Medtronic Earnings Solid as Covidien Integration Continues

By Chris Lange Updated Jan 13, 4:31PM EST · Published Dec 3, 9:15AM EST

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Medtronic Earnings Solid as Covidien Integration Continues — © Thinkstock

Medtronic PLC (NYSE: MDT) reported its fiscal second-quarter financial results before the markets opened on Thursday. The company had $1.03 in earnings per share (EPS) on $7.1 billion in revenue, which compares to consensus estimates from Thomson Reuters of $1.00 in EPS on revenue of $7.06 billion. In the same period of the previous year, the company posted EPS of $1.11 and $4.37 billion in revenue.

U.S. revenue of $4.098 billion represented 58% of company revenue and increased 6%, or 67% as reported. Non-U.S. developed market revenue of $2.052 billion represented 29% of company revenue and increased 4%, or 52% as reported. Emerging market revenue of $908 million represented 13% of company revenue and increased 11%, or 61% as reported.

In terms of guidance, the company now expects fiscal year 2016 diluted EPS in the range of $4.33 to $4.40, which includes an expected $0.45 to $0.50 negative foreign currency impact based on current exchange rates. The consensus estimate calls for $4.36 in EPS for the fiscal full year.

Medtronic Chairman and CEO Omar Ishrak commented on earnings:

Q2 was another strong quarter. Our above-market revenue growth remains robust and consistent, and, we believe, sustainable across our groups and regions. We are steadily executing our plan and meeting our expectations, while at the same time building a foundation for long-term, dependable revenue growth and EPS leverage.

He also commented on the Covidien acquisition:

Our integration of Covidien is going extremely well, and I am particularly pleased with the way our cultures continue to come together, evidenced by our high talent retention and employee satisfaction, and how we are delivering on the promised cost synergies. Our combination of solid constant currency revenue growth, strong leverage, and increased access to cash is positioning us to create long-term, dependable value in healthcare.

Free cash flow totaled $1.1 billion, while cash flow from operations totaled $1.3 billion.

Shares of Medtronic closed Wednesday down 0.5% at $76.11, with a consensus analyst price target of $86.58 and a 52-week trading range of $55.54 to $79.50. Following the release of the earnings report, shares were up 1% at $76.85 in early trading indications Thursday.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.