Medtronic Inc., the medical technology company poised to buy Covidien Plc and move its address abroad for tax purposes, said its quarterly sales grew 5 percent as demand rose for its pacemakers and aortic valves.
Net income for the three months ended July 25 fell to $871 million, or 87 cents a share, from $953 million, or 93 cents, a year earlier, the Minneapolis-based company said today in a statement. Profit excluding one-time items beat by 1 cent the 92 cents average of 19 analyst estimates compiled by Bloomberg, while revenue grew to $4.27 billion.
In June, Medtronic agreed to buy Dublin-based Covidien for $42.9 billion in cash and stock to expand its portfolio of products sold to hospitals. As part of the deal, Medtronic, the world’s biggest maker of heart-rhythm devices, would move its legal address, though not its executive offices, to Ireland and lower its tax bills to the U.S. government.
“We are moving as expeditiously as possible to get it done,” said Medtronic Chief Executive Officer Omar Ishrak said in a telephone interview. “The strategic benefits of the deal are very clear to us and Covidien. We all want to do our best to make sure those benefits become reality.”
The agreement to buy Covidien was among several health-care industry deals that have set off controversy in the U.S., with congressional leaders and President Barack Obama’s administration looking for ways to keep companies from moving.
If the policy governing such moves changes, Medtronic would have to renegotiate the deal, taking any new regulations into account, Ishrak said. The company isn’t trying to guess what lawmakers and regulators may do, he said.
“We’re really not wasting our time trying to figure out five different iterations that may or may not happen,” he said. “We’re sticking to what we know.”
Products to control the heart’s electrical pulses are Medtronic’s biggest business, and revenue rose to $1.26 billion from $1.19 billion a year earlier. The increase was driven by a surge in sales of pacemakers and heart monitors, up 11 percent to $525 million, as demand for defibrillators that shock a stopped heart back into rhythm dipped 4 percent to $627 million, from $655 million.
The company’s CoreValve product, which won broader approval in June for U.S. patients at high risk for surgery to repair a calcified aortic valve, helped push sales of structural heart products up 8 percent to $338 million. Medtronic agreed to pay Edwards Lifesciences Corp. $750 million, plus royalties, in May to settle patent litigation over the device.
Demand for the company’s spinal products continued to decline, with sales of $743 million, down from $765 million a year earlier.
Medtronic gained less than 1 percent to $64.01 at the close in New York. The shares have increased 18 percent in the past 12 months.