FRIDLEY (dpa-AFX) - Medical device maker Medtronic plc (MDT) on Thursday reported a 6 percent decline in profit for the first quarter from last year, as a surge in revenues that was helped by the company's acquisition of smaller rival Covidien plc was more than offset by higher costs and expenses.
However, sales for the quarter beat analysts' expectations. The company also affirmed its outlook for earnings and sales growth forecast for fiscal 2016.
Chairman and CEO Omar Ishrak said, 'Our first quarter results represent a strong start to fiscal year 2016, with all four of our groups contributing to revenue growth that was at the upper end of our goal when adjusted for the extra week. We are driving solid growth in the United States and seeing broad acceptance of our innovative therapies around the world.'
The Dublin, Ireland-based company reported net income for the first quarter of $820 million or $0.57 per share, down from $871 million or $0.87 per share in the prior-year quarter.
Excluding non-recurring items, adjusted net earnings for the quarter was $1.46 billion or $1.02 per share, compared to $992 million or $0.99 per share in the year-ago quarter.
On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $1.01 per share for the quarter. Analysts' estimates typically exclude special items.
Worldwide net sales for the quarter surged 70 percent to $7.27 billion from $4.27 billion in the same quarter last year, and topped analysts' consensus revenue estimate of $7.06 billion.
Including an extra week benefit, revenue increased 12 percent in the quarter on a comparable, constant currency basis. The extra selling week is a result of the company's 52-53 week fiscal year calendar, which occurs every six years.
U.S. revenue of $4.1 billion for the quarter grew 14 percent on a comparable basis including the extra week benefit, and increased 78 percent as reported. U.S. revenue represented 57 percent of company revenue.
First quarter non-U.S. developed market revenue of $2.20 billion increased 10 percent, mid-single digit growth adjusted for the extra week, or 58 percent as reported.
Emerging market revenue of $935 million increased 14 percent, high-single digit growth adjusted for the extra week, or 71 percent as reported. Emerging market revenue represented 13 percent of company revenue.
Segment-wise, revenues for Medtronic's Cardiac and Vascular Group grew 15 percent, high-single digit growth adjusted for the extra week, to $2.57 billion, and increased 14 percent as reported.
Revenues for the Minimally Invasive Therapies Group were $2.46 billion for the quarter. This represents an increase of 11 percent, mid-single digit growth adjusted for the extra week.
The Restorative Therapies Group reported revenues of $1.81 billion for the quarter. This represents an increase of 10 percent, mid-single digit growth adjusted for the extra week, or 13 percent as reported.
Diabetes Group revenues for the quarter of $445 million increased 15 percent, high-single digits growth adjusted for the extra week, or 7 percent as reported.
Looking ahead to fiscal 2016, Medtronic affirmed its outlook for adjusted earnings in a range of $4.30 to $4.40 per share, which includes an expected $0.40 to $0.50 negative foreign currency impact.
The company also maintained its outlook for full-year revenue growth in a range of 4 to 6 percent on a comparable, constant currency basis, excluding an estimated incremental 1.5 percent benefit on full-year revenue growth due to the extra selling week in the first quarter.
The revenue outlook also excludes an estimated $1.3 billion to $1.5 billion negative foreign currency impact based on current exchange rates.
The Street expects full-year earnings of $4.37 per share on revenue growth of 42 percent to $28.78 billion.
MDT closed Wednesday's trading at $71.55. In Thursday's pre-market activity, the stock is up $0.45 or 0.63 percent to $72.00.
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