07.29.15
$10.6 Billion
It’s sort of difficult to think of $10.66 billion as a placeholder. In this year’s installment of the MPO Top Company report, however, that’s just what it is as a result of one of the medical device industry’s largest and most closely scrutinized buyouts.
After much fanfare and media coverage, debate of corporate inversions and government action, Medtronic Inc. officially became Medtronic plc in January this year after completing the acquisition of Dublin, Ireland-based Covidien plc. The deal originally was announced in June of 2014. Because the Top Company rankings are based on 2014 revenue, we are—of course—including Covidien to make note of its accomplishments in the fiscal year (which ended for the company on Sept. 26).
“The culmination of this acquisition marks a significant milestone in our industry, creating a company uniquely positioned to alleviate pain, restore health and extend life for more patients around the world. We can now bring together the extensive and innovative capabilities of both Medtronic and Covidien with an underlying objective to solve healthcare’s biggest challenge—expanding access and improving clinical outcomes, while lowering costs,” said Omar Ishrak, chairman and CEO of Medtronic.
(For more on the structure and detail of the acquisition, turn to the Medtronic listing on page 48.)
Former Covidien CEO, Joe Almeida, stepped down following the close of the deal. Other top executives also left Covidien after the purchase was finalized. Based on a clause in a Jan. 24 proxy statement covering termination upon “change in control,” Almeida received a severance payout of $37.3 million. Charles H. Dockendorff, Covidien’s executive vice president and chief financial officer, received $15.1 million in severance. Other senior executives listed in the document are Peter L. Wehrly, group president for developed markets, who received $9.3 million; and, John H. Masterson, senior vice president and general counsel, who got $7.7 million.
Bryan Hanson, who was a group president for Covidien, became executive vice president and president of a new business group within Medtronic, the newly formed Covidien Group.
In addition to the new Covidien Group, the Peripheral Vascular business from Covidien, including the Endovascular, Arterial and Chronic Venous Insufficiency businesses, were integrated into the Covidien Group’s Aortic and Peripheral Vascular business after the close of the transaction. Upon the closing, Covidien’s Neurovascular business was integrated into Medtronic’s Restorative Therapies Group as an independent business unit.
Bob White, who was president of Covidien’s emerging markets, became senior vice president and president of Medtronic Asia Pacific, based in Singapore. This new region is composed of Japan, India, Australia/New Zealand, Korea and Southeast Asia.
Its final fiscal year as a standalone company was a solid one. In FY14 Covidien posted net sales of $10.66 billion, up 4 percent above the $10.24 billion in the previous year. Operational sales growth was 5 percent, as foreign exchange rate movement lowered the sales growth rate by one percentage point. The company reported operating income of $1.99 billion in fiscal 2014, compared with $2.13 billion in FY13. Fiscal 2014 adjusted operating income was $2.43 billion, versus $2.26 billion in the prior year. Fiscal 2014 adjusted operating income, excluding the specified items, represented 22.8 percent of sales, versus 22.1 percent for fiscal 2013. By business group, Surgical Solutions sales increased 7 percent to $5.11 billion from $4.78 billion in 2013.
Vascular Therapies sales increased 2 percent to $1.68 billion from $1.65 billion. Respiratory and Patient Care sales increased 2 percent to $3.87 billion from $3.81 billion in the previous fiscal year. During the year, the company released a number of new devices and made key acquisitions that now will fall under the Medtronic umbrella.
Covidien received U.S. Food and Drug Administration (FDA) approval for the HawkOne directional atherectomy system for the treatment of peripheral arterial disease. It launched the ReliaTack articulating reloadable fixation device, which the company billed as the “first and only of its kind” for laparoscopic (minimally invasive) hernia repair. The company’s Sonicision Cordless Ultrasonic Dissection Device portfolio was extended following FDA approval of three additional device lengths, enabling surgeons to expand their use of the system to more procedures. Covidien also boosted its vascular treatment capabilities with two strategic acquisitions: Sapheon Inc., a developer of venous disease treatments; and Reverse Medical Corporation, a medical device company focused on expanding the management of vascular disease. The company also opened a Covidien Center of Innovation in Brazil, the firm’s first medical training and research center in Latin America.
