J.P. Morgan Breaking News: Medtronic, Inc. to Return 50% of Cash Flow to Shareholders, Will Close Covidien Deal in Weeks

January 12, 2015
By Riley McDermid, BioSpace.com Breaking News Sr. Editor

Medical technology firm Medtronic delighted investors Monday, saying during a presentation that it would be using its significant cash flow to reward shareholders by returning as much as 50 percent of it via share buybacks and

Medtronic also could not say enough about its recent acquisition of device marker Covidien , saying that deal will close in the last week of January or early February and will “meaningfully accelerate” the company’s main three strategies of therapy innovation, globalization and economic value.

Medtronic made the announcement at the J.P. Morgan Healthcare Conference which begins Monday in San Francisco and the oldest and largest conference of its type. It will include 300 of the largest biotech, healthcare and biopharma companies presenting their top-line data and estimates to a sea of eager bankers, analysts, institutional investors, hedge funds and journalists.

Chairman and CEO Omar Ishrak said during his presentation that those three areas are crucial to Medtronic’s calculus going forward in 2015.

"We are steadfast in our focus on delivering long-term value in healthcare and believe there is significant growth opportunity for us as our strategies address the three universal healthcare needs: improving clinical outcomes, expanding access, and optimizing cost and efficiency," said Ishrak. "Aligned with these universal healthcare needs, our three key strategies will deliver new therapies, unlock opportunities in emerging markets and develop new solutions for hospital efficiency and disease management.”

Outside of Covidien, the company’s biggest news was its potential cash boon to investors. Medtronic's said it has a unique free cash flow, and vowed Monday to return 50 percent of that to shareholders through dividends and share repurchases.

"Medtronic is uniquely positioned to be the leading medical technology solutions partner with market-leading products, breadth and scale and financial strength," said Ishrak. "With the addition of Covidien, our combined portfolio and global representation will enhance our ability to deliver economic value to more patients and physicians, in more places around the world."