Financial

Medtronic Swing to Loss in First Quarter After Covidien Deal

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.

READ MORE HERE

Related Articles

Back to top button