Earnings delivered despite slower market
procedure volume and supply recovery; Growth driven by TAVR,
Pacing, U.S. Core Spine, and International Diabetes
DUBLIN, Nov. 22,
2022 /PRNewswire/ -- Medtronic plc (NYSE:MDT) today
announced financial results for its second quarter of fiscal year
2023, which ended October 28,
2022.
Key Highlights
- Revenue of $7.6 billion decreased
3% as reported and increased 2% organic
- GAAP diluted EPS of $0.32
decreased 67%; non-GAAP diluted EPS of $1.30 decreased 2%
- Company updates guidance; expects organic revenue to accelerate
in second half
"We're taking decisive actions to improve
the performance of the company."
-Geoff Martha, Chairman & CEO
The company reported worldwide revenue of $7.585 billion, a decrease of 3% as reported and
an increase of 2% on an organic basis. The organic comparison
excludes a $457 million negative
impact from foreign currency translation and a $25 million contribution from the company's
fiscal first quarter acquisition of Intersect ENT, which is
reported in the Specialty Therapies division in the Neuroscience
Portfolio. Unless otherwise stated, all revenue growth rates in
this press release are on an organic basis, which excludes the
impact of foreign currency translation and revenue from the
Intersect ENT acquisition.
The company's second quarter organic revenue results reflect
slower supply recovery or lower than anticipated underlying market
procedure volumes in certain businesses and the pricing impact of
volume-based procurement in China.
These challenges were partially offset by strength in certain
product lines, including Transcatheter Aortic Valves (TAVR),
Cardiac Pacing, Core Spine in the United
States, and Diabetes in International.
As reported, second quarter GAAP net income and diluted earnings
per share (EPS) were $427 million and
$0.32, respectively, both decreases
of 67%. As detailed in the financial schedules included at the end
of this release, second quarter non-GAAP net income and non-GAAP
diluted EPS were $1.725 billion and
$1.30, respectively, decreases of 4%
and 2%, respectively. Included in the company's GAAP earnings is a
$764 million income tax reserve
adjustment that was a direct result of the previously disclosed
U.S. Tax Court opinion issued in the fiscal second quarter. The
company's earnings decline also reflects the continued
macroeconomic impact of inflation on materials, direct labor,
freight, and utilities.
Second quarter U.S. revenue of $4.069
billion represented 54% of company revenue and increased 2%
as reported and 1% organic. Non-U.S. developed market revenue of
$2.157 billion represented 28% of
company revenue and decreased 13% as reported and increased 3%
organic. Emerging Markets revenue of $1.359
billion represented 18% of company revenue and decreased 1%
as reported and increased 4% organic.
"Slower than predicted procedure and supply recovery drove
revenue below our expectations this quarter. We continue to take
decisive actions to improve the overall performance of the company,
including streamlining our organizational structure, strengthening
our supply chain, driving a performance culture, and strategically
allocating capital to support our best growth opportunities with
the investments they deserve," said Geoff Martha, Medtronic
chairman and chief executive officer. "We're seeing the benefit of
these changes – along with new incentives and strong execution – in
certain businesses, and we're focused on ensuring these efforts
translate into improved performance across the company. Looking
ahead, we're confident we have a clear path to delivering durable
growth and increased shareholder value."
Cardiovascular Portfolio
The Cardiovascular Portfolio
includes the Cardiac Rhythm & Heart Failure (CRHF), Structural
Heart & Aortic (SHA), and Coronary & Peripheral Vascular
(CPV) divisions. Cardiovascular revenue of $2.773 billion decreased 2% as reported and
increased 4% organic, with all three divisions returning to growth
this quarter, including a high-single digit increase in SHA and
low-single digit increases in CRHF and CPV, all on an organic
basis.
- Cardiac Rhythm & Heart Failure revenue of
$1.431 billion decreased 3% as
reported and increased 3% organic. Cardiac Rhythm Management
revenue increased mid-single digits, with mid-single digit growth
in Cardiac Pacing Therapies driven by high-teens growth in Leadless
Pacemakers from continued global adoption of Micra™ transcatheter
pacing systems. Cardiovascular Diagnostics revenue increased
low-single digits, as procedures remain under pressure market-wide.
Cardiac Ablation Solutions revenue increased low-single digits,
including low-double digit growth in the
United States on the continued adoption of its Arctic Front™
cryoablation catheters. The company completed its acquisition of
Affera in the second quarter, expanding its cardiac ablation
portfolio to include technology under development, including its
first-ever cardiac mapping and navigation platform that encompasses
a differentiated, fully integrated diagnostic, focal pulsed field,
and radiofrequency ablation solution.
- Structural Heart & Aortic revenue of $757 million increased 1% as reported and 8%
organic. Structural Heart increased low-double digits, including
mid-teens growth in transcatheter aortic valves (TAVR). Aortic
increased mid-single digits with high-single digit growth in
thoracic stent graft systems. Cardiac Surgery increased mid-single
digits, driven by growth in surgical valves and perfusion
systems.
- Coronary & Peripheral Vascular revenue of
$584 million decreased 4% as reported
and increased 2% organic. Coronary & Renal Denervation
increased low-single digits on U.S. share gains from the recent
launch of the Onyx Frontier™ drug-eluting stent, despite overall
market percutaneous coronary intervention (PCI) procedures
remaining flat in developed markets. Earlier this month, the
company submitted the final module of the Symplicity Spyral™ renal
denervation system premarket approval package to the U.S. Food and
Drug Administration. Peripheral Vascular Health increased
low-single digits, with growth in vascular embolization,
drug-coated balloons, and superficial venous, partially offset by
declines in directional atherectomy, peripheral stents, and
percutaneous transluminal angioplasty balloons.
Medical Surgical Portfolio
The Medical Surgical
Portfolio includes the Surgical Innovations (SI) and the
Respiratory, Gastrointestinal & Renal (RGR) divisions. Medical
Surgical revenue of $2.070 billion
decreased 10% as reported and 3% organic, with a low-double digit
decline in RGR and partially offset by low-single digit growth in
SI. Excluding the impact of ventilator sales given the increased
COVID-19 related demand in the prior year, Medical Surgical revenue
decreased 1% organic.
- Surgical Innovations revenue of $1.398 billion decreased 7% as reported and
increased 1% organic. Advanced Surgical Instruments decreased
low-single digits given expected acute supply chain shortages of
raw materials and the impact of China provincial volume-based procurement
(VBP) stapling tenders. These declines were partially offset by
strength in Hernia & Wound Management, which increased
mid-single digits. In Surgical Robotics, the company received three
significant regulatory approvals for its Hugo™ robotic-assisted
surgery system: Conformité Européenne (CE) Mark clearance for a
general surgery indication, Health Canada license for a general
laparoscopic surgery indication, and Ministry of Health, Labor, and
Welfare (MHLW) approval for urological and gynecological
indications in Japan.
- Respiratory, Gastrointestinal & Renal revenue of
$671 million decreased 16% as
reported and 11% organic. RGR revenue decreased 5% organic
excluding the impact of ventilator sales. Respiratory Interventions
decreased mid-twenties, with sales of ventilators declining
low-fifties as demand continued to be well below pre-pandemic
levels as expected. Patient Monitoring decreased mid-single digits,
with expected low-double digit declines in Nellcor™ pulse oximetry
products as COVID tailwinds abate, offset by low-double digit
growth in Perioperative Complications products. The company
announced last month its intention to separate the combined
Respiratory Interventions and Patient Monitoring businesses.
