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    Medtronic PLC (MDT)

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    Business Description

    Medtronic plc is a leading global healthcare technology company headquartered in Dublin, Ireland, serving healthcare systems, physicians, clinicians, and patients in over 150 countries. The company develops and manufactures device-based medical therapies and services, organized into four principal segments: Cardiovascular Portfolio, Neuroscience Portfolio, Medical Surgical Portfolio, and Diabetes Operating Unit . Medtronic's diverse portfolio includes products for cardiac rhythm disorders, neurostimulation therapies, surgical solutions, and diabetes management .

    1. Cardiovascular Portfolio - Develops products for cardiac rhythm disorders, cardiovascular disease, and heart and vascular-related disorders, including divisions like Cardiac Rhythm & Heart Failure, Structural Heart & Aortic, and Coronary & Peripheral Vascular.
    2. Neuroscience Portfolio - Focuses on neurostimulation therapies, drug delivery systems for chronic pain, and products for spine and brain conditions, with divisions such as Cranial & Spinal Technologies, Specialty Therapies, and Neuromodulation.
    3. Medical Surgical Portfolio - Covers products for diseases of the respiratory system, gastrointestinal tract, and other preventable complications, including Surgical & Endoscopy and Acute Care & Monitoring divisions.
    4. Diabetes Operating Unit - Provides insulin pumps, continuous glucose monitoring systems, and related consumables, reflecting a significant growth in sales.

    Q1 2025 Summary

    Initial Price$80.04April 25, 2024
    Final Price$78.46July 25, 2024
    Price Change$-1.58
    % Change-1.97%

    What went well

    • Medtronic is experiencing sustainable growth driven by exciting new product cycles in high-growth markets, such as neuromodulation with new sensing technologies, and structural heart with the launch of Evolut FX+, leading to strong demand and positive fundamentals.
    • The company is proactively investing in high-growth areas through increased R&D and tuck-in M&A, utilizing its strong cash flow to prioritize innovation and expansion in markets like atrial fibrillation ablation, while maintaining operational efficiency.
    • Medtronic sees significant opportunity in underpenetrated markets like renal denervation and structural heart, with progress in reimbursement unlocking potential growth, and expects to grow faster than the market in areas like cardiac ablation with its breakthrough technologies PulseSelect and Sphere-9.

    What went wrong

    • Medtronic is still awaiting broad reimbursement for its Simplicity blood pressure procedure, and delays in securing coverage and coding could impact adoption and revenue growth of this therapy.
    • Certain high-growth businesses, like Diabetes and Cardiac Rhythm Management, may not sustain their strong growth rates throughout the year, potentially slowing overall company growth.
    • In Europe, cost constraints may lead to slower adoption of new technologies like Pulse Field Ablation, which could impact Medtronic's international growth.

    Q&A Summary

    1. Sustainability of Q1 Growth
      Q: Can you discuss if Q1 performance is sustainable and any one-offs?
      A: Geoff stated there were no one-offs driving Q1 performance. He believes growth is sustainable due to new product cycles in high-growth markets, like Neuromodulation reaching double-digit growth driven by new technologies and pricing uplifts. While Diabetes and CRM had particularly strong Q1 growth, he noted they might not sustain that high level throughout the year.

    2. Margin Outlook and FX Impact
      Q: How is your margin visibility for the second half, and did it change recently?
      A: Gary explained that underlying leverage is similar on a constant currency basis with high single-digit growth every quarter. FX pressure in the first half will wane in the back half, improving margins. Gross margins were strong, about 40 basis points ahead of consensus, and operating margin was in line.

    3. Diabetes Strategy and Abbott Partnership
      Q: How does the Abbott partnership impact your Diabetes strategy and installed base growth?
      A: Que emphasized their strategy hasn't changed. By partnering with Abbott, they can provide access to patients who prefer Abbott's sensor, tapping into the largest CGM installed base in the world. They're integrating Abbott's sensor into their system to offer a one Medtronic experience.

    4. Afib Ablation Devices and Market Potential
      Q: Can you provide perspective on Afra's progress in Europe and expectations for the U.S.?
      A: Sean highlighted that demand for Pulsed Field Ablation (PFA) is unbelievably strong, and they're ramping up capacity. Medtronic offers both single-shot and point-by-point approaches with differentiated features. Uptake in Europe is robust, and they anticipate PFA to be a robust growth market for a long time.

