Medical device and pharmaceutical company
-- a spinoff of
-- reported its first quarterly results as an independent company Thursday, including a brute settlement charge.
As part of a Tyco settlement, the company suffered a $1.2 billion charge, which prompted an operating loss of $730 million in the fiscal third quarter, in comparison to income of $557 million in the prior-year period. The company also incurred a $30 million charge for in-process research and development related to the acquisition of Sorbx's AbsorbaTack technology, which is used in hernia repair procedures, and a $5 million restructuring charge.
With the aforementioned charges included, the company reported a pro forma loss of $2.23 a share. Excluding those items, Covidien said it would have earned $512 million, or 67 cents a share.
Analysts surveyed by Thomson Financial had expected the new company to record 70 cents a share in the quarter.
Revenue was just a hair above expectations at $2.579 billion. Medical devices sales increased 9% to $1.6 billion from $1.5 billion in 2006.
Imaging solutions sales climbed 5% to $238 million, vs. $227 million, and pharmaceutical products increased 8% to $333 million from $307 million in the year-ago quarter.
However, the company said that due to the planned withdrawal from several low-margin private-label contracts, infant care volume fell and subsequently retail product sales were 18% lower than last year -- $178 million compared to $217 million. Medical supplies sales also decreased, though less substantially. They were 3% lower -- $247 million from $255 million -- which was attributed to lower sales of original equipment manufacturer (OEM) products, including needles and pre-filled syringes.
Looking ahead, the company maintains guidance of 4% to 6% sales growth for fiscal 2007. And in 2008, the Covidien said it expects sales to climb 3% to 5% excluding the impact of foreign exchange.
Covidien shares closed Thursday down 3.4% at $39.76.