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Elliott Management exits position in Covidien

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Elliott Management and Covidien

Elliott Management has exited its position in Covidien (COV). The investment represented 0.49% of the overall hedge fund portfolio in 3Q14. The fund sold shares worth $43 million according to its latest 13F filings for 4Q14.

Covidien makes up 1.42% of the Vanguard Health Care ETF (VHT). The ETF tracks the overall performance of 326 publicly traded companies in the health care sector.

As we learned earlier in this series, the hedge fund added to its position in pharmaceutical major Cubist Pharmaceutical (CBST).

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Overview of Covidien

Ireland-based Covidien (COV) is engaged in the development, manufacture, and sale of healthcare products for use in clinical and home settings. It operates its businesses through two segments:

  • Medical Devices – This segment includes the development, manufacture, and sale of endomechanical instruments, energy devices, soft tissue repair products, vascular products, oximetry and monitoring products, airway and ventilation products, and other medical products.
  • US Medical Supplies – This segment includes the development, manufacture, and sale of nursing care products, medical surgical products, SharpSafety products, and original equipment manufacturer products.

Covidien posts 1Q15 results, meets estimates

In January 2015, Covidien (COV) announced its 1Q15 results. The company reported net sales of $2.69 billion, an increase of 2% over 1Q14 revenues of $2.64 billion. Operational sales growth for the quarter was 6% because the foreign exchange rate movement lowered the quarterly sales growth rate by four percentage points.

José Almeida, chairman and CEO of COV, said, “We continued to perform strongly during the quarter, driven by considerable growth in Surgical Solutions, our largest product category, as well as important new offerings and a sustained focus on productivity improvement. We expect to maintain this solid performance as we continue to invest in and execute our global strategy.”

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Medtronic acquires Covidien in January 2015

In January 2015, Medtronic (MDT) completed the acquisition of Covidien (COV). The cash and stock transaction was valued at approximately $49.9 billion. According to the acquisition agreement, Medtronic Inc. and Covidien are now wholly owned subsidiaries of Medtronic, the new combined holding company.

This acquisition will help the company capture a considerable market share in the United States as well as Europe. According to Omar Ishrak, chairman and CEO of Medtronic, “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.”

Spectranetics acquires Stellarex from Covidien

In November 2014, Spectranetics Corporation (SPNC), together with COV, announced an agreement in the acquisition of Covidien’s Stellarex drug-coated angioplasty balloon platform for $30 million.

The CEO of Spectranetics, Scott Drake, said, “This acquisition advances SPNC’s objective to provide comprehensive solutions to cross, prepare and treat the most complex vascular conditions. Drug coated balloons are and will be an integral part of the vascular landscape for many years to come. Global thought leaders believe that primary patency is the most important clinical metric, and Stellarex’s feasibility data stands apart. We believe this technology will meaningfully add to our near-term revenue growth and expand operating leverage over time.”

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