    5. Hugo Robotic System Progress and Commitment
      Q: What's the progress and timeline for Hugo, and are you committed to it?
      A: Mike reported reaching targeted enrollment in clinical work but didn't provide a specific submission date. Geoff affirmed their absolute commitment to Hugo despite strong competition. They see robotics as crucial across surgical fields and are confident due to their team and technologies.

    6. TAVR Market and FX Launch Impact
      Q: How do you view the TAVR market and the impact of the FX launch on share?
      A: Sean stated the TAVR market is solid, with Medtronic growing in line with high single-digit growth. The FX launch has picked up momentum, improving usability without trade-offs. They expect continued growth as they obtain approvals in other geographies.

    Key Metrics

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    Executive Team

    NamePositionStart DateShort Bio
    Geoffrey S. MarthaChairman of the Board of Directors and Chief Executive OfficerApril 27, 2020Geoffrey S. Martha became CEO on April 27, 2020, and Chairman on December 11, 2020. He previously served as President of Medtronic and held leadership roles at GE Healthcare and GE Capital .
    Ivan K. FongExecutive Vice President, General Counsel, and Corporate SecretaryFebruary 2022Ivan K. Fong joined Medtronic in February 2022. He previously held leadership roles at 3M Company and served as General Counsel of the U.S. Department of Homeland Security .
    Robert ten HoedtExecutive Vice President and President of the Global RegionsJanuary 2015Robert ten Hoedt has been with Medtronic since January 2015, serving in various roles including President of the APAC Region and Senior Vice President of EMEA and Canada regions .
    Michael MarinaroExecutive Vice President and President of the Medical Surgical PortfolioFebruary 2023Michael Marinaro, age 53, has been with Medtronic since 2000, leading numerous businesses. He became Executive Vice President and President of the Medical Surgical Portfolio in February 2023 .
    Karen L. ParkhillFormer Executive Vice President and Chief Financial OfficerJune 2016Karen L. Parkhill served as CFO from June 2016 until her resignation on August 2, 2024. She previously worked at Comerica Incorporated and J.P. Morgan Chase & Co. .
    Sean SalmonExecutive Vice President and President of Medtronic's Cardiovascular PortfolioJanuary 2021Sean Salmon has been with Medtronic since 2004, holding various senior management positions. He became Executive Vice President and President of the Cardiovascular Portfolio in January 2021 .
    Gregory L. SmithExecutive Vice President, Global Operations and Supply ChainApril 2021Gregory L. Smith joined Medtronic in April 2021. He previously held leadership roles at Walmart, The Goodyear Tire & Rubber Company, and other companies .
    Brett WallExecutive Vice President and President of Medtronic's Neuroscience PortfolioN/ABrett Wall previously served as Senior Vice President and President of the Brain Therapies division. He held leadership roles at Covidien and worked at ev3, Inc., and Boston Scientific .
    Gary CoronaInterim Chief Financial OfficerAugust 3, 2024Gary Corona was appointed Interim CFO effective August 3, 2024, following Karen Parkhill's resignation. He joined Medtronic less than two years ago and led the corporate finance team .

    Questions to Ask Management

    1. With the impending launch of Simplera and your partnership with Abbott, how does this shift from your traditional integrated model in Diabetes align with your long-term strategy, and how will it affect your internal versus external investment in this area?

    2. Given your recent strong Q1 performance exceeding guidance expectations, were there any one-off factors that drove this quarter, and how sustainable are these trends into the back half of the year?

    3. In the structural heart market, are you concerned about potential capacity constraints in the long term, and how do you plan to address any limitations to support the growth of your therapies?

    4. With the CMS NTAP for Simplicity in the renal denervation market, how do you see this market developing now that reimbursement is getting behind the product, and what challenges do you anticipate in achieving broad coverage and adoption?

    5. As you invest heavily in new growth areas, how do you balance reinvesting for innovation with maintaining earnings leverage and margins over the next couple of years?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateMarch 2024
    End Date/DurationNo specific end date
    Total additional amount$5.0 billion
    Remaining authorization$2.6 billion as of October 25, 2024
    DetailsSupports stock-based compensation and returns capital to shareholders

    Past Guidance

    Q1 2025 Earnings Call

    • Issued Period: Q1 2025
    • Guided Period: FY 2025 and Q2 2025
    • Guidance:
      1. Non-GAAP Diluted EPS for FY 2025: Raised to $5.42 to $5.50 .
      2. EPS for Q2 2025: Expected to be $1.24 to $1.26 .
      3. FY 2025 Organic Revenue Growth: Expected to be 4.5% to 5% .
      4. Q2 2025 Organic Revenue Growth: Expected to be approximately 4.5% .
      5. Foreign Currency Impact: Unfavorable 5% for FY 2025, 8% for Q2 2025 .
      6. FX Impact on Revenue: Negative $120 million to $210 million .
      7. Operating Margins: Expected to expand .

