Medtronic Investor Meeting - Omar Ishrak
Transcript of Medtronic Investor Meeting - Omar Ishrak
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INVESTOR DAYJUNE 6, 2016NEW YORK CITY
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OMAR ISHRAKCHAIRMAN & CEO
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FORWARD LOOKING STATEMENT
This presentation contains forward-looking statements which provide current expectations or forecasts, includingrelating to market and sales growth, growth strategies, financial results, use of free cash flow, product developmintroduction, partnerships, regulatory matters, restructuring initiatives, mergers/acquisitions/divestitures and related ef
accounting estimates, financing activities, working capital adequacy, competitive strengths and sales efforts. They aron current assumptions and expectations that involve uncertainties or risks. These uncertainties and risks include, but limited to, those described in our periodic reports on file with the U.S. Securities and Exchange Commission (SEresults may differ materially from anticipated results. Forward-looking statements are made as of today's date,undertake no duty to update them or any of the information contained in this presentation.
Financial Data
Certain information in this presentation includes calculations or figures that have been prepared internally and have reviewed or audited by our independent registered public accounting firm. Use of different methods for preparing, caor presenting information may lead to differences and such differences may be material. This presentation also contaiGAAP financial measures such as free cash flow and historical revenue on a comparable constant currency basis, whistorical data of Medtronic and Covidien, aligns Covidien’s prior year monthly revenue to Medtronic’s fiscal qadjusts for the impact of foreign currency translation. We believe these measures provide a useful way to evaunderlying performance. Detail concerning how all non-GAAP measures are calculated, including all non-GAAreconciliations, are posted to our website.
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THE MEDTRONIC MISSIONTENET ONE
“To contribute to human welfareby application of biomedicalengineering in the research,design, manufacture, and sale ofinstruments or appliances thatalleviate pain, restore health, andextend life .”
Medtronic is a technology company and one that is dedicatedto improving patient outcomes
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Innovation
Size / Scale
Profitability
Consistency
WHY INVEST IN MEDTRONIC?
$40 BFree Cash Flow
Next 5 Years
CashAccessibility
DisciplinedAllocator
ReturnsFocused
$
2Return toMedtronicDifferentiators
MedtronicDifferentiators
N
$M&A and
$1Finan
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LAST 5 YEARS: ADDED NEW CAPABILITIESEXECUTING ON A BROADENED, MORE SUSTAINABLE GROWTH
THERAPY INNOVATION: Improved R&D productivity to create newmarkets and reinvigorate growth
GLOBALIZATION: Expanded our global reach to realize themassive emerging market opportunity
ECONOMIC VALUE:Redefined the business to broaden ourscope beyond devices
Created a runway for strong operating leverageover next 5+ years, supplemented by financialleverage
Significantly enhanced our accessible cashgeneration capabilities to generate moreinvestment power and returns for shareholders
REVENUEGROWTH
EPSLEVERAGE
CAPITALALLOCATION
B U S I N E S S
G E O G R A P H Y
FY1
INCREASED
INCREAS
LARGER
FinancialLeverage
OperatingLeverage
TrappedFCF
AccessibleFCF
$15.9
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LAST 5 YEARS: EXECUTED ON THE LARGEST ACQUISITION IN MEDTECH H
Delivering on CommitmentsMade at Deal Announcement
Preserving and accelerating corestrategies: Therapy Innovation,Globalization & Economic Value
Offering a more comprehensiveand competitive growth platform
Diversifying revenue mix
Capturing operational synergies
Accretive to FY16 cash EPS andsignificantly accretive thereafter
Increasing access to capital andoptimizing shareholder returnsthrough deployment flexibility
Preserve
Accelerate
Op
Tra
Maintaining businessmomentum at bothcompanies while deliveringconsecutive quarters ofstrong businessperformance.
Integsystemfacilioursegrowt
Delivhealth
Alignemerpaym
Partnstake
Realizing synergyopportunities for Covidien’sPeripheral Vascular andNeurovascular divisions.
Increasing capitaldeployment and access to“trapped” cash.
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0.0%
2.0%
4.0%
6.0%
8.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Constant currency. Q1 FY11 and Q1 FY16 adjusted for extra week impact. Q4FY15 through Q3 FY16 on a comparable basis.Non-GAAP EPS on a constant currency basis. Leverage rounded to the nearest 50bps.FCF is operating cash flow minus capital expenditures. Adjusted for litigation payments.
