Covidien reports strong growth in Q2

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Covidien has reported double-digit net income results for the second quarter of fiscal 2012, which ended March 31.

For the net income, the Dublin-based company recorded an increase of 16.2 percent—from $455 million in the 2011 second quarter to $497 million in the 2012 second quarter. Also, the second quarter net sales of $2.95 billion increased 5 percent from the $2.8 billion reported in the second quarter of a year ago. Foreign exchange rate movement lowered the quarterly sales growth rate by 1 percentage point.

Selling, general and administrative expenses for the second quarter of 2012 were above those of the comparable quarter of the year before, which was due to “spending on growth initiatives, primarily to expand the company’s sales and marketing presence in emerging markets,” Covidien reported. Research and development expense in the second quarter of 2012 climbed 28 percent, representing 5.7 percent of net sales vs. 4.6 percent of sales in the year-ago period.   

In the second quarter of 2012, the company reported operating income of $609 million vs. $615 million in the same period the year before.

“Our second quarter performance was paced by good top-line growth, improvements in gross and operating margin and a double-digit increase in earnings per share,” José E. Almeida, chairman, president and CEO, said in a statement. “Once again, our largest business segment, medical devices, drove our strong performance, with broad-based growth that was led by double-digit advances in energy and vascular products."

Sales in its medical devices unit of $2 billion in the 2012 second quarter were 7 percent higher than the $1.88 billion in the comparable quarter of last year. “Growth was driven by new products and increased volume,” the company said.

Second quarter sales in endomechanical rose from those of the prior year, fueled by good growth for stapling products that was led by Tri-Staple reloads. In soft tissue repair, sales were slightly above those of a year ago, as an increase for sutures was partially offset by a decline for mechanical fixation and biosurgery products.

Energy registered another double-digit quarterly sales gain, primarily due to the continued performance of vessel sealing products. Sales in oximetry and monitoring were higher than a year ago, spurred by a strong double-digit advance for monitors. Airway and ventilation sales were even with those of last year, as an increase in airway products countered lower sales of ventilators.

Vascular products posted another strong quarterly sales showing, led by outstanding gains for neurovascular, peripheral vascular and venous insufficiency products, Covidien said.

Pharmaceuticals sales of $508 million in the second quarter were up 4 percent from last year’s second quarter sales of $490 million, reported the company. Sales of specialty pharmaceuticals climbed sharply from those of a year ago, due to strong growth for the Exalgo and Pennsaid products, coupled with increased sales of generics.

Sales of active pharmaceutical ingredients were below those of the previous year, primarily due to lower sales of narcotics related to customer order timing. Sales of contrast products were well below those of the second quarter of 2011, reflecting customer order timing and decreased sales in the U.S. Sales of radiopharmaceuticals were higher than in the prior year, chiefly reflecting stronger generator sales.

Finally, its medical supplies unit’s second quarter sales of $434 million were unchanged from the comparable quarter of 2011, as increased sales of medical surgical and OEM products were offset by lower sales of nursing care and SharpSafety products.