These forward-looking statements are based on certain assumptions and analyses made by Medtronic plc (the "Company") in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors the Company believes are appropriate in the circumstances. Medtronic to save $3B by 2022 in new restructuring plan: 5 things to know MDT trades at a discount to peers on calendar 2021E P/E multiples (~19.5x versus ~22.5x).. Oppenheimer analyst Steven Lichtman at the end last month raised the stocks price target to $118 from $112 and reiterated a Buy rating, citing recent peer multiple expansion. SVB Leerink analysts, however, credited Martha for instilling more confidence than they've perhaps ever had that Medtronic can achieve its new annual sales growth target over the long-range plan. The medical device giant based in Ireland but mainly run from Fridley is adopting a new operating model [that] will simplify Medtronics organizational structure and accelerate decisionmaking and execution, according to a filing Tuesday with the U.S. Securities and Exchange Commission (SEC). "One of the pushbacks on Medtronic has been that the organization is too big and complex," wrote Evercore ISI analyst Vijay Kumar in a note, adding the spin off would help narrow Medtronic's focus. Better health access for our world | Medtronic With plans to spin off three major divisions this year, Medtronic CEO Geoff Martha said hes taking his foot off the gas. In the ongoing phase of operational. The two businesses contributed $2.2 billion, or around 7%, to Medtronic's revenue in the fiscal year ended April 29. During the J.P. Morgan Healthcare Conference in San Francisco, the company announced a restructuring initiative that could save the company $3 billion over several years and impact an unknown number of jobs. Medtronic kicks off 2023 fiscal year with slipping revenues Commenting on the companys revenue outlook, Lichtmann expects sequential improvement in F2H21 with F4Q21 returning to more normalized revenue (mid-single-digit growth on two-year stacked basis) and margin levels (we forecast high-20's op margin in F4Q). 800-929-4043. Burl Gilyard is the Star Tribune's medtech reporter. The company is also currently assessing the impact of these changes to the external reporting of its segments and may provide an update, if changes are necessary, prior to the start of its fiscal fourth quarter. We want to hear from you. Jefferies analysts were skeptical of this promise. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. See here for a complete list of exchanges and delays. Martha also said he was excited about Medtronics launch of its Hugo robotic-assisted surgery system, which has a CE Mark in Europe but is still an investigational product in the U.S. I know there's a lot of skepticism out there because it took us so long to get this product out there and other competitors have struggled to get a competitive system out there against the DaVinci, Martha said. But Martha said the departures reflect well on Medtronic. It is a giant company & offers its employees a lot of opportunities. Ariana Lindquist | Bloomberg | Getty Images. The charges represent incremental costs of complying with the new European Union (E.U.) "We don't have any intention of moving those people," Martha said. Medtronic also is expecting FDA approval of its MiniMed 780G insulin pump during its next fiscal year. "We have said that this will be a tougher year on the bottom line," Parkhill said on the call with analysts. Forward Looking Statements Published Jan. 9, 2023 Elise Reuter Reporter | noon ET, Medtech companies shift strategy as more orthopedic procedures move to ambulatory surgical centers, A look back at medtechs top 10 acquisitions of 2022, Medicare to expand CGM coverage to more Type 2 diabetes patients, Medtronic says renal denervation consensus could open up multibillion-dollar market, Boston Scientific to lay off 120 people at ex-Preventice site, continuing run of medtech cuts, FDA Class I recalls hit 15-year high in 2022, 8 Strategies to Reduce Costs and Extend Runway in Life Sciences, How a New Blood Test is Helping Health Systems and Doctors Detect Cancer Early, 5 Factors Holding Back Healthcare Practices From Adopting RPM, Mountains of Cath Lab Waste Could Be Recycled, Study Estimates. The stock, which advanced 10% over the past month, is still down 5% on a year-to-date basis (See Medtronic stock analysis on TipRanks). The company continues to expect fiscal year 2023 diluted non-GAAP EPS in the range of $5.53 to $5.65, including an estimated 17 to 22 cent negative impact from foreign currency. The charges relate to the early redemption of approximately $2.3 billion of debt and were recorded within interest expense within the consolidated statements of income. Medtronic officials expect their Simplification Restructuring Program to cost roughly $400 million to $450 million before taxes, with the majority of costs recognized by the end of the fiscal. become SVP and chief transformation officer at Zimmer Biomet, GE serving as a management feeder system for the healthcare and medtech industries, Read on to find out five things that make Martha optimistic about Medtronics future>>, Geoff Martha updates Medtronics new course; AJAX CEO Duke Rohlen is funding innovation differently, Medtech jobs: The worlds largest medical device companies are hiring, Engineers at Northwestern develop electronic bandage that accelerates healing, Medtechs