07.22.14
$16.59 Billion
KEY EXECUTIVES:
Omar Ishrak, Chairman and CEO
Michael J. Coyle, Exec. VP & Group President, Cardiac and Vascular Group
Christopher J. O’Connell, Exec. VP & Group President, Restorative Therapies Group
Richard Kuntz, M.D., Sr. VP & Chief Scientific, Clinical and Regulatory Officer
Gary L. Ellis, Sr. VP & Chief Financial Officer
Geoffrey S. Martha, Sr. VP, Strategy and Business Development
Stephen N. Oesterle, M.D., Sr. VP, Medicine and Technology
Catherine M. Szyman, Sr. VP, Diabetes
Luann M. Pendy, Ph.D., VP, Global Quality
NO. OF EMPLOYEES: 46,000
GLOBAL HEADQUARTERS: Minneapolis, Minn.
Three seconds. It’s become the go-to metric lately for decision-making, website loading, first impressions, and love declarations. Scientific research also has shown the timespan can effectively distract the human mind and spoil productivity.
Medtronic Inc. has long used the clock to measure its own success, gauging its annual progress not only in dollars but in moments of time as well. In FY13 (ended April 26, 2013), the company improved upon its mission to alleviate pain, restore health and extend lives by gaining an additional second, impacting millions of patients worldwide.
“As I reflect on our results, I am pleased to announce that we have achieved an important milestone in our Mission: Every three seconds, someone somewhere in the world benefits from a Medtronic product,” Chairman/CEO Omar Ishrak told shareholders at the end of his fiscal 2013 annual report. “Over the past 12 years, we have lowered this metric by seven seconds, which impacts millions of additional lives, an enormous accomplishment.”
Enormous, indeed: Medtronic’s three-second product benefit metric translates into 18.19 patients per minute, 26,197 per day and 9.562 million for FY13—or the entire population of New York City “and then some.”
The company’s fiscal-year accomplishments weren’t too shabby either—sales jumped 2.5 percent (5 percent on a constant currency basis) to $16.6 million and non-GAAP diluted earnings per share grew 8 percent to $3.75, or 300 basis points faster than revenue. In addition, Medtronic generated $4.4 billion of free cash flow, roughly half of which was used to distribute more than $1 billion in dividends and repurchase more than $1.2 billion of common stock.
International sales were particularly solid, rising 7 percent on a constant currency basis (2 percent as reported), with revenue in emerging markets (Brazil, Russia, India, China) surging 17 percent, according to the company’s annual report. In the fourth quarter of FY13, emerging markets generated 12 percent of revenue—a testament, no doubt, to Ishrak’s laser-like focus on BRIC economies.
That focus intensified in fiscal 2013 with the $816 million acquisition of orthopedic implant maker China Kanghui Holdings Inc. and $66.2 million investment (for a 26.4 percent stake) in LifeTech Scientific Corporation, a Shenzhen, China-based manufacturer of minimally invasive cardiovascular and peripheral vascular disease treatment devices. The latter deal gave Medtronic the right to distribute LifeTech products and buy additional shares of the company upon the achievement of specific financial and/or developmental milestones.
“China is key to our global strategy as we continue to expand our geographic footprint and strive to meet the needs of local cardiovascular patients, and this agreement reaffirms our commitment to this important market,” Mike Coyle, executive vice president and president of Medtronic’s Cardiac and Vascular business group, said when the LifeTech deal was announced.
Another affidavit of Medtronic’s commitment to the Chinese market coincided with the August 2012 opening of its Shanghai Innovation Center—the firm’s first research and development facility outside the United States and Europe. The move fulfills Ishrak’s vow to create local product R&D in China and increases its local engineering staff to more than 250 total.
Medtronic has pledged to hire and train an additional 1,000 skilled workers in China over the next five years, several hundreds of whom will develop new medical technologies within the Innovation Center. The facility also will function as an incubator for Chinese doctors to commercialize novel ideas into clinical solutions.
“We are far from finished in growing our international capabilities and footprint,” Ishrak said in the firm’s FY13 annual report. “Our primary near-term focus is to capitalize on the enormous opportunity in the global premium segment, which we have identified as a $5 billion annual opportunity. We will continue to pursue this opportunity by driving penetration of our existing and new therapies, raising patient and physician awareness of our offerings, and supporting the development of infrastructure and training of physicians where necessary.”