Gastrointestinal revenue decreased low-single digits given
non-emergent procedure softness in the market, including low-double
digit declines in Hepatopancreaticobiliary (HPB) products partially
offset by low-single digit growth in Chronic and Colorectal
products. Renal Care Solutions decreased low-double digits given
product availability challenges. Medtronic announced in May its
intention to contribute its Renal Care Solutions business into a
new, independent kidney care-focused medical device company
together with DaVita.
Neuroscience Portfolio
The Neuroscience Portfolio
includes the Cranial & Spinal Technologies (CST), Specialty
Therapies, and Neuromodulation divisions. Neuroscience revenue of
$2.186 billion increased 2% as
reported and 5% organic, with a high-single digit increase in
Specialty Therapies, a mid-single digit increase in CST, and a flat
result year-over-year in Neuromodulation, all on an organic
basis.
- Cranial & Spinal Technologies revenue of
$1.081 billion increased 1% as
reported and 5% organic. Spine & Biologics increased mid-single
digits, with mid-teens growth in the
United States partially offset by the impact of the
China national volume-based
procurement (VBP) spine tender. Neurosurgery increased high-single
digits, with double digit growth in robotics, navigation, and
powered surgical instruments.
- Specialty Therapies revenue of $686 million increased 8% as reported and 9%
organic. Neurovascular increased high-single digits, with double
digit growth in mechanical thrombectomy, aspiration, flow
diversion, and liquid embolic products. Pelvic Health increased
low-single digits on continued profitable growth despite
competitive pressure. ENT increased high-teens on an organic basis
driven by strength in Straightshot™ microdebriders, NIM Vital™
nerve monitoring systems, and StealthStation™ ENT navigation
systems.
- Neuromodulation revenue of $419
million decreased 4% as reported and was flat year-over-year
organic. Pain Therapies increased mid-single digits, with
high-single digit growth in Targeted Drug Delivery and mid-single
digit growth in Pain Stim. Interventional decreased mid-single
digits on product availability challenges and competitive pressure.
Brain Modulation decreased low-single digits, as significant
declines of replacement devices were partially offset by increased
share of initial implants from the continued adoption of the
Percept™ PC deep brain stimulation (DBS) system and SenSight™
directional DBS lead system.
Diabetes
Diabetes revenue of $556 million decreased 5% as reported and
increased 3% organic. U.S. revenue declined low-double digits,
given the absence of new product approvals. This was offset by
mid-teens growth in non-U.S. developed markets and low-double digit
growth in emerging markets. International sales were driven by
high-teens growth of insulin pumps, low-twenties growth of
continuous glucose monitoring (CGM) products, and high-single digit
growth in consumable sales.
Guidance
The company today issued revenue growth
guidance for the remainder of the fiscal year and updated its
fiscal year 2023 EPS guidance range.
The company expects fiscal year 2023 second half revenue growth
of 3.5% to 4.0% on an organic basis, an acceleration over the first
half. If foreign currency exchange rates as of the beginning of
November hold, revenue growth in fiscal year 2023 would be
negatively affected by approximately $1.740
billion to $1.840 billion
versus the previously stated $1.4
billion to $1.5 billion
impact.
The company now expects fiscal year 2023 diluted non-GAAP EPS in
the range of $5.25 to $5.30. EPS guidance includes an estimated
18 cent negative impact from foreign
currency at rates as of the beginning November.
"We continue to expect organic revenue growth acceleration, with
the second half growing faster than the first. However, given a
slower pace of market and supply recovery, we're reducing our
revenue expectations for the remainder of the year," said
Karen Parkhill, Medtronic chief
financial officer. "On the bottom line, we are driving expense
reductions throughout the company to help offset the lower revenue
and the effects of cost inflation. We are also committed to
investing appropriately for the long-term, allocating capital to
our most promising growth drivers and executing tuck-in
acquisitions, all designed to reach more patients and create
greater value for our shareholders."
Webcast Information
Medtronic will host a webcast
today, November 22, at 8:00 a.m. EST (7:00 a.m.
CST) to provide information about its businesses for the
public, investors, analysts, and news media. This webcast can be
accessed by clicking on the Events icon at
investorrelations.medtronic.com, and this earnings release will be
archived at news.medtronic.com. Within 24 hours of the webcast, a
replay of the webcast and transcript of the company's prepared
remarks will be available by clicking on the Events icon at
investorrelations.medtronic.com.
Medtronic plans to report its fiscal year 2023 third and fourth
quarter results on February 21, 2023,
and Thursday, May 25, 2023,
respectively. Confirmation and additional details will be provided
closer to the specific event.
Financial Schedules
The second quarter financial
schedules and non-GAAP reconciliations can be viewed by clicking on
the Investor Events link at investorrelations.medtronic.com. To
view a printable PDF of the financial schedules and non-GAAP
reconciliations, click here. To view the second quarter earnings
presentation, click here.
MEDTRONIC
PLC
WORLD WIDE
REVENUE(1)
(Unaudited)
|
|
|
SECOND QUARTER
|
|
|
SECOND QUARTER YEAR-TO-DATE
|
|
REPORTED
|
|
|
|
CONSTANT
CURRENCY
|
|
|
REPORTED
|
|
|
|
CONSTANT
CURRENCY
|
(in millions)
|
FY23
|
|
FY22
|
|
Growth
|
|
Currency
Impact(2)
|
|
FY23
|
|
Growth(3)
|
|
|
FY23
|
|
FY22
|
|
Growth
|
|
Currency
Impact(2)
|
|
FY23
|
|
Growth(3)
|
Cardiovascular
|
$
2,773
|
|
$
2,827
|
|
(1.9) %
|
|
$ (177)
|
|
$
2,950
|
|
4.4 %
|
|
|
$
5,486
|
|
$
5,717
|
|
(4.0) %
|
|
$ (315)
|
|
$
5,801
|
|
1.5 %
|
Cardiac Rhythm &
Heart Failure
|
1,431
|
|
1,471
|
|
(2.7)
|
|
(91)
|
|
1,522
|
|
3.5
|
|
|
2,824
|
|
2,954
|
|
(4.4)
|
|
(162)
|
|
2,986
|
|
1.1
|
Structural Heart &
Aortic
|
757
|
|
750
|
|
0.9
|
|
(54)
|
|
811
|
|
8.1
|
|
|
1,499
|
|
1,537
|
|
(2.5)
|
|
(96)
|
|
1,595
|
|
3.8
|
Coronary &
Peripheral Vascular
|
584
|
|
606
|
|
(3.6)
|
|
(32)
|
|
616
|
|
1.7
|
|
|
1,163
|
|
1,226
|
|
(5.1)
|
|
(57)
|
|
1,220
|
|
(0.5)
|
Medical Surgical
|
2,070
|
|
2,299
|
|
(10.0)
|
|
(149)
|
|
2,219
|
|
(3.5)
|
|
|
4,071
|
|
4,621
|
|
(11.9)
|
|
(264)
|
|
4,335
|
|
(6.2)
|
Surgical
Innovations
|
1,398
|
|
1,497
|
|
(6.6)
|
|
(107)
|
|
1,505
|
|
0.5
|
|
|
2,736
|
|
3,051
|
|
(10.3)
|
|
(189)
|
|
2,925
|
|
(4.1)
|
Respiratory,
Gastrointestinal, & Renal
|
671
|
|
802
|
|
(16.3)
|
|
(42)
|
|
713
|
|
(11.1)
|
|
|
1,335
|
|
1,570
|
|
(15.0)
|
|
(75)
|
|
1,410
|
|
(10.2)
|
Neuroscience
|
2,186
|
|
2,136
|
|
2.3
|
|
(85)
|
|
2,271
|
|
6.3
|
|
|
4,301
|
|
4,340
|
|
(0.9)
|
|
(149)
|
|
4,450
|
|
2.5
|
Cranial & Spinal
Technologies
|
1,081
|
|
1,067
|
|
1.3
|
|
(35)
|
|
1,116
|
|
4.6
|
|
|
2,124
|
|
2,189
|
|
(3.0)
|
|
(64)
|
|
2,188
|
|
—
|
Specialty
Therapies
|
686
|
|
634
|
|
8.2
|
|
(31)
|
|
717
|
|
13.1
|
|
|
1,353
|
|
1,275
|
|
6.1
|
|
(53)
|
|
1,406
|
|
10.3
|
Neuromodulation
|
419
|
|
435
|
|
(3.7)
|
|
(18)
|
|
437
|
|
0.5
|
|
|
824
|
|
875
|
|
(5.8)
|
|
(33)
|
|
857
|
|
(2.1)
|
Diabetes
|
556
|
|
585
|
|
(5.0)
|
|
(47)
|
|
603
|
|
3.1
|
|
|
1,098
|
|
1,157
|
|
(5.1)
|
|
(80)
|
|
1,178
|
|
1.8
|
TOTAL
|
$
7,585
|
|
$
7,847
|
|
(3.3) %
|
|
$ (457)
|
|
$
8,042
|
|
2.5 %
|
|
|
$
14,955
|
|
$
15,835
|
|
(5.6) %
|
|
$ (808)
|
|
$
15,763
|
|
(0.5) %
|
|
(1) The data in this
schedule has been intentionally rounded to the nearest million and,
therefore, may not sum.
