$2.50 Billion ($28.91B total)
Prior Fiscal: $2.65 Billion
Percentage Change: -6%
No. of Employees: 93,792 (total)
Global Headquarters: Dublin, Ireland
Geoffrey S. Martha, CEO
Omar Ishrak, Executive Chairman and Chairman of the Board
Karen L. Parkhill, EVP and CFO
Noel Colón, SVP, Chief Quality and Regulatory Affairs Officer
Richard E. Kuntz, M.D., M.SC., SVP, Chief Medical and Scientific Officer
Brett Wall, EVP and President, Restorative Therapies Group
Jacob Paul, SVP and President, Cranial & Spinal Technologies Division
Last year, Medtronic made a significant announcement with regard to a change in leadership. At the start of its next fiscal (which began April 27, 2020), the firm would have a new CEO in place. The previous chairman and CEO of the world’s largest medical device manufacturer—Omar Ishrak—would retire as its chief executive, but remain as part of the board as the newly created position of executive chairman as well as serving as chairman of the board. Ishrak held the CEO role for nine years, during which time Medtronic grew significantly.
“As Omar approaches the company’s mandatory executive officer retirement of 65 years of age next year, we have ensured Medtronic has the right leadership at the right time to advance its mission and deliver shareholder return through a seamless transition,” said Scott Donnelly, Medtronic’s lead director, and chairman, president, and CEO of Textron Inc. “The Board is extremely grateful to Omar for his outstanding leadership—as the company’s annual revenues have doubled and its market capitalization has increased by more than $100 billion during his tenure. We are confident Omar’s contributions to Medtronic will continue as executive chairman.”
During his tenure, Medtronic made the largest acquisition in medtech history when it bought Covidien in 2014 for $42.9 billion. The move was part of a redefined growth strategy that saw M&A used strategically to increase the company’s reach. Ishrak is also credited with inspiring the firm to embrace the concept of value-based healthcare, while also strengthening its position in emerging markets.
“Leading Medtronic as CEO is an honor and a privilege, and I know that Geoff is the right leader to take Medtronic to the next level of its growth and evolution. Geoff is a results-oriented, dynamic, and innovative business leader who is passionately committed to our mission, the advancement of our growth strategy, and the development and diversity of our people. I am confident he has the right track record, commitment, vision, and judgment to lead our company,” explained Ishrak.
The former CEO was referring to Geoff Martha, previously executive vice president (EVP) and president of the Restorative Therapies Group (RTG). Medtronic’s Board of Directors unanimously appointed Martha to assume the newly created role of president as of Nov. 1, 2019. He would also be made a member of the board as of the same date. Then, at the start of the new fiscal, he would move into the CEO role.
“I’ve had the pleasure of working closely with Omar throughout his tenure,” said Martha. “I think I speak for all of us when I say we are tremendously grateful for his leadership over the past nine years, and for his steadfast commitment to the Medtronic Mission. He has provided us with a solid foundation on which to continue the journey.”
ANALYST INSIGHTS: MDT continues to operate generally under four main business units, focusing on more than 30 chronic diseases. They continue with acquisitions in all four business units. The acquisition of Digital Surgery, a surgical AI company, earlier this year follows on the heels of their 2019 acquisitions of AV Medical, Titan spine, Klue, and EPIC Therapeutics. Look for this trend to continue as connected health and telehealth have accelerated their rapid rise further with the arrival of the COVID-19 pandemic. MDT sees this change happening and will not be left behind.
—Mark Bonifacio, President, BCS LLC
Martha joined the organization in 2011 and was named EVP and president of Medtronic’s RTG in 2015. He reorganized the group around key therapy areas and helped to restore consistent sales growth. Martha oversaw a record performance in fiscal year 2019, contributing more than $8 billion in revenue to the firm. During the same period, the $2 billion quarterly average represented historic highs for the company.
Also moving into a new position, Brett Wall, who had been senior vice president and president of the Brain Therapies division of RTG (which is also home to the Spine division), was promoted to EVP and group president of RTG in November. Wall made his way to Medtronic via the Covidien purchase, where he was president of Neurovascular and International. His 25 years of industry experience has seen him in roles including senior sales, marketing, and operational leadership positions with ev3, Boston Scientific, and C.R. Bard.
These moves were announced during a time marred by Medtronic’s first down fiscal period in some time. The organization dropped from its previous record revenue high of $30.56 billion in its 2019 fiscal—the first time a medical device manufacturer topped the $30 billion mark. In 2020’s fiscal, all businesses and segments saw decreases with one exception to finish the period at $28.91 billion. The tally was just slightly above the revenue total for the firm’s 2016 fiscal.