Ishrak certainly delivered on his near-term promise, further infiltrating foreign and domestic markets with the FY13 launches of the Resolute Integrity drug-eluting stent (for coronary artery disease treatment) in Japan, the Advisa MRI pacemaker (for abnormally slow heart rhythm) in the United States and Japan, the RestoreSensor SureScan MRI spinal cord stimulation system (for chronic pain) in Europe and the CD Horizon Solera spinal implants/surgical instruments in the United States and other global markets.
Resolute’s Japanese debut as well as its U.S. market penetration—it was launched in the fourth quarter of FY12—propelled Medtronic’s coronary device sales 11 percent to $1.7 billion in fiscal 2013. The Coronary and Endovascular business posted the highest profits in the company’s Cardiac and Vascular Group, which itself grew 3 percent to $8.6 billion due to strong sales of coronary, endovascular and atrial fibrillation products. Endovascular unit sales jumped 11 percent to $867 million, while atrial fibrillation device revenue soared 17 percent to $243 million and Structural Heart business proceeds rose 4 percent to $1.1 billion.
Those gains were somewhat offset by pricing pressures, declining growth rates in Western Europe beginning in the third fiscal quarter of 2013 and lower sales of defibrillation systems, pacing systems and cardiac rhythm disease management (CRDM) products.
Despite showing signs of stabilization in FY13, and slightly higher U.S. procedure volumes, CRDM unit sales fell 2 percent to $4.9 billion. Executives attribute the decline to unfavorable foreign currency exchange rates and weak defibrillation system sales due to increased competition and pricing pressures in the United States and Western Europe. Still, the company managed to cap its defibrillation system revenue loss at 2 percent (slipping to $2.7 billion) through solid sales of its shock reduction and lead integrity alert technologies, the Viva/Brava portfolio of cardiac resynchronization therapy with defibrillation (CRT-D) devices, increasing lead-to-port ratios and share gains. The Viva/Brava CRT-D product family features a new algorithm called AdaptivCRT, which improves patients’ response rates to CRT-D therapy by preserving their normal heart rhythms and continuously adapting to individual patient needs, according to Medtronic.
Foreign exchange rates, pricing pressures and declining U.S. implant volumes proved too strong an obstacle to offset with international share gains realized through the Japanese launch of the Advisa DR MRI SureScan pacemaker in the second quarter. As a result, pacing system sales fell 4 percent to $1.9 billion.
Executives attributed the growth in atrial fibrillation revenue to the continued global acceptance of the Arctic Front Cardiac CryoAblation Catheter system, while Structural Heart’s net gain was linked to strong sales of transcatheter aortic heart valves and growth in the company’s cardiopulmonary product lines.
Endovascular unit sales were driven by new product launches, including the Endurant Abdominal Aortic Aneurysm Stent Graft System (in Japan), and the Valiant Captivia Thoracic Stent Graft System, which debuted in the United States in the fourth quarter of FY12 and in Japan and China in Q1 of fiscal 2013. Strong worldwide sales of peripheral stent products and drug-eluting balloons also contributed to the growth.
Results in Medtronic’s Restorative Therapies Group practically mirrored its sister unit, with gains in three divisions counteracting losses in one. The black sheep in this group was the Spine division, where sales slid 4 percent to $3.1 billion due to revenue declines in bone morphogenic protein (BMP) and core spine products.
Also like its sister, Restorative Therapies Group sales were negatively impacted by unfavorable foreign exchange rates, pricing pressures and increased competition. But the Restorative Group still managed to grow revenues 3 percent to $7.8 billion due to strong sales in its Surgical Technologies, Neuromodulation, and Diabetes units.
Surgical Technologies unit profits ballooned 14 percent to $1.4 billion thanks to robust sales of capital equipment, including O-arm imaging and StealthStation S7 surgical navigation systems, Midas Rex powered surgical equipment, and Advanced Energy products, namely the Aquamantys bipolar sealers and PEAK PlasmaBlade electrosurgical devices. Net sales in the unit also were positively affected by balanced growth of disposables and service revenue in Medtronic’s neurosurgery and ENT (ear, nose, throat) businesses.
