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| 8-K - 8-K - Medtronic plc | fy16q3earningsrelease.htm |
| EX-99.1 - EXHIBIT 99.1 - Medtronic plc | exhibit991-fy16q3earningsr.htm |
MEDTRONIC PLC Q3 FY16 CONSOLIDATED RESULTS AND GROUP REVENUE HIGHLIGHTS Exhibit 99.2
Q3 FY16 Earnings Results | March 1, 2016 | 2 FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements which provide current expectations or forecasts, including those relating to market and sales growth, growth strategies, financial results, use of free cash flow, product development and introduction, partnerships, regulatory matters, restructuring initiatives, mergers/acquisitions/divestitures and related effects, accounting estimates, financing activities, working capital adequacy, competitive strengths and sales efforts. They are based on current assumptions and expectations that involve uncertainties or risks. These uncertainties and risks include, but are not limited to, those described in our periodic reports on file with the U.S. Securities and Exchange Commission (SEC). Actual results may differ materially from anticipated results. Forward-looking statements are made as of today's date, and we 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 not been reviewed or audited by our independent registered public accounting firm. Use of different methods for preparing, calculating or presenting information may lead to differences and such differences may be material. This presentation also contains non-GAAP financial measures such as free cash flow and historical revenue on a comparable constant currency basis, which sums historical data of Medtronic and Covidien, aligns Covidien’s prior year monthly revenue to Medtronic’s fiscal quarters and adjusts for the impact of foreign currency translation. We believe these measures provide a useful way to evaluate our underlying performance. Detail concerning how all non-GAAP measures are calculated, including all non- GAAP to GAAP reconciliations, are provided on our website and can be accessed using this link.
Q3 FY16 Earnings Results | March 1, 2016 | 3 Sustained execution results in another quarter of market outperformance • Revenue growth of 6% in the upper half of our mid-single digit expectation • Acquisitions & divestitures contributed a net 20 bps to Q3 revenue growth • Foreign currency translation had a negative $344M impact on revenue Executing on three revenue growth vectors; driving increased diversity of our revenue growth • Therapy Innovation: 350 bps – at the high end of 150 to 350 bps goal • Emerging Markets: 190 bps – at the high end of 150 to 200 bps goal • Services & Solutions: 20 bps – below 40 to 60 bps goal Delivering robust operating leverage • Executing on our value capture programs from the Covidien integration and targeted cost synergies • 140 bps improvement in operating margin1; 510 bps of operating leverage1 • 140 bps improvement in SG&A as a percent of revenue1 EPS leverage of 1,150 bps1 • Significantly exceeding our baseline goal of 200-400 bps Generating significant accessible free cash flow • Deploying with discipline, investing for our future while at the same time allocating capital for debt paydown and providing strong returns to our shareholders MDT Q3 FY16 HIGHLIGHTS 1 Figures represent comparison to Q3 FY15 on a comparable constant currency basis SOLID PERFORMANCE IN Q3 Revenue: Other Financial Highlights: U.S. 57% Non- U.S. Dev 30% EM 13% 1 Revenue $M As Rep Y/Y % CC1 Y/Y % CVG 2,410 8 7 MITG 2,291 NC 5 RTG 1,759 7 4 Diabetes 474 6 11 Total $6,934 61% 6% U.S. 3,965 61 4 Non-U.S. Dev 2,066 58 5 EM 903 64 14 Total $6,934 61% 6% EPS2 Y/Y Y/Y CC1 GAAP $0.77 -21% NC Non-GAAP $1.06 -1% 17% Cash Flow from Ops $1.8B Adj. Free Cash Flow $1.8B 2 Diluted EPS CVG 35% MITG 33% RTG 25% DIAB 7%