|
(2) The currency impact
to revenue measures the change in revenue between current and prior
year periods using constant exchange rates.
|
(3) The three and six
months ended October 28, 2022 includes $25 million and $45
million, respectively, 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. When excluding the impact of currency and the inorganic
Intersect ENT revenue for three and six months ended October 28,
2022, revenue increased 2.2 percent organic and declined 0.7
percent organic, respectively.
|
MEDTRONIC
PLC
U.S.(1)(2) REVENUE
|
|
|
SECOND QUARTER
|
|
|
SECOND QUARTER YEAR-TO-DATE
|
|
REPORTED
|
|
|
REPORTED
|
(in millions)
|
FY23
|
|
FY22
|
|
Growth(3)
|
|
|
FY23
|
|
FY22
|
|
Growth(3)
|
Cardiovascular
|
$
1,424
|
|
$
1,373
|
|
3.7 %
|
|
|
$
2,722
|
|
$
2,793
|
|
(2.5) %
|
Cardiac Rhythm &
Heart Failure
|
790
|
|
761
|
|
3.8
|
|
|
1,507
|
|
1,530
|
|
(1.5)
|
Structural Heart &
Aortic
|
348
|
|
327
|
|
6.4
|
|
|
660
|
|
674
|
|
(2.1)
|
Coronary &
Peripheral Vascular
|
286
|
|
286
|
|
—
|
|
|
555
|
|
589
|
|
(5.8)
|
Medical Surgical
|
905
|
|
970
|
|
(6.7)
|
|
|
1,748
|
|
1,959
|
|
(10.8)
|
Surgical
Innovations
|
560
|
|
550
|
|
1.8
|
|
|
1,069
|
|
1,170
|
|
(8.6)
|
Respiratory,
Gastrointestinal, & Renal
|
345
|
|
420
|
|
(17.9)
|
|
|
679
|
|
790
|
|
(14.1)
|
Neuroscience
|
1,512
|
|
1,394
|
|
8.5
|
|
|
2,931
|
|
2,840
|
|
3.2
|
Cranial & Spinal
Technologies
|
817
|
|
749
|
|
9.1
|
|
|
1,580
|
|
1,544
|
|
2.3
|
Specialty
Therapies
|
403
|
|
354
|
|
13.8
|
|
|
784
|
|
714
|
|
9.8
|
Neuromodulation
|
291
|
|
291
|
|
—
|
|
|
567
|
|
582
|
|
(2.6)
|
Diabetes
|
228
|
|
261
|
|
(12.6)
|
|
|
434
|
|
506
|
|
(14.2)
|
TOTAL
|
$
4,069
|
|
$
3,997
|
|
1.8 %
|
|
|
$
7,835
|
|
$
8,098
|
|
(3.2) %
|
|
(1) U.S. includes the
United States and U.S. territories.
|
(2) The data in this
schedule has been intentionally rounded to the nearest million and,
therefore, may not sum.
|
(3) The three and six
months ended October 28, 2022 includes $25 million and $45
million, respectively, 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. When excluding the impact of currency and the inorganic
Intersect ENT revenue for three and six months ended October 28,
2022, revenue increased 1.2 percent organic and declined 3.8
percent organic, respectively.
|
MEDTRONIC
PLC
WORLD WIDE REVENUE:
GEOGRAPHIC (1)(2)
(Unaudited)
|
|
|
SECOND QUARTER
|
|
|
SECOND QUARTER YEAR-TO-DATE
|
|
REPORTED
|
|
|
|
CONSTANT
CURRENCY
|
|
|
REPORTED
|
|
|
|
CONSTANT
CURRENCY
|
(in millions)
|
FY23
|
|
FY22
|
|
Growth
|
|
Currency
Impact(3)
|
|
FY23
|
|
Growth(4)
|
|
|
FY23
|
|
FY22
|
|
Growth
|
|
Currency
Impact(3)
|
|
FY23
|
|
Growth(4)
|
U.S.
|
$ 1,424
|
|
$ 1,373
|
|
3.7 %
|
|
$
—
|
|
$ 1,424
|
|
3.7 %
|
|
|
$ 2,722
|
|
$ 2,793
|
|
(2.5) %
|
|
$
—
|
|
$ 2,722
|
|
(2.5) %
|
Non-U.S.
Developed
|
802
|
|
948
|
|
(15.4)
|
|
(148)
|
|
950
|
|
0.2
|
|
|
1,694
|
|
1,952
|
|
(13.2)
|
|
(271)
|
|
1,965
|
|
0.7
|
Emerging
Markets
|
546
|
|
506
|
|
7.9
|
|
(28)
|
|
574
|
|
13.4
|
|
|
1,070
|
|
972
|
|
10.1
|
|
(44)
|
|
1,114
|
|
14.6
|
Cardiovascular
|
2,773
|
|
2,827
|
|
(1.9)
|
|
(177)
|
|
2,950
|
|
4.4
|
|
|
5,486
|
|
5,717
|
|
(4.0)
|
|
(315)
|
|
5,801
|
|
1.5
|
U.S.
|
905
|
|
970
|
|
(6.7)
|
|
—
|
|
905
|
|
(6.7)
|
|
|
1,748
|
|
1,959
|
|
(10.8)
|
|
—
|
|
1,748
|
|
(10.8)
|
Non-U.S.