It’s sort of difficult to think of $10.66 billion as a placeholder. In this year’s installment of the MPO Top Company report, however, that’s just what it is as a result of one of the medical device industry’s largest and most closely scrutinized buyouts.
After much fanfare and media coverage, debate of corporate inversions and government action, Medtronic Inc. officially became Medtronic plc in January this year after completing the acquisition of Dublin, Ireland-based Covidien plc. The deal originally was announced in June of 2014. Because the Top Company rankings are based on 2014 revenue, we are—of course—including Covidien to make note of its accomplishments in the fiscal year (which ended for the company on Sept. 26).
“The culmination of this acquisition marks a significant milestone in our industry, creating a company uniquely positioned to alleviate pain, restore health and extend life for more patients around the world. We can now bring together the extensive and innovative capabilities of both Medtronic and Covidien with an underlying objective to solve healthcare’s biggest challenge—expanding access and improving clinical outcomes, while lowering costs,” said Omar Ishrak, chairman and CEO of Medtronic.
(For more on the structure and detail of the acquisition, turn to the Medtronic listing on page 48.)
Former Covidien CEO, Joe Almeida, stepped down following the close of the deal. Other top executives also left Covidien after the purchase was finalized. Based on a clause in a Jan. 24 proxy statement covering termination upon “change in control,” Almeida received a severance payout of $37.3 million. Charles H. Dockendorff, Covidien’s executive vice president and chief financial officer, received $15.1 million in severance. Other senior executives listed in the document are Peter L. Wehrly, group president for developed markets, who received $9.3 million; and, John H. Masterson, senior vice president and general counsel, who got $7.7 million.
Bryan Hanson, who was a group president for Covidien, became executive vice president and president of a new business group within Medtronic, the newly formed Covidien Group.
In addition to the new Covidien Group, the Peripheral Vascular business from Covidien, including the Endovascular, Arterial and Chronic Venous Insufficiency businesses, were integrated into the Covidien Group’s Aortic and Peripheral Vascular business after the close of the transaction. Upon the closing, Covidien’s Neurovascular business was integrated into Medtronic’s Restorative Therapies Group as an independent business unit.
Bob White, who was president of Covidien’s emerging markets, became senior vice president and president of Medtronic Asia Pacific, based in Singapore. This new region is composed of Japan, India, Australia/New Zealand, Korea and Southeast Asia.
Its final fiscal year as a standalone company was a solid one. In FY14 Covidien posted net sales of $10.66 billion, up 4 percent above the $10.24 billion in the previous year. Operational sales growth was 5 percent, as foreign exchange rate movement lowered the sales growth rate by one percentage point. The company reported operating income of $1.99 billion in fiscal 2014, compared with $2.13 billion in FY13. Fiscal 2014 adjusted operating income was $2.43 billion, versus $2.26 billion in the prior year. Fiscal 2014 adjusted operating income, excluding the specified items, represented 22.8 percent of sales, versus 22.1 percent for fiscal 2013. By business group, Surgical Solutions sales increased 7 percent to $5.11 billion from $4.78 billion in 2013.
Vascular Therapies sales increased 2 percent to $1.68 billion from $1.65 billion. Respiratory and Patient Care sales increased 2 percent to $3.87 billion from $3.81 billion in the previous fiscal year. During the year, the company released a number of new devices and made key acquisitions that now will fall under the Medtronic umbrella.
Covidien received U.S. Food and Drug Administration (FDA) approval for the HawkOne directional atherectomy system for the treatment of peripheral arterial disease. It launched the ReliaTack articulating reloadable fixation device, which the company billed as the “first and only of its kind” for laparoscopic (minimally invasive) hernia repair. The company’s Sonicision Cordless Ultrasonic Dissection Device portfolio was extended following FDA approval of three additional device lengths, enabling surgeons to expand their use of the system to more procedures. Covidien also boosted its vascular treatment capabilities with two strategic acquisitions: Sapheon Inc., a developer of venous disease treatments; and Reverse Medical Corporation, a medical device company focused on expanding the management of vascular disease. The company also opened a Covidien Center of Innovation in Brazil, the firm’s first medical training and research center in Latin America.