top R&D spenders and the projects they launched, Researchers in Hong Kong develop self-charging face mask. Forward-looking statements set forth in this press release speak only as of the date hereof, and the Company does not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law. The webcast can be accessed by clicking on the Events icon at investorrelations.medtronic.com. "The diabetes branch of the FDA has been particularly busy," said Martha. In a far-ranging interview with the DeviceTalks Weekly podcast, Martha reviewed the companys strong third quarter-results and spoke of the programs giving him the most optimism. Expense Guidance Our technologies and therapies treat 70 health conditions and include cardiac devices, surgical robotics, insulin pumps, surgical tools, patient monitoring systems, and more. Electricity-conducting gel forms electrodes in zebrafish and leeches, with potential for bioelectronic medicine. The company's net income is down amid inflation and unfavorable currency exchange rates. Historical non-GAAP financial measures presented in our earnings release have been recast for comparability. Medtronic to book $500 million restructuring charge - Star Tribune Revenue exceeds guidance, with known supply chain challenges impacting results; notable strength in Pacing, Cardiac Surgery, Core Spine in the U.S., and Diabetes in Europe DUBLIN, Aug. 23, 2022 Revenue exceeds guidance, with known supply chain challenges impacting results; notable strength in Pacing, Cardiac Surgery, Core Spine in the U.S., and Diabetes in Europe. Medtronic announced restructuring plans to cut annual costs by $450 million - $475 million by fiscal 2023 as the medical device maker introduces a new operating model to simplify its. To view a printable PDF of the financial schedules and non-GAAP reconciliations, click here. Martha contends the medtech will be more agile, increasing the speed of decision-making, execution and innovation, while holding individual units responsible and rewarding growth. Keep up with the story. Our Mission to alleviate pain, restore health and extend life unites a global team of 95,000+ passionate people across 150 . Medtronic management will discuss its new operating model at its virtual Investor Day on October 14. Medtronic eyes $450 million-$475 million in annual cost savings through Most of those are unchanged so far, except coronary has gotten slightly better in the last couple of weeks. He also updated listeners on the reorganization plan that created 20 semi-autonomous operating units. "Our matrix organization was too bureaucratic. Medtronic will host a webcast today, August 23, at 8:00 a.m. EDT (7:00 a.m. CDT) to provide information about its businesses for the public, investors, analysts, and news media. However, analysts who tuned in to Wednesday's event are taking a wait-and-see attitude on the restructuring. When excluding the impact of currency and the inorganic Intersect ENT revenue, first quarter 2023 revenue declined approximately 3.6 percent organic. This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties, including risks related to competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of medical products, government regulation and general economic conditions and other risks and uncertainties described in the company's periodic reports on file with the U.S. Securities and Exchange Commission including the most recent Annual Report on Form 10-K of the company, as filed with the U.S. Securities and Exchange Commission. Asked a general question about management turnover following a reorganization, Martha agreed its not unexpected. Let MedTech Dive's free newsletter keep you informed, straight from your inbox. Site Map | Privacy Policy | RSS, Is Medtech really recession proof? U.S. companies such as Johnson & Johnson, General Electric and 3M have been breaking up their businesses amid a growing consensus they perform best with streamlined focus, along with increasing pressure from activist investors to boost shareholder returns. Medtronic still faces a warning letter related to its handling of a recall of the MiniMed 600 series insulin pumps. Our Mission to alleviate pain, restore health, and extend life unites a global team of 95,000+ passionate people across 150 countries. Martha wants Medtronic to create the same talent factory for medtech managers. Send this article to anyone, no subscription is necessary to view it, After pandemic hit, cultural groups hope for boost from state, One of state's richest families feuds over $1 billion estate, Innocence Project takes up case of man convicted in Mpls. This is a next step. "We anticipate the inspection happening in the very near future.". Send this article to anyone, no subscription is necessary to view it, Anyone can read, no subscription required, See Adjustments to reconcile net income to net cash provided by operating activities: MCS asset impairment and inventory write-down. 2023 CNBC LLC. In everything we do, we are engineering the extraordinary. CEO Geoff Martha says Medtronics ongoing corporate restructuring will position the company to compete better with medical device rivals, freeing the front-line forces from earlier entanglements. Medtronic to spin off 2 businesses as part of restructuring process You will be required (the company will say you're not required but your boss may infer you that you are) to help with whichever Christian charities Medtronic decides to