Neuromodulation sales increased 7 percent to $1.8 billion, driven primarily by the continued U.S. adoption of RestoreSensor spinal cord stimulator, new implant growth of Activa DBS system for movement disorder, and solid demand for InterStim Therapy devices to treat bladder, urinary and bowel conditions. Sales were particularly strong in Western Europe, where the SureScan spinal cord stimulation system is approved for full-body magnetic resonance imaging scans.
Strong international sales of the Paradigm Veo insulin pump and the Enlite CGM sensor drove a 3 percent gain in diabetes net sales ($1.5 billion), the growth was partially offset by a decline in U.S. insulin pump sales as the company awaits approval of its MiniMed 530G device.
The culprits in Spine’s FY13 slide fell victim to the usual setbacks—pricing/competitive pressures, a challenging reimbursement environment in certain markets and unfavorable foreign exchange rates. Bigwigs attributed the 2 percent decline in core spine sales ($2.6 billion) to weak demand for balloon kyphoplasty procedures (BKP), minimally invasive surgery to repair spinal fractures. The loss in core spine profits was partially offset (but not enough to prevent an overall decrease, obviously) by the introductions of AMT implants, the Capstone Control, and Bryan ACD Instrument Set as well as the continued adoption of Solera, Atlantis Vision Elite, and other biologics products. A further sales slide was prevented with Medtronic’s focus on enabling technologies, including O-Arm imaging, StealthStation surgical navigation, and Powerease powered surgical instruments.
Medtronic’s BMP products suffered from weak demand as well; sales plummeted 15 percent to $528 million as fallout continued over the Infuse bone graft controversy. The company has yet to shake the 3-year-old scandal that erupted with a scathing series of Spine Journal articles that accused the multinational firm of bribing doctors to under-report risks associated with the product.
Around the same time, a U.S. Senate report claimed various studies promoting the bioengineered synthetic bone graft substance likely were biased because they were written by Medtronic employees.
KEY EXECUTIVES:
Omar Ishrak, Chairman and CEO
Michael J. Coyle, Exec. VP & Group President, Cardiac and Vascular Group
Christopher J. O’Connell, Exec. VP & Group President, Restorative Therapies Group
Richard Kuntz, M.D., Sr. VP & Chief Scientific, Clinical and Regulatory Officer
Gary L. Ellis, Sr. VP & Chief Financial Officer
Geoffrey S. Martha, Sr. VP, Strategy and Business Development
Stephen N. Oesterle, M.D., Sr. VP, Medicine and Technology
Catherine M. Szyman, Sr. VP, Diabetes
Luann M. Pendy, Ph.D., VP, Global Quality
NO. OF EMPLOYEES: 46,000
GLOBAL HEADQUARTERS: Minneapolis, Minn.
Three seconds. It’s become the go-to metric lately for decision-making, website loading, first impressions, and love declarations. Scientific research also has shown the timespan can effectively distract the human mind and spoil productivity.
Medtronic Inc. has long used the clock to measure its own success, gauging its annual progress not only in dollars but in moments of time as well. In FY13 (ended April 26, 2013), the company improved upon its mission to alleviate pain, restore health and extend lives by gaining an additional second, impacting millions of patients worldwide.
“As I reflect on our results, I am pleased to announce that we have achieved an important milestone in our Mission: Every three seconds, someone somewhere in the world benefits from a Medtronic product,” Chairman/CEO Omar Ishrak told shareholders at the end of his fiscal 2013 annual report. “Over the past 12 years, we have lowered this metric by seven seconds, which impacts millions of additional lives, an enormous accomplishment.”
Enormous, indeed: Medtronic’s three-second product benefit metric translates into 18.19 patients per minute, 26,197 per day and 9.562 million for FY13—or the entire population of New York City “and then some.”
The company’s fiscal-year accomplishments weren’t too shabby either—sales jumped 2.5 percent (5 percent on a constant currency basis) to $16.6 million and non-GAAP diluted earnings per share grew 8 percent to $3.75, or 300 basis points faster than revenue. In addition, Medtronic generated $4.4 billion of free cash flow, roughly half of which was used to distribute more than $1 billion in dividends and repurchase more than $1.2 billion of common stock.