Developed
|
719
|
|
841
|
|
(14.5)
|
|
(129)
|
|
848
|
|
0.8
|
|
|
1,485
|
|
1,710
|
|
(13.2)
|
|
(233)
|
|
1,718
|
|
0.5
|
Emerging
Markets
|
446
|
|
488
|
|
(8.6)
|
|
(19)
|
|
465
|
|
(4.7)
|
|
|
838
|
|
951
|
|
(11.9)
|
|
(30)
|
|
868
|
|
(8.7)
|
Medical Surgical
|
2,070
|
|
2,299
|
|
(10.0)
|
|
(149)
|
|
2,219
|
|
(3.5)
|
|
|
4,071
|
|
4,621
|
|
(11.9)
|
|
(264)
|
|
4,335
|
|
(6.2)
|
U.S.
|
1,512
|
|
1,394
|
|
8.5
|
|
—
|
|
1,512
|
|
8.5
|
|
|
2,931
|
|
2,840
|
|
3.2
|
|
—
|
|
2,931
|
|
3.2
|
Non-U.S.
Developed
|
382
|
|
433
|
|
(11.8)
|
|
(70)
|
|
452
|
|
4.4
|
|
|
788
|
|
898
|
|
(12.2)
|
|
(126)
|
|
914
|
|
1.8
|
Emerging
Markets
|
292
|
|
309
|
|
(5.5)
|
|
(15)
|
|
307
|
|
(0.6)
|
|
|
582
|
|
602
|
|
(3.3)
|
|
(23)
|
|
605
|
|
0.5
|
Neuroscience
|
2,186
|
|
2,136
|
|
2.3
|
|
(85)
|
|
2,271
|
|
6.3
|
|
|
4,301
|
|
4,340
|
|
(0.9)
|
|
(149)
|
|
4,450
|
|
2.5
|
U.S.
|
228
|
|
261
|
|
(12.6)
|
|
—
|
|
228
|
|
(12.6)
|
|
|
434
|
|
506
|
|
(14.2)
|
|
—
|
|
434
|
|
(14.2)
|
Non-U.S.
Developed
|
254
|
|
256
|
|
(0.8)
|
|
(43)
|
|
297
|
|
16.0
|
|
|
518
|
|
519
|
|
(0.2)
|
|
(76)
|
|
594
|
|
14.5
|
Emerging
Markets
|
74
|
|
69
|
|
7.2
|
|
(4)
|
|
78
|
|
13.0
|
|
|
145
|
|
132
|
|
9.8
|
|
(4)
|
|
149
|
|
12.9
|
Diabetes
|
556
|
|
585
|
|
(5.0)
|
|
(47)
|
|
603
|
|
3.1
|
|
|
1,098
|
|
1,157
|
|
(5.1)
|
|
(80)
|
|
1,178
|
|
1.8
|
U.S.
|
4,069
|
|
3,997
|
|
1.8
|
|
—
|
|
4,069
|
|
1.8
|
|
|
7,835
|
|
8,098
|
|
(3.2)
|
|
—
|
|
7,835
|
|
(3.2)
|
Non-U.S.
Developed
|
2,157
|
|
2,478
|
|
(13.0)
|
|
(390)
|
|
2,547
|
|
2.8
|
|
|
4,485
|
|
5,079
|
|
(11.7)
|
|
(705)
|
|
5,190
|
|
2.2
|
Emerging
Markets
|
1,359
|
|
1,372
|
|
(0.9)
|
|
(66)
|
|
1,425
|
|
3.9
|
|
|
2,635
|
|
2,658
|
|
(0.9)
|
|
(101)
|
|
2,736
|
|
2.9
|
TOTAL
|
$ 7,585
|
|
$ 7,847
|
|
(3.3) %
|
|
$
(457)
|
|
$ 8,042
|
|
2.5 %
|
|
|
$
14,955
|
|
$
15,835
|
|
(5.6) %
|
|
$
(808)
|
|
$
15,763
|
|
(0.5) %
|
|
(1) U.S. includes the
United States and U.S. territories. Non-U.S. developed markets
include Japan, Australia, New Zealand, Korea, Canada, and the
countries of Western Europe. Emerging Markets include the countries
of the Middle East, Africa, Latin America, Eastern Europe, and the
countries of Asia that are not included in the non-U.S. developed
markets, as previously defined.
|
(2) The data in this
schedule has been intentionally rounded to the nearest million and,
therefore, may not sum.
|
(3) The currency impact
to revenue measures the change in revenue between current and prior
year periods using constant exchange rates.
|
(4) The three and six
months ended October 28, 2022 includes $25 million and $45
million, respectively, 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. When excluding the impact of currency and the inorganic
Intersect ENT revenue for three and six months ended October 28,
2022, revenue increased 2.2 percent organic and declined 0.7
percent organic, respectively.
|
MEDTRONIC
PLC
CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
|
|
|
Three months ended
|
|
Six months ended
|
(in millions, except per share
data)
|
October 28,
2022
|
|
October 29,
2021
|
|
October 28,
2022
|
|
October 29,
2021
|
Net sales
|
$
7,585
|
|
$
7,847
|
|
$
14,955
|
|
$
15,835
|
Costs and expenses:
|
|
|
|
|
|
|
|
Cost of products sold,
excluding amortization of intangible assets
|
2,535
|
|
2,497
|
|
5,051
|
|
5,095
|
Research and
development expense
|
676
|
|
676
|
|
1,368
|
|
1,426
|
Selling, general, and
administrative expense
|
2,617
|
|
2,615
|
|
5,184
|
|
5,163
|
Amortization of
intangible assets
|
421
|
|
431
|
|
844
|
|
866
|
Restructuring charges,
net
|
30
|
|
10
|
|
44
|
|
21
|
Certain litigation
charges, net
|
—
|
|
34
|
|
—
|
|
60
|
Other operating
(income) expense, net
|
(97)
|
|
21
|
|
(62)
|
|
781
|
Operating profit
|
1,404
|
|
1,563
|
|
2,528
|
|
2,422
|
Other non-operating
income, net
|
(109)
|
|
(66)
|
|
(192)
|
|
(177)
|
Interest
expense
|
118
|
|
136
|
|
282
|
|
273
|
Income before income taxes
|
1,395
|
|
1,493
|
|
2,438
|
|
2,326
|
Income tax provision
|
959
|
|
176
|
|
1,072
|
|
240
|
Net income
|
435
|
|
1,317
|
|
1,367
|
|
2,086
|
Net income attributable to noncontrolling
interests
|
(8)
|
|
(6)
|
|
(10)
|
|
(12)
|
Net income attributable to
Medtronic
|
$
427
|
|
$
1,311
|
|
$
1,356
|
|
$
2,074
|
Basic earnings per share
|
$
0.32
|
|
$
0.97
|
|
$
1.02
|
|
$
1.54
|
Diluted earnings per share
|
$
0.32
|
|
$
0.97
|
|
$
1.02
|
|
$
1.53
|
Basic weighted average shares
outstanding
|
1,329.4
|
|
1,345.1
|
|
1,329.4
|
|
1,344.8
|
Diluted weighted average shares
outstanding
|
1,332.0
|
|
1,355.3
|
|
1,333.3
|
|
1,355.9
|
|
The data in this
schedule has been intentionally rounded to the nearest million,
and, therefore, may not sum.
