Medtronic PLC employs at least 300 more people in Minnesota than it did a year ago, when the company's world headquarters was still in Fridley, company executives said Thursday.
Now based in Dublin, Ireland, the medical technology manufacturer has been transforming itself since it acquired surgical supplier Covidien PLC in a $49.9 billion January deal that also moved the combined company's legal address overseas.
Although the deal proved controversial with some politicians and many longtime individual investors, Medtronic pledged to add 1,000 jobs in the state within five years.
"We have added jobs in Minnesota, per our earlier commitment," Medtronic CEO Omar Ishrak said in an interview after a quarterly earnings report Thursday. "I think we've added 300 or 400 jobs already in Minnesota."
Many of the jobs are moving from Mansfield, Mass., where Covidien previously had its U.S. headquarters. Before the deal, Medtronic employed about 8,000 people in Minnesota, and Covidien had 1,300 workers in the state. Medtronic has roughly 87,000 employees worldwide, according to company shareholder handouts.
Chief Financial Officer Gary Ellis noted Thursday that about 500 positions in the company have been eliminated since the deal. "But in many cases, those employees have found another role within the organization in general," he said. "Our employment levels are up around the world, but there are certain locations where we are obviously eliminating redundant positions, and in that population it would be down."
Medtronic has already closed 60 redundant offices worldwide, and more moves are expected in the coming year and a half, Ellis said.
Another commitment from the Covidien deal was Ishrak's promise of more investment in the U.S. because the move to Ireland would give Medtronic more flexibility to allocate overseas-held cash without facing U.S. repatriation taxes on the money. And indeed, news of proposed and completed deals has been piling up for the devicemaker, including two last month.
On Aug. 31, Medtronic said it had paid $150 million to buy California's Medina Medical, which makes a brain aneurysm treatment device. Six days earlier, Medtronic announced its intention to buy another California company, transcatheter mitral valve maker Twelve Inc., for $458 million, even though the company's device is not yet approved for sale in any country.
Ishrak and Ellis said such deals mesh with Medtronic's pledge not to engage in deals that dilute the company's overall earnings per share. For example, the acquisition of Twelve will mean cutbacks in Medtronic's existing transcatheter mitral valve program as executives look to integrate the Twelve device and their in-house design into a single program.
"We look at these companies as technology acquisitions. And we have a certain amount of internal technology spend, and we make trade-offs so that we can afford the added technology spend. And we know how to do that," Ishrak said.
The company beat earnings estimates by a penny a share, recording $1.02 per share in adjusted earnings for its fiscal first quarter that ended July 31.
Medtronic reported $7.27 billion in revenue, which was about 12 percent above what Medtronic and Covidien's combined revenue would have been last year. But the most recent period included an extra week of sales.
As a stand-alone company, Medtronic had $4.27 billion in revenue in the same quarter last year.
Sales of devices in weaker foreign currencies like the euro shaved about $529 million from revenue in the quarter that ended last July. Executives are forecasting up to $1.5 billion in negative currency impact for the year, which would cancel up to 50 cents per share in earnings.
During the quarter, Medtronic's four divisions all grew revenue more than 10 percent in the quarter, including its historically largest business, cardiac and vascular devices, which grew 15 percent to $2.4 billion. Minimally invasive therapies, which primarily involve Covidien surgical devices and hospital supplies, grew by 11 percent to $2.4 billion in the quarter. Those two divisions reported absorbing negative currency impacts of more than $200 million each.
Medtronic's unadjusted net income was $820 million for the quarter, down from $871 million in the same period a year ago. Restructuring charges and $481 million in amortization were key factors for the decrease.
The quarterly report reiterated Medtronic's full-year earnings outlook of $4.30 to $4.50 per share and revenue guidance of 4 percent to 6 percent growth.