By Angela Chen
Covidien PLC said earnings jumped 28% on sales growth in its core surgical products segment, ahead of the company's merger with medical-device maker Medtronic Inc.
Earnings beat expectations, sending shares up 1.6% in premarket trading.
Ireland-based Covidien agreed last year to be acquired by U.S. company Medtronic for $42.9 billion, in a deal that would allow Medtronic to set up shop in Ireland, where it would enjoy a lighter tax load. Medtronic shareholders approved the acquisition in early January, putting the deal on track to close within the next two months.
In a move to address new rules set by the U.S. Treasury, Medtronic last year said it would raise $16 billion in debt to finance part of the deal. That will make the merger more expensive for Medtronic, but it allows the deal to move ahead.
Overall, Covidien, which makes medical supplies such as operating-room equipment and generic drugs, posted earnings of $511 million, or $1.12 a share, for the quarter ended in December, up from $398 million, or 87 cents a share, a year earlier.
Excluding restructuring charges and other items, per-share earnings from continuing operations were $1.11, up from $1 a share a year ago.
Sales rose to $2.69 billion from $2.64 billion.
Analysts surveyed by Thomson Reuters had projected earnings of $1.05 a share on revenue of $2.72 billion.
Sales for the company's medical devices segment edged up 1% to $2.28 billion, though unfavorable foreign currency slowed sales growth by five percentage points. The medical supplies segment had 5% sales growth. The largest product category, surgical solutions, grew 4.1%.
Respiratory and patient-care sales fell about 1% to $945 million, while vascular-therapies sales ticked up about 1% to $428 million.
Shares of Covidien have been up about 51% in the past 12 months through Wednesday's close.
Write to Angela Chen at email@example.com
Access Investor Kit for Covidien Plc
Access Investor Kit for Medtronic, Inc.