International sales were particularly solid, rising 7 percent on a constant currency basis (2 percent as reported), with revenue in emerging markets (Brazil, Russia, India, China) surging 17 percent, according to the company’s annual report. In the fourth quarter of FY13, emerging markets generated 12 percent of revenue—a testament, no doubt, to Ishrak’s laser-like focus on BRIC economies.
That focus intensified in fiscal 2013 with the $816 million acquisition of orthopedic implant maker China Kanghui Holdings Inc. and $66.2 million investment (for a 26.4 percent stake) in LifeTech Scientific Corporation, a Shenzhen, China-based manufacturer of minimally invasive cardiovascular and peripheral vascular disease treatment devices. The latter deal gave Medtronic the right to distribute LifeTech products and buy additional shares of the company upon the achievement of specific financial and/or developmental milestones.
“China is key to our global strategy as we continue to expand our geographic footprint and strive to meet the needs of local cardiovascular patients, and this agreement reaffirms our commitment to this important market,” Mike Coyle, executive vice president and president of Medtronic’s Cardiac and Vascular business group, said when the LifeTech deal was announced.
Another affidavit of Medtronic’s commitment to the Chinese market coincided with the August 2012 opening of its Shanghai Innovation Center—the firm’s first research and development facility outside the United States and Europe. The move fulfills Ishrak’s vow to create local product R&D in China and increases its local engineering staff to more than 250 total.
Medtronic has pledged to hire and train an additional 1,000 skilled workers in China over the next five years, several hundreds of whom will develop new medical technologies within the Innovation Center. The facility also will function as an incubator for Chinese doctors to commercialize novel ideas into clinical solutions.
“We are far from finished in growing our international capabilities and footprint,” Ishrak said in the firm’s FY13 annual report. “Our primary near-term focus is to capitalize on the enormous opportunity in the global premium segment, which we have identified as a $5 billion annual opportunity. We will continue to pursue this opportunity by driving penetration of our existing and new therapies, raising patient and physician awareness of our offerings, and supporting the development of infrastructure and training of physicians where necessary.”
Ishrak certainly delivered on his near-term promise, further infiltrating foreign and domestic markets with the FY13 launches of the Resolute Integrity drug-eluting stent (for coronary artery disease treatment) in Japan, the Advisa MRI pacemaker (for abnormally slow heart rhythm) in the United States and Japan, the RestoreSensor SureScan MRI spinal cord stimulation system (for chronic pain) in Europe and the CD Horizon Solera spinal implants/surgical instruments in the United States and other global markets.
Resolute’s Japanese debut as well as its U.S. market penetration—it was launched in the fourth quarter of FY12—propelled Medtronic’s coronary device sales 11 percent to $1.7 billion in fiscal 2013. The Coronary and Endovascular business posted the highest profits in the company’s Cardiac and Vascular Group, which itself grew 3 percent to $8.6 billion due to strong sales of coronary, endovascular and atrial fibrillation products. Endovascular unit sales jumped 11 percent to $867 million, while atrial fibrillation device revenue soared 17 percent to $243 million and Structural Heart business proceeds rose 4 percent to $1.1 billion.
Those gains were somewhat offset by pricing pressures, declining growth rates in Western Europe beginning in the third fiscal quarter of 2013 and lower sales of defibrillation systems, pacing systems and cardiac rhythm disease management (CRDM) products.
Despite showing signs of stabilization in FY13, and slightly higher U.S. procedure volumes, CRDM unit sales fell 2 percent to $4.9 billion. Executives attribute the decline to unfavorable foreign currency exchange rates and weak defibrillation system sales due to increased competition and pricing pressures in the United States and Western Europe. Still, the company managed to cap its defibrillation system revenue loss at 2 percent (slipping to $2.7 billion) through solid sales of its shock reduction and lead integrity alert technologies, the Viva/Brava portfolio of cardiac resynchronization therapy with defibrillation (CRT-D) devices, increasing lead-to-port ratios and share gains. The Viva/Brava CRT-D product family features a new algorithm called AdaptivCRT, which improves patients’ response rates to CRT-D therapy by preserving their normal heart rhythms and continuously adapting to individual patient needs, according to Medtronic.