|
MEDTRONIC
PLC
GAAP TO NON-GAAP
RECONCILIATIONS(1)
(Unaudited)
|
|
|
Three months ended October 28,
2022
|
(in millions, except per share
data)
|
Net Sales
|
|
Cost of
Products Sold
|
|
Gross Margin
Percent
|
|
Operating
Profit
|
|
Operating Profit
Percent
|
|
Income Before
Income Taxes
|
|
Net Income
Attributable
to Medtronic
|
|
Diluted
EPS
|
|
Effective
Tax Rate
|
GAAP
|
$
7,585
|
|
$
2,535
|
|
66.6 %
|
|
$ 1,404
|
|
18.5 %
|
|
$ 1,395
|
|
$
427
|
|
$
0.32
|
|
68.7 %
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
associated costs (2)
|
—
|
|
(21)
|
|
0.3
|
|
95
|
|
1.3
|
|
95
|
|
76
|
|
0.06
|
|
20.0
|
Acquisition-related
items (3)
|
—
|
|
(13)
|
|
0.2
|
|
2
|
|
—
|
|
2
|
|
(6)
|
|
—
|
|
400.0
|
(Gain)/loss on minority
investments (4)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(11)
|
|
(11)
|
|
(0.01)
|
|
—
|
Medical device
regulations (5)
|
—
|
|
(22)
|
|
0.3
|
|
37
|
|
0.5
|
|
37
|
|
30
|
|
0.02
|
|
18.9
|
Amortization of
intangible assets
|
—
|
|
—
|
|
—
|
|
421
|
|
5.6
|
|
421
|
|
356
|
|
0.27
|
|
15.4
|
RCS impairments / costs
(6)
|
—
|
|
—
|
|
—
|
|
24
|
|
0.3
|
|
24
|
|
24
|
|
0.02
|
|
4.2
|
Exit of business
(7)
|
—
|
|
(26)
|
|
0.3
|
|
37
|
|
0.5
|
|
37
|
|
37
|
|
0.03
|
|
—
|
Certain tax
adjustments, net (8)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
793
|
|
0.60
|
|
—
|
Non-GAAP
|
$
7,585
|
|
$
2,454
|
|
67.6 %
|
|
$ 2,020
|
|
26.6 %
|
|
$ 1,999
|
|
$
1,725
|
|
$
1.30
|
|
13.3 %
|
Currency
impact
|
457
|
|
150
|
|
—
|
|
20
|
|
(1.2)
|
|
|
|
|
|
0.01
|
|
|
Currency Adjusted
|
$
8,042
|
|
$
2,604
|
|
67.6 %
|
|
$ 2,040
|
|
25.4 %
|
|
|
|
|
|
$
1.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended October 29,
2021
|
(in millions, except per share
data)
|
Net Sales
|
|
Cost of
Products Sold
|
|
Gross Margin
Percent
|
|
Operating
Profit
|
|
Operating Profit
Percent
|
|
Income Before
Income Taxes
|
|
Net Income
Attributable
to Medtronic
|
|
Diluted
EPS
|
|
Effective
Tax Rate
|
GAAP
|
$
7,847
|
|
$
2,497
|
|
68.2 %
|
|
$ 1,563
|
|
19.9 %
|
|
$ 1,493
|
|
$
1,311
|
|
$
0.97
|
|
11.8 %
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
associated costs (2)
|
—
|
|
(31)
|
|
0.4
|
|
77
|
|
1.0
|
|
77
|
|
62
|
|
0.05
|
|
19.5
|
Acquisition-related
items (3)
|
—
|
|
(5)
|
|
0.1
|
|
(13)
|
|
(0.2)
|
|
(13)
|
|
(15)
|
|
(0.01)
|
|
(15.4)
|
Certain litigation
charges
|
—
|
|
—
|
|
—
|
|
34
|
|
0.4
|
|
34
|
|
30
|
|
0.02
|
|
11.8
|
(Gain)/loss on minority
investments (4)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6
|
|
6
|
|
—
|
|
—
|
Medical device
regulations (5)
|
—
|
|
(15)
|
|
0.2
|
|
24
|
|
0.3
|
|
24
|
|
20
|
|
0.01
|
|
16.7
|
Amortization of
intangible assets
|
—
|
|
—
|
|
—
|
|
431
|
|
5.5
|
|
431
|
|
361
|
|
0.27
|
|
16.0
|
Certain tax
adjustments, net (9)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
16
|
|
0.01
|
|
—
|
Non-GAAP
|
$
7,847
|
|
$
2,447
|
|
68.8 %
|
|
$ 2,116
|
|
27.0 %
|
|
$ 2,052
|
|
$
1,792
|
|
$
1.32
|
|
12.4 %
|
|
See description of
non-GAAP financial measures contained in the press release dated
November 22, 2022.
|
(1)
|
The data in this
schedule has been intentionally rounded to the nearest million or
$0.01 for EPS figures, and, therefore, may not sum.
|
(2)
|
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 charges primarily
include business combination costs and changes in fair value of
contingent consideration.
|
(4)
|
We exclude unrealized
and realized gains and losses on our minority investments as we do
not believe that these components of income or expense have a
direct correlation to our ongoing or future business
operations.
|
(5)
|
The charges represent
incremental costs of complying with the new European Union (E.U.)
medical device regulations for previously registered products and
primarily include charges for contractors supporting the project
and other direct third-party expenses. We consider these costs to
be duplicative of previously incurred costs and/or one-time costs,
which are limited to a specific time period.
|
(6)
|
The charges
predominantly include impairments related to changes in the
carrying amount of the disposal group and other associated costs,
as a result of the anticipated sale of half of the Company's Renal
Care Solutions (RCS) business related to the May 25, 2022 agreement
with DaVita Inc.
|
(7)
|
The charges relate to
the exit of a business and are primarily comprised of
inventory write-downs.
|
(8)
|
The charge primarily
relates to a $764 million reserve adjustment that was a direct
result of the U.S. Tax Court opinion, issued on August 18, 2022, on
the previously disclosed litigation regarding the allocation of
income between Medtronic, Inc. and its wholly owned subsidiary
operating in Puerto Rico.
|
(9)
|
The charge includes the
amortization on previously established deferred tax assets from
intercompany intellectual property transactions.
