Healthcare products company Covidien plc (COV) on Wednesday posted higher profit for the first quarter, boosted by an 18% sales growth in Medical Devices. Further, the company updated its fiscal 2010 guidance.
The Dublin, Ireland-based company's first-quarter net income was $412 million or $0.82 per share, compared to $386 million or $0.76 per share in the year-ago quarter.
On an adjusted basis, earnings before specified items increased 32% to $0.86 per share from $0.65 per share in the prior-year period.
On average, 19 analysts polled by Thomson Reuters expected the company to post earnings of $0.75 per share. Analysts' estimates typically exclude certain items.
Operating income for the latest quarter totaled $552 million, compared to $544 million in the same quarter of last year. Adjusted operating income, excluding the specified items, grew 21% to $590 million from $489 million in the year-ago period.
Quarterly net sales advanced 7% to $2.75 billion from the previous year's sales of $2.56 billion, with favorable foreign exchange of $121 million increasing the quarterly sales growth rate by about 5 percentage points. Sixteen Wall Street analysts had a consensus revenue estimate of $2.64 billion for the quarter.
Excluding $96 million in sales of oxycodone hydrochloride extended-release tablets or Oxy ER in the first-quarter 2009, first-quarter 2010 net sales grew 11%, while operational growth, which excludes the effect of foreign exchange, was 6%, driven primarily by higher volume and new products.
First-quarter gross margin of 54.3% rose 0.8 percentage points from the prior-year period. Adjusted gross margin was up 2.5 percentage points from the previous year's 51.8%. The company noted that the improvement reflected positive mix in all three segments, benefits from its restructuring program and favorable foreign exchange.
Richard Meelia, Chairman, President and CEO of Covidien, said, "Our excellent performance in the first quarter of fiscal 2010 reflected the success of ongoing strategic initiatives focused on innovation and growth. Building on last year's strong operational sales gains, we delivered exceptional growth in our largest business segment, Medical Devices, which generated broad-based improvement across its product lines."
The company's Medical Devices sales were up 18% to $1.7 billion from $1.4 billion reported a year earlier. Operational growth was 11%, reflecting new products and increased volume. First-quarter sales from the pharmaceuticals division dropped 12% to $616 million from the prior-year's $697 million, including favorable foreign exchange of about 2 percentage points to the 2010 quarterly results and Oxy ER contributing $96 million in sales to the year-ago quarter.
Medical Supplies sales for the first quarter amounted to $443 million, 2% above the $435 million reported last year, primarily due to favorable foreign exchange, which drove higher reported sales of Nursing Care and Medical Surgical products.
Looking ahead, the company continues to project fiscal 2010 sales to be up 6%-9%, including foreign exchange at current rates and excluding Oxy ER sales from the 2009 base.
In the Medical Devices segment, net sales are now expected to be up 10% - 13% versus 2009, compared with prior guidance of 9% - 12% growth. Sales forecast for Pharmaceuticals segment remains unchanged at flat to up 3%, despite the announced sale of U.S. radiopharmacies which is expected to close in the first half of calendar 2010.
Covidien continues to expect sales to rise 2% - 5% in the Medical Supplies segment. Including foreign exchange at current rates and excluding the impact of one-time items, the operating margin is now estimated to be in the 21% - 22% range, versus its earlier issued outlook of 20% - 21%. The company also revised its guidance for 2010 free cash flow to in excess of $1.5 billion from earlier guidance of about $1.4 billion.
Covidien shares, which have been trading between $27.27 and $49.87 in the past 52 weeks, closed Tuesday's trading session at $49.45.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.