By Jeanne Whalen
Medtronic PLC reported a net loss of $1 million in its first combined quarter with Covidien, largely related to $ 880 million in charges for the Covidien acquisition and a $329 million expense from the resolution of a tax dispute with the Internal Revenue Service.
The medical-device maker said healthy product sales will help it record revenue growth of 4% to 6% for fiscal year 2016, excluding the expected negative impact of the strong U.S. dollar. It also forecast adjusted earnings per share in the range of $4.30 to $4.40.
The $43 billionCovidien acquisition closed in late January after drawing scrutiny over a tax-lowering tactic criticized by U.S. government officials. The acquisition involved Medtronic reincorporating from Minneapolis to Dublin, a so-called inversion deal that lowers the company’s tax burden.
The deal will help lower Medtronic’s global tax rate to a range of 16% to 18% in fiscal year 2016, from a previous rate of 18% to 20%, Chief Financial Officer Gary Ellis told analysts on a conference call Tuesday. That lower rate depends on Congress renewing a tax credit for companies that conduct research and development in the U.S., Mr. Ellis said, adding that he expects the tax perk to be renewed.