    Q4 2024 Earnings Call

    • Issued Period: Q4 2024
    • Guided Period: FY 2025
    • Guidance:
      1. Non-GAAP Diluted EPS: $5.40 to $5.50 .
      2. Organic Revenue Growth: 4% to 5% .
      3. Segment Growth: Diabetes segment to grow above corporate average .
      4. Foreign Exchange Impact: Unfavorable $275 million to $375 million .
      5. Operating Margin: Expected to be flat .
      6. Free Cash Flow: Expected to increase .
      7. Capital Allocation: Minimum 50% of free cash flow to shareholders .
      8. Currency Headwinds: Expected to lessen .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: FY 2024 and FY 2025
    • Guidance:
      1. Full Year EPS Guidance: $5.19 to $5.21 .
      2. Fourth Quarter Adjusted EPS: $1.44 to $1.46 .
      3. Full Year Organic Revenue Growth: 4.75% to 5% .
      4. Fourth Quarter Organic Revenue Growth: 4% to 4.5% .
      5. Currency Impact: Unfavorable 7% on full-year EPS .
      6. Full Year Revenue Impact from Currency: Unfavorable $15 million to favorable $35 million .

    Q2 2025 Earnings Call

    • Issued Period: Q2 2025
    • Guided Period: N/A
    • Guidance: The documents do not contain information from the Q2 2025 earnings call for Medtronic (MDT). Therefore, I cannot provide the guidance metrics from that specific earnings call.

    These summaries reflect Medtronic's strategic focus on earnings growth, revenue management, and handling currency impacts across different fiscal periods.

    Latest news

    Recent developments and announcements about MDT.

    Financial Reporting

      Earnings Report

      ·
      Nov 19, 2024, 8:05 PM

      Medtronic's Second Quarter Fiscal 2025 Earnings Results

      Medtronic plc has released its financial results for the second quarter of fiscal year 2025, which ended on October 25, 2024. Here are the key highlights from the earnings report:

      • Revenue: The company reported a worldwide revenue of $8.4 billion, marking an increase of 5.3% as reported and 5.0% on an organic basis .

      • Earnings Per Share (EPS): The GAAP diluted EPS was $0.99, while the non-GAAP diluted EPS was $1.26. The non-GAAP EPS saw a 1% increase, despite a -9 cent impact from foreign currency translation .

      • Net Income: The GAAP net income was $1.270 billion, representing a 40% increase, while the non-GAAP net income was $1.620 billion, a decrease of 3% .

      • Guidance Update: Medtronic has raised its FY25 organic revenue growth guidance to 4.75% to 5% and its diluted non-GAAP EPS guidance to a range of $5.44 to $5.50 .

      • Segment Performance:

        • Cardiovascular Portfolio: Revenue increased by 6.1% as reported and 5.6% organic, driven by high-single digit growth in Structural Heart & Aortic and mid-single digit growth in Cardiac Rhythm & Heart Failure and Coronary & Peripheral Vascular .
        • Neuroscience Portfolio: Revenue increased by 7.1% as reported and 6.7% organic, with significant growth in Neuromodulation and steady growth in Cranial & Spinal Technologies and Specialty Therapies .
        • Medical Surgical Portfolio: Revenue increased by 1.2% as reported and 0.7% organic, with growth in Acute Care & Monitoring and flat results in Surgical & Endoscopy .
        • Diabetes: Revenue increased by 12.4% as reported and 11.0% organic, driven by the adoption of the MiniMed™ 780G system .

      • Strategic Focus: The company continues to focus on innovation, with strong performance in areas such as transcatheter aortic valve replacement (TAVR), pulsed field ablation (PFA), leadless pacemakers, diabetes, spine, and neuromodulation .

      These results reflect Medtronic's ongoing commitment to innovation and its ability to execute on its strategic priorities, driving growth across its diverse portfolio of medical technologies.