Medtronic, Inc. (NYSE:MDT): To Pay Over $1 Billion Towards Patent Dispute Settlement – EW

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Dallas, Texas 05/21/2014 (FINANCIALSTRENDS) – Medtronic, Inc. (NYSE:MDT) yesterday announced that it will require to pay over $1 billion as part of a patent dispute settlement. Medtronic will required to pay this amount to Edwards Lifesciences Corp (NYSE:EW) over a period of eight years and includes $750 million up-front and royalties worth around $40 million per annum through 2022. Both the companies are leaders in aortic heart valve devices and have been waging war over proprietary innovations for the latest generation heart valve devices.

The dispute between the companies were related to CoreValve devices and Leerink Partners analyst, Danielle Antallfy noted that such a patent dispute will make Medtronic think before aggressively driving CoreValve’s products to the market. The company is currently approved to sell CoreValve products in Europe and is expecting approval in the U.S. this year.

Executive Comment:

Medtronic, Inc. (NYSE:MDT) acquired CoreValve Inc. for $700 million in 2009 to bring this technology to the market. Despite the dispute settlement cost more than acquisition price, the Chief Executive Officer of Medtronic, Omar Ishrak said in an interview that the company is still getting a good return on investment as the market for minimally invasive heart valves getting larger than what company previously anticipated.

Ishrak added that the company has got a tremendous technology that efficiently delivers superior clinical results and the dispute settlement will now allow the company to better focus on serving patients.

4Q14 Earnings Highlights:

Medtronic, Inc. (NYSE:MDT) yesterday also announced its 4Q14 earnings for the quarter ended April 25, 2014. The company reported revenue of $4.57 billion and earnings of $448 million for 4Q14. This represents marginal 2% increase in its revenue and significant 54% decline in earnings during 4Q14, on a year over year basis. The company reported adjusted earnings of $1.12 per share for 4Q14, after adjusting for one-time factors.

Stock Update:

On Tuesday, the stock of Medtronic closed at $59.41, losing 1.54% from its previous close.

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