bring in. The company disclosed the cost reductions during a conference call with stock analysts to discuss the company's third quarter fiscal results, released Tuesday morning. With the creation of the new units, Medtronic is consolidating operations at the corporate level including the companys global manufacturing, supply chain and facilities, the filing said. (2) The data in this schedule has been intentionally rounded to the nearest million and, therefore, may not sum. "We're still measuring these leaders on operating profit and free cash flow, but we're reworking our employee incentive plans to be more heavily weighted towards revenue growth and market share.". Operating The efforts to cut costs will continue for the rest of the company's fourth quarter and into the next fiscal year, Parkhill said. The charging industry and the state's Commerce Department question Xcel's nearly $200 million ratepayer-funded plan for over 700 utility-owned chargers. Global scale and commercial reach to drive increased penetration in core strategic markets; Connected care solutions to drive increased share within existing customer accounts globally; Investments in innovation to drive technology leadership, new parameter expansion, and expand its addressable market segments; and. Designs are in place for townhouses to be built on privately owned land on the point between Agate and Burlington bays. The company continues to expect organic revenue growth in its fiscal year 2023 in the range of 4% to 5%. as a % of The patient monitoring technology portfolio includes Nellcor pulse oximetry and BIS brain monitoring, while the respiratory interventions business comprises ventilators and breathing systems. Associated costs include costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses. (3) The first quarter of 2023 includes $20 million of inorganic revenue related to the Intersect ENT acquisition, which is included in the reported results of the Specialty Therapies division of the Neuroscience portfolio. From a COVID perspective, Martha said the virus has moved through the company unbelievably quickly, but that the supply chain hasnt had any problems yet. Medtronic said it will discuss its plans further at an upcoming Investor Day being held virtually on Oct. 14. As far as Medtronic's warning letter from the U.S. Food and Drug Administration in December 2021 that demanded the company's diabetes unit improve how it handles complaints and recalls, Martha said the company has completed its commitments. "It's important that we look across our full cost structure and reduce spending everywhere that we can.". However, the absence of these words does not mean that the statements are not forward-looking. Medtronicplans to provideadditional details on the potentialtransactionin due course. Our technologies and therapies treat 70 health conditions and include cardiac devices, surgical robotics, insulin pumps, surgical tools, patient monitoring systems, and more. Medtronic's financial advisors on the transaction are Perella Weinberg Partners LP and Goldman Sachs & Co. LLC. Medtronic will incorporate these metrics into the company's performance objectives for this fiscal year and intends to include them in next fiscal year's incentive plans. The two businesses - patient monitoring and respiratory interventions - contributed $2.2 billion, or around 7%, to Medtronic's revenue in the fiscal year ended April 29. Medtronic said on Monday it would spin off two of its smaller businesses into a new company to streamline its portfolio and increase the pace of revenue growth. Medtronic to Restructure, Unknown Number of Employees Impacted The company's net profit of $1.2 billion was down 17.3% compared with the same period a year ago. Excluding the impact of ventilator sales given the increased COVID-19 related demand in the prior year, Medical Surgical revenue decreased 7% organic. Expense as Martha said that the new operating model, which will be implemented across the company over the next several quarters, was tested in its Restorative Therapies Group, which accelerated organic revenue growth to 6% while also improving profitability in Martha's last full fiscal year as RTG president. Following the separation of NewCo, Medtronic will have: NewCo is uniquely positioned to offer the full suite of connected patient monitoring and respiratory care solutions. All Rights Reserved. Medtronic, like many medical device makers, has been facing supply chain shortages and rising costs, exacerbated by the Ukraine conflict and strict Covid-19 lockdowns in China. In 2018, the company announced a restructuring plan expected to help them save $500 million to $700 million annually over five years. The separation, expected to be completed in the next 12 to 18 months, will also help the company unlock value from the two divested businesses. First quarter U.S. revenue of $3.766 billion represented 51% of company revenue and decreased 8% as reported and 9% organic. Medtronic is spinning off its renal care business into the venture. On this shift to value-based purchasing, Martha said Medtronic had gone through the process with its coronary stents and spine business, and expects to have done so with half of the companys revenue through the end of fiscal year 2023, reaching 80%by fiscal year 2024, giving us a new, albeit lower revenue base to grow from going forward., Get the free daily newsletter read by industry experts.