Foreign exchange rates, pricing pressures and declining U.S. implant volumes proved too strong an obstacle to offset with international share gains realized through the Japanese launch of the Advisa DR MRI SureScan pacemaker in the second quarter. As a result, pacing system sales fell 4 percent to $1.9 billion.
Executives attributed the growth in atrial fibrillation revenue to the continued global acceptance of the Arctic Front Cardiac CryoAblation Catheter system, while Structural Heart’s net gain was linked to strong sales of transcatheter aortic heart valves and growth in the company’s cardiopulmonary product lines.
Endovascular unit sales were driven by new product launches, including the Endurant Abdominal Aortic Aneurysm Stent Graft System (in Japan), and the Valiant Captivia Thoracic Stent Graft System, which debuted in the United States in the fourth quarter of FY12 and in Japan and China in Q1 of fiscal 2013. Strong worldwide sales of peripheral stent products and drug-eluting balloons also contributed to the growth.
Results in Medtronic’s Restorative Therapies Group practically mirrored its sister unit, with gains in three divisions counteracting losses in one. The black sheep in this group was the Spine division, where sales slid 4 percent to $3.1 billion due to revenue declines in bone morphogenic protein (BMP) and core spine products.
Also like its sister, Restorative Therapies Group sales were negatively impacted by unfavorable foreign exchange rates, pricing pressures and increased competition. But the Restorative Group still managed to grow revenues 3 percent to $7.8 billion due to strong sales in its Surgical Technologies, Neuromodulation, and Diabetes units.
Surgical Technologies unit profits ballooned 14 percent to $1.4 billion thanks to robust sales of capital equipment, including O-arm imaging and StealthStation S7 surgical navigation systems, Midas Rex powered surgical equipment, and Advanced Energy products, namely the Aquamantys bipolar sealers and PEAK PlasmaBlade electrosurgical devices. Net sales in the unit also were positively affected by balanced growth of disposables and service revenue in Medtronic’s neurosurgery and ENT (ear, nose, throat) businesses.
Neuromodulation sales increased 7 percent to $1.8 billion, driven primarily by the continued U.S. adoption of RestoreSensor spinal cord stimulator, new implant growth of Activa DBS system for movement disorder, and solid demand for InterStim Therapy devices to treat bladder, urinary and bowel conditions. Sales were particularly strong in Western Europe, where the SureScan spinal cord stimulation system is approved for full-body magnetic resonance imaging scans.
Strong international sales of the Paradigm Veo insulin pump and the Enlite CGM sensor drove a 3 percent gain in diabetes net sales ($1.5 billion), the growth was partially offset by a decline in U.S. insulin pump sales as the company awaits approval of its MiniMed 530G device.
The culprits in Spine’s FY13 slide fell victim to the usual setbacks—pricing/competitive pressures, a challenging reimbursement environment in certain markets and unfavorable foreign exchange rates. Bigwigs attributed the 2 percent decline in core spine sales ($2.6 billion) to weak demand for balloon kyphoplasty procedures (BKP), minimally invasive surgery to repair spinal fractures. The loss in core spine profits was partially offset (but not enough to prevent an overall decrease, obviously) by the introductions of AMT implants, the Capstone Control, and Bryan ACD Instrument Set as well as the continued adoption of Solera, Atlantis Vision Elite, and other biologics products. A further sales slide was prevented with Medtronic’s focus on enabling technologies, including O-Arm imaging, StealthStation surgical navigation, and Powerease powered surgical instruments.
Medtronic’s BMP products suffered from weak demand as well; sales plummeted 15 percent to $528 million as fallout continued over the Infuse bone graft controversy. The company has yet to shake the 3-year-old scandal that erupted with a scathing series of Spine Journal articles that accused the multinational firm of bribing doctors to under-report risks associated with the product.
Around the same time, a U.S. Senate report claimed various studies promoting the bioengineered synthetic bone graft substance likely were biased because they were written by Medtronic employees.