NON-GAAP EPS 2 & LEVERAGE
ADJUSTED FREE CASH FLOW 3 & RETURN
$3.00$3.50$4.00$4.50
FY11 FY12 FY13 FY14 FY15Billions
REVENUE GROWTH 1 (Y/Y)
FY11 FY12 FY13 FY14 FY15
+6.0% +4.0% +4.5% +2.0% +1.0%
02,5005,0007,500
FY11 FY12 FY13 FY14 FY15
400 bps of ccleverage
200bps 400bps
400bps 100bps
= Returned to shareholders.
-3.5%
LAST 5 YEARS: IMPROVED REVENUE, EPS, AND FREE CASH FLOW GROWT
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Total
LowtDividend Yield
Low-Single Digits
EPS GrowthDouble Digits
MEDTRONIC GROWTH MODELEXPECT TO GENERATE STRONG TOTAL SHAREHOLDER RETURN
All growth rates and leverage targets given on a constant-currency basis.
Revenue GrowthMid-Single Digits
Financial LeverageLow-Single Digits
Operating LeverageLow to Mid-Single
Digits
Therapy Innovation
Services & Solutions
Emerging Markets
Interest Income
Share Repurchases
Tax
Covidien Synergies
G&A Leverage
COGS Reduction
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TODAY’S AGENDACREATING LONG-TERM VALUE IN HEALTHCARE
MorningTwo15 minute
breaks
Afternoon
Lunch
Focus Grou
Revenue Growth
Margin Expansion
Free Cash Flow &Capital Allocation
Session
CVG RTG
TherapyInnovation
Globalization
Economic Value
Americas EMEA China Asia Pacific
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REVENUE GROWTHABOVE MARKET,CONSISTANT, RELIABLE
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UNIVERSAL HEALTHCARENEEDS:
PERPETUAL SOURCE OF OPPORTUNITY
MEDTRONIC STRATEGIES TOCAPTURE GROWTH:
THREEGROWT
Improve Clinical Outcomes
Expand Access
Optimize Cost & Efficiency
New 200
Emergi
150
Services40
DIVERSIFIED SOURCES OF REVENUE GROWTHCOMMITTED TO SUSTAINABLE MID-SINGLE DIGIT TOPLINE GRO
Therapy Innovation
Globalization
Economic Value
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THERAPY INNOVATION
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FOCUSED NEW THERAPIES ARE KEY TO SUSTAINABLE MID SINGLE DIGI
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FOCUSED: NEW THERAPIES ARE KEY TO SUSTAINABLE MID-SINGLE DIGI
Cardiac & VascularGroup
Minimally InvasiveTherapies Group
RestorativeTherapies Group
FY17
FY16
FY18
FY19
FY20 &Beyond
MicraTM (EU / US)
Visia AF MRITM (US)
Drug Filled Stents (EU)
Resolute ONYXTM (US)
CoreValve EvolutTM R XL(EU & US)
AzureTM (EU)
IN.PACT® Admiral® (US)
Polaris (US / EU)LINQ IITM
CoreValve EvolutTM PRO
>80 product launchesover the next 3 yearsgenerating ~$4B in
cumulative revenue fromnew products by FY21
SigniaTM
PoweredStapler
ValleylabTM FT10
Robotics Platform
Renal Solutions
NextGenO-Arm®
Stealth-Midas®v
Medina Embolization (US)
IntellisTM RC
Atlantis EssentialsTM Anterior Cervical Plate
Valiant ® Evo
Harmo
3T MRITM Pacing (US)
Evera MRITM ICD (US)
IntrepidTMTMVRExtravascular ICD
Stealth-Connect ®
Cranial Robot4th Generation
Pipeline
DBS PC/RC with Sensing
DBS Lead Refresh
Solitaire
Platinum®
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WHAT YOU WILL HEAR NEXT
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DIABETES
WHAT YOU WILL HEAR NEXTTHERAPY INNOVATION DRIVING GROWTH ACROSS GROUPS
CVG
RTG
MITG
Sustainable Therapy Innovation across allbusinesses driven by changes in culture,structure, and processes.
Changes to structure and talent willreinvigorate Therapy Innovation anddeliver meaningful innovation through aconsistent cadence of new products.
Committed to moving from type 1 pump & sensor coglobal, holistic diabetes mbusiness focused on outcomes
Bringing less invasive soimprove patient outcomes whon high growth submarket~80 new products over the ne