|
MEDTRONIC
PLC
GAAP TO NON-GAAP
RECONCILIATIONS(1)
(Unaudited)
|
|
|
Six months ended October 28,
2022
|
(in millions, except per share
data)
|
Net Sales
|
|
Cost of
Products Sold
|
|
Gross Margin
Percent
|
|
Operating
Profit
|
|
Operating Profit
Percent
|
|
Income Before
Income Taxes
|
|
Net Income
attributable
to Medtronic
|
|
Diluted
EPS
|
|
Effective
Tax Rate
|
GAAP
|
$ 14,955
|
|
$
5,051
|
|
66.2 %
|
|
$ 2,528
|
|
16.9 %
|
|
$
2,438
|
|
$
1,356
|
|
$ 1.02
|
|
44.0 %
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
associated costs (2)
|
—
|
|
(41)
|
|
0.3
|
|
171
|
|
1.1
|
|
171
|
|
136
|
|
0.10
|
|
20.5
|
Acquisition-related
items (3)
|
—
|
|
(24)
|
|
0.2
|
|
38
|
|
0.3
|
|
38
|
|
23
|
|
0.02
|
|
36.8
|
(Gain)/loss on minority
investments (4)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(15)
|
|
(15)
|
|
(0.01)
|
|
—
|
Medical device
regulations (5)
|
—
|
|
(40)
|
|
0.3
|
|
70
|
|
0.5
|
|
70
|
|
56
|
|
0.04
|
|
20.0
|
Amortization of
intangible assets
|
—
|
|
—
|
|
—
|
|
844
|
|
5.6
|
|
844
|
|
715
|
|
0.54
|
|
15.3
|
RCS impairments / costs
(6)
|
—
|
|
—
|
|
—
|
|
99
|
|
0.7
|
|
99
|
|
97
|
|
0.07
|
|
2.0
|
Debt redemption premium
and other charges (7)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
53
|
|
42
|
|
0.03
|
|
20.8
|
Exit of business
(8)
|
—
|
|
(26)
|
|
0.2
|
|
37
|
|
0.2
|
|
37
|
|
37
|
|
0.03
|
|
—
|
Certain tax
adjustments, net (9)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
780
|
|
0.59
|
|
—
|
Non-GAAP
|
$ 14,955
|
|
$
4,921
|
|
67.1 %
|
|
$ 3,785
|
|
25.3 %
|
|
$
3,733
|
|
$
3,226
|
|
$ 2.42
|
|
13.3 %
|
Currency
impact
|
808
|
|
232
|
|
0.2
|
|
71
|
|
(0.8)
|
|
|
|
|
|
0.04
|
|
|
Currency Adjusted
|
$ 15,763
|
|
$
5,153
|
|
67.3 %
|
|
$ 3,856
|
|
24.5 %
|
|
|
|
|
|
$ 2.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended October 29,
2021
|
(in millions, except per share
data)
|
Net Sales
|
|
Cost of
Products Sold
|
|
Gross Margin
Percent
|
|
Operating
Profit
|
|
Operating Profit
Percent
|
|
Income Before
Income Taxes
|
|
Net Income
attributable
to Medtronic
|
|
Diluted
EPS
|
|
Effective
Tax Rate
|
GAAP
|
$ 15,835
|
|
$
5,095
|
|
67.8 %
|
|
$ 2,422
|
|
15.3 %
|
|
$
2,326
|
|
$
2,074
|
|
$ 1.53
|
|
10.3 %
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
associated costs (2)
|
—
|
|
(64)
|
|
0.4
|
|
159
|
|
1.0
|
|
159
|
|
128
|
|
0.09
|
|
19.5
|
Acquisition-related
items (3)
|
—
|
|
(9)
|
|
0.1
|
|
6
|
|
—
|
|
6
|
|
3
|
|
—
|
|
50.0
|
Certain litigation
charges
|
—
|
|
—
|
|
—
|
|
60
|
|
0.4
|
|
60
|
|
51
|
|
0.04
|
|
15.0
|
(Gain)/loss on minority
investments (4)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(25)
|
|
(22)
|
|
(0.02)
|
|
—
|
Medical device
regulations (5)
|
—
|
|
(26)
|
|
0.2
|
|
45
|
|
0.3
|
|
45
|
|
36
|
|
0.03
|
|
20.0
|
Amortization of
intangible assets
|
—
|
|
—
|
|
—
|
|
866
|
|
5.5
|
|
866
|
|
728
|
|
0.54
|
|
16.1
|
MCS impairments / costs
(10)
|
—
|
|
(58)
|
|
0.4
|
|
726
|
|
4.6
|
|
726
|
|
564
|
|
0.42
|
|
22.3
|
Certain tax
adjustments, net (11)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
69
|
|
0.05
|
|
—
|
Non-GAAP (1)
|
$ 15,835
|
|
$
4,938
|
|
68.8 %
|
|
$ 4,284
|
|
27.1 %
|
|
$
4,163
|
|
$
3,629
|
|
$ 2.68
|
|
12.6 %
|
|
See description of
non-GAAP financial measures contained in the press release dated
November 22, 2022.
|
(1)
|
The data in this
schedule has been intentionally rounded to the nearest million or
$0.01 for EPS figures, and, therefore, may not sum. Starting with
the quarter ended April 29, 2022, the Company will no longer adjust
non-GAAP financial measures for certain license payments for, or
acquisitions of, technology not approved by regulators due to
recent industry guidance from the U.S. Securities and Exchange
Commission. Historical non-GAAP financial measures presented in our
earnings release have been recast for comparability.
|
(2)
|
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 charges primarily
include business combination costs and changes in fair value of
contingent consideration.
|
(4)
|
We exclude unrealized
and realized gains and losses on our minority investments as we do
not believe that these components of income or expense have a
direct correlation to our ongoing or future business
operations.
|
(5)
|
The charges represent
incremental costs of complying with the new European Union (E.U.)
medical device regulations for previously registered products and
primarily include charges for contractors supporting the project
and other direct third-party expenses. We consider these costs to
be duplicative of previously incurred costs and/or one-time costs,
which are limited to a specific time period.
|
(6)
|
The charges
predominantly include non-cash pre-tax impairments, primarily
related to goodwill, and other associated costs, as a result of the
anticipated sale of half of the Company's Renal Care Solutions
(RCS) business related to the May 25, 2022 agreement with DaVita
Inc.
|
(7)
|
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.
|
(8)
|
The charges relate to
the exit of a business and are primarily comprised of
inventory write-downs.
|
(9)
|
The charge primarily
relates to a $764 million reserve adjustment that was a direct
result of the U.S. Tax Court opinion, issued on August 18, 2022, on
the previously disclosed litigation regarding the allocation of
income between Medtronic, Inc. and its wholly owned subsidiary
operating in Puerto Rico.
|
(10)
|
The charges relate to
the Company's June 2021 decision to stop the distribution and sale
of the Medtronic HVAD System within the Mechanical Circulatory
Support Operating Unit (MCS). The charges included $515 million of
non-cash impairments, primarily related to $409 million of
intangible asset impairments, as well as $211 million for
commitments and obligations in connection with the decision,
including customer support obligations, restructuring, and other
associated costs. Medtronic is committed to serving the needs of
patients currently implanted with the HVAD System.
|
(11)
|
The charge is
associated with a change in the company's permanently reinvestment
assertion on certain historical earnings and the amortization on
previously established deferred tax assets from intercompany
intellectual property transactions.
