 percent year-over-year to $439 million.
Operating margin for the quarter contracted 150 basis points to 19.2 percent from last year's 19.4 percent and gross profit margin declined 30 basis points from last year.
The company noted that margins were negatively impacted by the reactor shutdown and unfavorable raw material costs in the pharmaceuticals segment, partially offset by favorable mix and productivity improvements.
The company noted that it will announce its fiscal 2013 guidance, excluding Pharmaceuticals, on May 3, when it plans to release financial results for fiscal 2010, 2011, 2012 and the first quarter of 2013, all adjusted for the planned spin-off of the pharmaceuticals segment.
"Looking forward, we plan to make the investments necessary to enhance our growth, while continuing to deliver a solid earnings performance. Our robust pipeline of new products, increased market opportunities and capital flexibility should enable us to meet the challenges of the global healthcare marketplace and deliver on our expectations," Almeida added.
COV closed Thursday's regular trading session at $66.37, down $0.05 on a volume of 2.62 million shares.
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