The segment most directly impacted by the aforementioned leadership moves, RTG, shrank 6 percent overall to tally $7.73 billion. Responsible for devices and therapies indicated for the treatment of neurological disorders and diseases, as well as surgical technologies designed to improve the precision and workflow of neuro procedures, Brain Therapies withdrew by 1 percent to finish at $2.92 billion. The Specialty Therapies business delivers products and therapies to treat diseases of the ear, nose, and throat, as well as help control the systems of overactive bladder, urinary retention, and chronic fecal incontinence. It wrapped up the term with $1.19 billion in revenue, a 9 percent loss. Pain Therapies had the most dramatic decrease in the segment with a 14 percent fall. The $1.11 billion in sales was for technologies including spinal cord stimulation systems, implantable drug infusion systems for chronic pain, and interventional products.
The last segment of RTG is the Spine division. This sector, which develops and sells medical devices and implants used in the treatment of the spine and musculoskeletal system, fell 6 percent in the latest fiscal to complete the period at $2.5 billion. According to the company’s fiscal report, much of this was attributed to the COVID-19 pandemic and a decrease in spending on products within the Spine division.
ANALYST INSIGHTS: Wall street continues it’s positive outlook on MDT, despite the well documented COVID-19-related slowing in elective procedures, which has had a short term effect. MDT has made it clear they will continue to invest both organically and inorganically in order to keep pace with the rapidly changing landscape in our post COVID-19 world.
—Mark Bonifacio, President, BCS LLC
In an attempt to add support to the Spine division, Medtronic announced in May 2019 it had entered into an agreement to acquire Titan Spine. The firm to be purchased was a privately held titanium spine interbody implant and surface technology company. The products were used in spinal fusion procedures.
Jacob Paul, senior vice president and president of the Spine division, said, “Titan Spine has pioneered the spine implant surface technology category over the past several years. We feel that surface-enhanced titanium implants combined with our comprehensive biologics portfolio can have a positive impact on patient outcomes in spinal procedures.”
While the deal closed in late June of the same year, the financial details of the purchase were not disclosed.
Meanwhile, Big Blue was pleased with the results of another transaction it made during a previous fiscal period. “It’s only beginning to pay off,” then CEO Omar Ishrak told Jim Cramer (of “Mad Money”) at the 2020 J.P. Morgan Healthcare Conference in San Francisco. “We’re delighted with the results that we’re seeing and our spine business this last year—ever since I’ve been here—has had its strongest year, and the robot has played a big role in that.”
ANALYST INSIGHTS: With Geoff Marta taking over at CEO at MDT, don’t expect much to change as Omar Ishrak (former CEO) remains as executive chairman. MDT will continue to focus on growth across their platforms, both inorganically and organically. The COVID impacts will quickly be in their rearview mirror.
—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors
Unfortunately, not all the news around the company’s spinal robotic system was positive. In December 2019, the company issued an Urgent Field Safety Notice regarding its Mazor X system. The warning was with regard to a part of the system unlocking once securely positioned in place. The firm had received seven complaints of the issue occurring, triggering the response. Fortunately, there were no reports of patient injury as a result, and Medtronic issued a temporary fix while developing a permanent solution.
The organization also announced a new clinical trial to study the use of its Infuse Bone Graft in transforaminal lumbar interbody fusion procedures. A successful result of the study could lead to broader clinical and scientific evidence regarding the use of Infuse, which has been available since 2002.
Q4 2020 Revenue: $6.0 billion (ended April 24, 2020)
Q4 2019 Revenue: $8.1 billion (ended April 26, 2019)
Percentage Change: -26%
That’s not to say, however, that Medtronic hasn’t been quite active in lending its assistance in whatever ways it could in battling the virus. In a surprising yet generous move, the firm made the full design specifications, including manuals, design documents, and software code, open-source. This enabled anyone to access the files for the Puritan Bennett (PB) 560 portable ventilator in order to manufacture it. The unit had originally been introduced in 2010 and offers a compact design, enabling easy portability.
In a related story, the company also announced it’s team-up with Foxconn Industrial Internet, a business group within Foxconn Technology Group, to produce 10,000 of the PB560 ventilators. Foxxconn passed the regulatory and quality requirements of Medtronic to enable it to manufacture the units for the medtech firm. The arrangement has the units being produced in Foxconn’s Wisconn Valley Science and Technology Park in Mount Pleasant, Wis., while they would be marketed and sold by Medtronic. The partnership was established as a direct result of Medtronic’s ventilator open source initiative.
These efforts are in addition to the company stating in March that it had increased ventilator production by 40 percent and was attempting to double its capacity to manufacture the device.
Further, the organization also launched two solutions from its Medtronic Care Management Services (MCMS) business, each designed to help assess, monitor, and triage support for patients who may be concerned about COVID-19. One was the Respiratory Infectious Disease Health Check, which was offered to existing MCMS customers. The second was a new COVID-19 Virtual Care Evaluation and Monitoring solution Medtronic made available to U.S. health systems, health plans, and employers. The latter offering uses a virtual assistant to evaluate patients through a CDC guideline-based survey for COVID-19 symptoms.