|
MEDTRONIC
PLC
GAAP TO NON-GAAP
RECONCILIATIONS(1)
(Unaudited)
|
|
|
Three months ended October 28,
2022
|
(in millions)
|
Net Sales
|
|
SG&A
Expense
|
|
SG&A Expense
as a % of
Net Sales
|
|
R&D Expense
|
|
R&D Expense
as a % of
Net Sales
|
|
Other Operating
Expense (Income), net
|
|
Other Operating
Expense, net as a % of
Net Sales
|
|
Other Non-Operating
(Income) Expense, net
|
GAAP
|
$ 7,585
|
|
$ 2,617
|
|
34.5 %
|
|
$ 676
|
|
8.9 %
|
|
$
(97)
|
|
(1.3) %
|
|
$
(109)
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
associated costs (2)
|
—
|
|
(43)
|
|
(0.6)
|
|
(2)
|
|
—
|
|
—
|
|
—
|
|
—
|
Acquisition-related
items (3)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11
|
|
0.1
|
|
—
|
Medical device
regulations (4)
|
—
|
|
(1)
|
|
—
|
|
(15)
|
|
(0.2)
|
|
—
|
|
—
|
|
—
|
RCS impairments / costs
(5)
|
—
|
|
(9)
|
|
(0.1)
|
|
—
|
|
—
|
|
(15)
|
|
(0.2)
|
|
—
|
Gain/(loss) on minority
investments (6)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11
|
Exit of business
(7)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(11)
|
|
(0.1)
|
|
—
|
Non-GAAP
|
$ 7,585
|
|
$ 2,563
|
|
33.8 %
|
|
$ 659
|
|
8.7 %
|
|
$
(112)
|
|
(1.5) %
|
|
$
(98)
|
Currency
impact
|
457
|
|
132
|
|
(0.3)
|
|
13
|
|
(0.3)
|
|
142
|
|
1.9
|
|
(4)
|
Currency Adjusted
|
$ 8,042
|
|
$ 2,695
|
|
33.5 %
|
|
$ 672
|
|
8.4 %
|
|
$
30
|
|
0.4 %
|
|
$
(102)
|
|
Six months ended October 28,
2022
|
(in millions)
|
Net Sales
|
|
SG&A
Expense
|
|
SG&A Expense
as a % of
Net Sales
|
|
R&D Expense
|
|
R&D Expense
as a % of
Net Sales
|
|
Other Operating
Expense (Income), net
|
|
Other Operating
Expense, net as a % of
Net Sales
|
|
Other Non-Operating
(Income) Expense, net
|
GAAP
|
$
14,955
|
|
$ 5,184
|
|
34.7 %
|
|
$
1,368
|
|
9.1 %
|
|
$
(62)
|
|
(0.4) %
|
|
$
(192)
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
associated costs (2)
|
—
|
|
(85)
|
|
(0.6)
|
|
(2)
|
|
—
|
|
—
|
|
—
|
|
—
|
Acquisition-related
items (3)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(13)
|
|
(0.1)
|
|
—
|
Medical device
regulations (4)
|
—
|
|
(1)
|
|
—
|
|
(29)
|
|
(0.2)
|
|
—
|
|
—
|
|
—
|
RCS impairments / costs
(5)
|
—
|
|
(16)
|
|
(0.1)
|
|
—
|
|
—
|
|
(82)
|
|
(0.5)
|
|
—
|
Gain/(loss) on minority
investments (6)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
15
|
Exit of business
(7)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(11)
|
|
(0.1)
|
|
—
|
Non-GAAP
|
$
14,955
|
|
$ 5,081
|
|
34.0 %
|
|
$
1,337
|
|
8.9 %
|
|
$
(169)
|
|
(1.1) %
|
|
$
(177)
|
Currency
impact
|
808
|
|
227
|
|
(0.3)
|
|
22
|
|
(0.3)
|
|
256
|
|
1.7
|
|
(6)
|
Currency Adjusted
|
$
15,763
|
|
$ 5,308
|
|
33.7 %
|
|
$
1,359
|
|
8.6 %
|
|
$
87
|
|
0.6 %
|
|
$
(183)
|
|
See description of
non-GAAP financial measures contained in the press release dated
November 22, 2022.
|
(1)
|
The data in this
schedule has been intentionally rounded to the nearest million,
and, therefore, may not sum.
|
(2)
|
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 charges primarily
include business combination costs and changes in fair value of
contingent consideration.
|
(4)
|
The charges represent
incremental costs of complying with the new European Union (E.U.)
medical device regulations for previously registered products and
primarily include charges for contractors supporting the project
and other direct third-party expenses. We consider these costs to
be duplicative of previously incurred costs and/or one-time costs,
which are limited to a specific time period.
|
(5)
|
The charges
predominantly include non-cash pre-tax impairments, primarily
related to goodwill, and other associated costs, as a result of the
anticipated sale of half of the Company's Renal Care Solutions
(RCS) business related to the May 25, 2022 agreement with DaVita
Inc.
|
(6)
|
We exclude unrealized
and realized gains and losses on our minority investments as we do
not believe that these components of income or expense have a
direct correlation to our ongoing or future business
operations.
|
(7)
|
Associated costs
related to the exit of a business.
|
MEDTRONIC
PLC
GAAP TO NON-GAAP
RECONCILIATIONS(1)
(Unaudited)
|
|
|
Six months ended
|
|
Six months ended
|
(in millions)
|
October 28, 2022
|
|
October 29, 2021
|
Net cash provided by operating
activities
|
$
2,005
|
|
$
3,061
|
Additions to property,
plant, and equipment
|
(749)
|
|
(649)
|
Free Cash Flow (2)
|
$
1,256
|
|
$
2,412
|
|
See description of
non-GAAP financial measures contained in the press release dated
November 22, 2022.
|
(1)
|
The data in this
schedule has been intentionally rounded to the nearest million,
and, therefore, may not sum.
|
(2)
|
Free cash flow
represents operating cash flows less property, plant, and equipment
additions.
|
MEDTRONIC
PLC
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
|
|
(in millions)
|
|
October 28, 2022
|
|
April 29, 2022
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
4,828
|
|
$
3,714
|
Investments
|
|
6,602
|
|
6,859
|
Accounts receivable,
less allowances and credit losses of $203 and $230,
respectively
|
|
5,626
|
|
5,551
|
Inventories,
net
|
|
5,055
|
|
4,616
|
Other current
assets
|
|
3,287
|
|
2,318
|
Total current assets
|
|
25,398
|
|
23,059
|
Property, plant, and
equipment
|
|
13,497
|
|
13,365
|
Accumulated
depreciation
|
|
(8,199)
|
|
(7,952)
|
Property, plant, and equipment,
net
|
|
5,298
|
|
5,413
|
Goodwill
|
|
40,417
|
|
40,502
|
Other intangible assets, net
|
|
15,655
|
|
15,595
|
Tax assets
|
|
3,350
|
|
3,403
|
Other assets
|
|
3,124
|
|
3,008
|
Total assets
|
|
$
93,241
|
|
$
90,981
|
LIABILITIES AND EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Current debt
obligations
|
|
$
5,864
|
|
$
3,742
|
Accounts
payable
|
|
2,198
|
|
2,276
|
Accrued
compensation
|
|
1,721
|
|
2,121
|
Accrued income
taxes
|
|
651
|
|
704
|
Other accrued
expenses
|
|
4,031
|
|
3,551
|
Total current liabilities
|
|
14,465
|
|
12,394
|
Long-term debt
|
|
20,753
|
|
20,372
|
Accrued compensation and retirement
benefits
|
|
1,048
|
|
1,113
|
Accrued income taxes
|
|
2,614
|
|
2,087
|
Deferred tax liabilities
|
|
871
|
|
884
|
Other liabilities
|
|
1,435
|
|
1,410
|
Total liabilities
|
|
41,184
|
|
38,260
|
Commitments and contingencies
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
Ordinary shares— par
value $0.0001, 2.6 billion shares authorized, 1,330,148,578
and
1,330,743,395 shares issued and outstanding,
respectively
|
|
—
|
|
—
|
Additional paid-in
capital
|
|
24,442
|
|
24,566
|
Retained
earnings
|
|
29,799
|
|
30,250
|
Accumulated other
comprehensive loss
|
|
(2,361)
|
|
(2,265)
|
Total shareholders' equity
|
|
51,880
|
|
52,551
|
Noncontrolling
interests
|
|
177
|
|
171
|
Total equity
|
|
52,057
|
|
52,722
|
Total liabilities and equity
|
|
$
93,241
|
|
$
90,981
|
|
The data in this
schedule has been intentionally rounded to the nearest million,
and, therefore, may not sum.
