Lower Tax Burden, Expenses Boost Medtronic To 13 Percent Profit Growth
Medtronic’s revenue totaled about $7.16 billion during the first quarter of its fiscal year 2017, which fell in line with analyst expectations, but dropped below the previous year’s mark.
The net income decrease, according to the Dublin-based medical device maker, was due to its quarter being one week shorter than that of the previous year. With an extra selling week, Medtronic believes its revenue would have been $450 million higher, therefore placing its revenue above the $7.27 billion mark from last year.
Drops in operating expenses and a lower tax burden helped push Medtronic toward a 13 percent year-over-year rise in profits. The company’s profit for the 13-week period ending July 29 totaled $929 million compared to $820 million a year ago. Its earnings per share also rose by a penny to $1.03, which beat the $1.01 estimate made by analysts polled by Thomson Reuters.
“Q1 was another strong quarter for Medtronic, where our diversified businesses and geographies delivered solid results,” CEO Omar Ishrak said in a statement.
On Tuesday, the company completed its $1.1 billion purchase of HeartWare International Inc., a med-tech company in the cardiac and vascular care industries. The finalization of the deal surprised investors as Medtronic had previously predicted an October 28 closing.
The addition of HeartWare’s portfolio will boost the product offering within Medtronic’s Cardiac and Vascular Group, a division of the company that experienced a 2 percent sales decrease from last year.
Sales drops also occurred within Medtronic’s Minimally Invasive Therapies Group (down 1 percent) and its Restorative Therapies Group (down 2 percent). The company’s Diabetes Group (up 2 percent) was the only division to experience a growth in sales.
“We feel very good about our momentum to start our fiscal year,” Ishrak said, “and we are confident in our ability to sustain this performance over the coming quarters.”
Medtronic said it would stick to its initial earnings per share guidance of $4.60 to $4.70 for the year.
The company’s stock dipped slightly in early morning trading to as low as $84.51. It has since risen to just below its Wednesday closing price of $86.65.