Medtronic Announces Expensive Settlement, Reports Inline

Medtronic MDT shares are mostly unmoved in the Tuesday pre-market session after the company reported expected fourth quarter earnings and a settlement with Edwards Lifesciences EW.

Analysts did well predicting Medtronic’s earnings report. Sales during the quarter were just below analyst estimates at $4.57 billion versus $4.58 billion. This figure is, however, 2.5 percent lower than the same quarter a year ago. EPS was inline at $1.12 and is up $0.02 from a year ago, although revenue was down. Lower restructuring charges and R&D as a percentage of sales are reasons for the increase in profitability.

Guidance for the upcoming year was a little bit lower than expected, however the company has performed inline or beat expectations for the past eight quarters. EPS for the year is expected to be in the range $4.00 to $4.10. The current analyst consensus for the quarter is $4.09.

Medtronic also announced an expensive settlement with Edwards Lifesciences. Under the agreement, Medtronic is to pay Edwards Lifesciences $750 million in a one time payment, and an percentage of Medtronics CoreValve sales annually through April 2022. The minimum annual payment is $40 million.

Although volume has been very light, shares are up 0.27 percent to $60.34.