|
MEDTRONIC
PLC
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
Six months ended
|
(in millions)
|
|
October 28, 2022
|
|
October 29, 2021
|
Operating Activities:
|
|
|
|
|
Net income
|
|
$
1,367
|
|
$
2,086
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
1,339
|
|
1,347
|
Provision for credit
losses
|
|
41
|
|
34
|
Deferred income
taxes
|
|
(92)
|
|
(78)
|
Stock-based
compensation
|
|
199
|
|
209
|
Loss on debt
extinguishment
|
|
53
|
|
—
|
MCS asset impairment
and inventory write-down
|
|
—
|
|
515
|
Other, net
|
|
148
|
|
130
|
Change in operating
assets and liabilities, net of acquisitions and
divestitures:
|
|
|
|
|
Accounts receivable,
net
|
|
(346)
|
|
(171)
|
Inventories,
net
|
|
(784)
|
|
(156)
|
Accounts payable and
accrued liabilities
|
|
(14)
|
|
(446)
|
Other operating assets
and liabilities
|
|
94
|
|
(409)
|
Net cash provided by operating
activities
|
|
2,005
|
|
3,061
|
Investing Activities:
|
|
|
|
|
Acquisitions, net of
cash acquired
|
|
(1,867)
|
|
(91)
|
Additions to property,
plant, and equipment
|
|
(749)
|
|
(649)
|
Purchases of
investments
|
|
(3,743)
|
|
(5,311)
|
Sales and maturities
of investments
|
|
3,609
|
|
4,637
|
Other investing
activities, net
|
|
19
|
|
(79)
|
Net cash used in investing
activities
|
|
(2,731)
|
|
(1,493)
|
Financing Activities:
|
|
|
|
|
Change in current debt
obligations, net
|
|
349
|
|
—
|
Proceeds from
short-term borrowings (maturities greater than 90 days)
|
|
2,284
|
|
—
|
Issuance of long-term
debt
|
|
3,430
|
|
—
|
Payments on long-term
debt
|
|
(2,311)
|
|
(1)
|
Dividends to
shareholders
|
|
(1,807)
|
|
(1,693)
|
Issuance of ordinary
shares
|
|
153
|
|
274
|
Repurchase of ordinary
shares
|
|
(477)
|
|
(744)
|
Other financing
activities
|
|
443
|
|
(46)
|
Net cash provided by (used in) financing
activities
|
|
2,064
|
|
(2,210)
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
(223)
|
|
(51)
|
Net change in cash and cash
equivalents
|
|
1,114
|
|
(693)
|
Cash and cash
equivalents at beginning of period
|
|
3,714
|
|
3,593
|
Cash and cash equivalents at end of
period
|
|
$
4,828
|
|
$
2,900
|
|
|
|
|
|
Supplemental Cash Flow
Information
|
|
|
|
|
Cash paid
for:
|
|
|
|
|
Income
taxes
|
|
$
821
|
|
$
615
|
Interest
|
|
234
|
|
280
|
|
The data in this
schedule has been intentionally rounded to the nearest million,
and, therefore, may not sum.
|
About Medtronic
Bold thinking. Bolder actions. We are
Medtronic. Medtronic plc, headquartered in Dublin, Ireland, is the leading global
healthcare technology company that boldly attacks the most
challenging health problems facing humanity by searching out and
finding solutions. Our Mission — to alleviate pain, restore health,
and extend life — unites a global team of 95,000+ passionate people
across 150 countries. Our technologies and therapies treat 70
health conditions and include cardiac devices, surgical robotics,
insulin pumps, surgical tools, patient monitoring systems, and
more. Powered by our diverse knowledge, insatiable curiosity, and
desire to help all those who need it, we deliver innovative
technologies that transform the lives of two people every second,
every hour, every day. Expect more from us as we empower
insight-driven care, experiences that put people first, and better
outcomes for our world. In everything we do, we are engineering the
extraordinary. For more information on Medtronic (NYSE:MDT), visit
www.Medtronic.com and follow @Medtronic on Twitter and
LinkedIn.
FORWARD LOOKING STATEMENTS
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. In some cases, you can
identify these statements by forward-looking words or expressions,
such as "anticipate," "believe," "could," "estimate," "expect,"
"forecast," "intend," "looking ahead," "may," "plan," "possible,"
"potential," "project," "should," "going to," "will," and similar
words or expressions, the negative or plural of such words or
expressions and other comparable terminology. Actual results may
differ materially from anticipated results. Medtronic does not
undertake to update its forward-looking statements or any of the
information contained in this press release, including to reflect
future events or circumstances.
NON-GAAP FINANCIAL MEASURES
This press release
contains financial measures, including adjusted net income,
adjusted diluted EPS, and organic revenue, which are considered
"non-GAAP" financial measures under applicable SEC rules and
regulations. References to quarterly figures increasing, decreasing
or remaining flat are in comparison to fiscal year 2022.
Medtronic management believes that non-GAAP financial
measures provide information useful to investors in understanding
the company's underlying operational performance and trends and to
facilitate comparisons with the performance of other companies in
the med tech industry. Non-GAAP net income and diluted EPS exclude
the effect of certain charges or gains that contribute to or reduce
earnings but that result from transactions or events that
management believes may or may not recur with similar materiality
or impact to operations in future periods (Non-GAAP Adjustments).
Medtronic generally uses non-GAAP financial measures to facilitate
management's review of the operational performance of the company
and as a basis for strategic planning. Non-GAAP financial measures
should be considered supplemental to and not a substitute for
financial information prepared in accordance with U.S. generally
accepted accounting principles (GAAP), and investors are cautioned
that Medtronic may calculate non-GAAP financial measures in a way
that is different from other companies. Management strongly
encourages investors to review the company's consolidated financial
statements and publicly filed reports in their entirety.
Starting with the quarter ended April 29,
2022, the company no longer adjusts non-GAAP financial
measures for certain license payments for, or acquisitions of,
technology not approved by regulators. Historical non-GAAP
financial measures have been recast for comparability.
Reconciliations of the non-GAAP financial measures to the most
directly comparable GAAP financial measures are included in the
financial schedules accompanying this press release.
Medtronic calculates forward-looking non-GAAP financial
measures based on internal forecasts that omit certain amounts that
would be included in GAAP financial measures. For instance,
forward-looking organic revenue growth guidance excludes the impact
of foreign currency fluctuations, as well as significant
acquisitions or divestitures. Forward-looking diluted non-GAAP EPS
guidance also excludes other potential charges or gains that would
be recorded as Non-GAAP Adjustments to earnings during the fiscal
year. Medtronic does not attempt to provide reconciliations of
forward-looking non-GAAP EPS guidance to projected GAAP EPS
guidance because the combined impact and timing of recognition of
these potential charges or gains is inherently uncertain and
difficult to predict and is unavailable without unreasonable
efforts. In addition, the company believes such reconciliations
would imply a degree of precision and certainty that could be
confusing to investors. Such items could have a substantial impact
on GAAP measures of financial performance.
Contacts:
|
|
|
|
Erika Winkels
|
Ryan
Weispfenning
|
Public Relations
|
Investor
Relations
|
+1-763-526-8478
|
+1-763-505-4626
|
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SOURCE Medtronic plc