Covidien (NYSE: COV), a leading global provider of healthcare products, held a meeting for the investment community today where it highlighted the strengths, strategies and innovations that are expected to drive the Company’s growth in 2010 and beyond. In addition, the meeting included two interactive physician panels discussing the latest developments in several of the Company’s key product lines.
Chairman, President and CEO Richard J. Meelia spoke about the Company’s accomplishments in 2009 and the key factors which will drive the Company’s growth over the next few years.
“We are successfully delivering on our objectives in 2009, despite the challenging external environment. We implemented a number of internal changes to better align our business with market growth opportunities, launched several meaningful new products and significantly increased our investment in research and development,” Meelia said. “In addition, we made a number of portfolio moves which we expect will better position us for future growth. These included two acquisitions in the vascular products category, several licensing agreements in pharmaceuticals and the divestiture of slower growth, low-margin product lines. We again generated strong cash flow, initiated a stock buyback program and implemented tax planning strategies which resulted in a significant reduction in our effective tax rate.”
Chief Financial Officer Charles Dockendorff provided an outlook for fiscal 2010. The Company estimates that net sales in the 2010 fiscal year will increase 4% - 7% versus 2009 adjusted net sales, excluding oxycodone extended-release tablets (Oxy ER). Net sales are expected to increase 7% - 10% versus 2009 in the Medical Devices segment and 2% - 5% in Medical Supplies. The Company expects sales in Pharmaceuticals to be down 2% to up 1% versus the 2009 adjusted net sales excluding Oxy ER. All sales growth rates assume current foreign exchange rates.
Excluding the impact of one-time items, operating margin is expected to be in the 20% - 21% range. Covidien anticipates the effective tax rate will be in the 21% - 23% range for fiscal 2010, excluding the impact of one-time items.
Individuals who were unable to attend the meeting in person may view a replay of the presentations at Covidien’s website: http://investor.covidien.com. Presentation materials are also available at the same website.
ABOUT COVIDIEN
Covidien is a leading global healthcare products company that creates innovative medical solutions for better patient outcomes and delivers value through clinical leadership and excellence. Covidien manufactures, distributes and services a diverse range of industry-leading product lines in three segments: Medical Devices, Pharmaceuticals and Medical Supplies. With 2008 revenue of $10 billion, Covidien has more than 41,000 employees worldwide in 59 countries, and its products are sold in over 140 countries. Please visit www.covidien.com to learn more about our business.
NON-GAAP FINANCIAL MEASURES
This press release contains financial measures, including adjusted net sales and adjusted operating margin, which are considered “non-GAAP” financial measures under applicable Securities & Exchange Commission rules and regulations. These non-GAAP financial measures should be considered supplemental to and not a substitute for financial information prepared in accordance with generally accepted accounting principles. The Company’s definition of these non-GAAP measures may differ from similarly titled measures used by others.
The Company presents its operating margin and effective tax rate forecast before special items to give investors a perspective on the expected underlying business results. Because the Company cannot predict the amount and timing of such items and the associated charges or gains that will be recorded in the Company’s financial statements, it is difficult to include the impact of those items in the forecast. In addition, the Company is excluding the one-time impact of Oxy ER from its fiscal 2009 net sales to give investors a better perspective on its base business operations. Sales of Oxy ER in fiscal 2009 were $354 million. Given the substantial but finite nature of Oxy ER sales, the Company believes that excluding the impact provides investors with a better understanding of its base business operations. Including Oxy ER and foreign exchange rates at current levels, the Company estimates that net sales in the 2010 fiscal year will increase 0.5% - 3.5% versus 2009 and sales in the Pharmaceuticals segment will be down 14% to down 11% versus those of 2009.
FORWARD-LOOKING STATEMENTS
Any statements contained in this communication that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are based on our management’s current beliefs and expectations, but are subject to a number of risks, uncertainties and changes in circumstances, which may cause actual results or Company actions to differ materially from what is expressed or implied by these statements. The factors that could cause actual future results to differ materially from current expectations include, but are not limited to, our ability to effectively introduce and market new products or keep pace with advances in technology, the reimbursement practices of a small number of large public and private insurers, cost-containment efforts of customers, purchasing groups, third-party payers and governmental organizations, intellectual property rights disputes, complex and costly regulation, including healthcare fraud and abuse regulations, manufacturing or supply chain problems or disruptions, rising commodity costs, recalls or safety alerts and negative publicity relating to Covidien or its products, product liability losses and other litigation liability, including legacy Tyco-related litigation, divestitures of some of our businesses or product lines, our ability to execute strategic acquisitions of, investments in or alliances with other companies and businesses, competition, risks associated with doing business outside of the United States, foreign currency exchange rates, issues related to our existing material weakness in accounting for income taxes or potential environmental liabilities. These and other factors are identified and described in more detail in our filings with the SEC. We disclaim any obligation to update these forward-looking statements other than as required by law.
Contacts:
Covidien
Eric Kraus, 508-261-8305
Senior Vice President
Corporate
Communications
eric.kraus@covidien.com
or
Coleman
Lannum, CFA, 508-452-4343
Vice President
Investor Relations
cole.lannum@covidien.com
or
Bruce
Farmer, 508-452-4372
Vice President
Public Relations
bruce.farmer@covidien.com
or
Brian
Nameth, 508-452-4363
Director
Investor Relations
brian.nameth@covidien.com