Q3 FY16 Earnings Results | March 1, 2016 | 4 CVG Q3 FY16 HIGHLIGHTS CRHF 53% CSH 31% APV 16% U.S. 52% Non- U.S. Dev 32% EM 16% Cardiac Rhythm & Heart Failure (CRHF) KEY PERFORMANCE DRIVERS1 High Power – LSD Decline • Highest US share since Q4FY10 • ICDs: HSD growth – US Evera MRI™, • CRT-D: HSD decline on lower bulk purchases ahead of MRI launch • Amplia & Compia MRI™ CRT-D: FDA & CE Mark received Low Power – HSD • US Pacing – MSD; Market – LSD decline • Gained > 300 bps share • Advisa SR MRI™ single chamber • Reveal LINQ™ pull-through • Diagnostics – High-Teens: Reveal LINQ™ Coronary & Structural Heart (CSH) Aortic & Peripheral Vascular (APV) AF Solutions – Mid 30’s • Arctic Front Advance™ Services & Sol. – Low 30’s Heart Valve Therapies – DD • TCV – low 30’s WW; mid 20’s US • Strong Evolut® R launch execution in the US • Losing some share in large valves, expect to start 34mm clinical in H2 CY16 • WW TAVR market growing low 30’s • Europe: #1 in 13 countries, gaining share • Japan: CoreValve® reimb. & launch in Jan • US Low Risk trial: received IDE approval • WW TAVR market: ~$4B by 2020 Coronary – LSD • DES – LSD; maintaining share • OUS – MSD: Resolute Onyx™ share gains on new sizes • US – LSD decline, maintained share with multiline contracts • Balloons – LDD: Euphora™ PTCA Aortic – MSD • US: HSD growth; strong adoption in new Type B dissection in Thoracic • OUS: competitive pressure & Japan reimbursement cuts • Heli-FX™ EndoAnchor: continuing to gain momentum; competitive account conversion & device pull-through Peripheral – DD • DCB: US & WW market share leader • IN.PACT ® Admiral launch • Exceptional clin. & economic data Strong, Balanced Growth Across all Three Divisions Extracorp. Therapies – LSD • Strong next gen Bio-Medicus® cannula launch endoVenous – Mid Teens • VenaSeal™ launch gaining traction Evera MRI™ SureScan® ICD Reveal LINQ® CoreValve® Evolut® R Resolute Onyx™ IN.PACT Admiral ® WW implantables market: LSD decline; MDT taking share Y/Y and Q/Q Heli-FX™ EndoAnchor Revenue $M As Rep Y/Y % CC1 Y/Y % CRHF 1,278 1 6 CSH 736 0 7 APV 396 82 10 Total $2,410 8% 7% U.S. 1,250 19 7 Non-U.S. Dev 775 -5 2 EM 385 6 14 Total $2,410 8% 7% Growth Outlook: MSD 1 Figures represent comparison to Q3 FY15 on a comparable constant currency basis
Q3 FY16 Earnings Results | March 1, 2016 | 5 MITG Q3 FY16 HIGHLIGHTS Surgical Solutions KEY PERFORMANCE DRIVERS1 Strong, At or Above Market Growth Performance Patient Monitoring & Recovery (PMR) Advanced Surgical – HSD • Continues to benefit from new products and the continued shift from open to minimally invasive surgery (MIS) • Focused on sustainable, long-term surgical market leadership, by improving open surgeries, transitioning open surgeries to MIS, and advancing MIS technologies • Estimate US surgical volume growth has normalized at 1-2% Early Technologies – LDD • Diversifying our business with investments in Early Technologies • Strong results from growth in Gastrointestinal Diagnostics General Surgical – MSD • Benefitted from RF Surgical acquisition, which closed in Q2 Nursing Care – Flat • Strength in enteral feeding Patient Care & Safety – Flat • Strength in electrode sales, particularly in US Endo GIA™ Capno- stream™ 20p Bedside Monitor Renal Care Solutions • Formed new business unit • Acquired Bellco in early Q4 Revenue $M As Rep Y/Y % CC1 Y/Y % Surg. Sol. 1,264 NC 7 PMR 1,027 NC 1 Total $2,291 NC 5% U.S. 1,207 NC 1 Non-U.S. Dev 780 NC 5 EM 304 NC 19 Total $2,291 NC 5% Growth Outlook: MSD 1 Figures represent comparison to Q3 FY15 on a comparable constant currency basis Endo GIA™ LigaSure™ ValleyLab™ PMR 45% Surg. Sol. 55% U.S. 53% Non- U.S. Dev 34% EM 13% Respiratory & Patient Monitoring – MSD • Growth driven by strong performance in capnography • PB980 product hold/field action resulted in $10-$15M in lost revenue in Q3; expect ~$20-25M impact /qtr going forward until resolved; expect to resume sales in H1 FY17
Q3 FY16 Earnings Results | March 1, 2016 | 6 RTG Q3 FY16 HIGHLIGHTS Spine 40% Neuro 27% ST 25% NV 8% US 69% Non-US Dev 21% EM 10% KEY PERFORMANCE DRIVERS1 Strong NV & ST Growth Offsetting Declines in Neuromodulation and Spine Drug Pump – LDD Decline • Continued challenges based on the FDA consent decree • Divested drug bus.; $7M impact / qtr Core Spine – LSD Decline • OUS: MSD growth; gaining share • US: MSD declines; Market LSD growth • Focused on “Speed to Scale” with new product launches and offering a differentiated Surgical Synergy™ experience BMP – MSD • US: Strong, LDD Infuse® growth • OUS: Dealing with InductOs™ ship hold in Europe; not expected to return until mid-FY17 DBS – LSD • Activa® full body MRI approval • FDA approval for Parkinson’s patients with early onset motor complications Advanced Energy – Mid-Teens • Solid growth driven by PEAK® Surgery Systems & Aquamantys® System ENT – HSD • Continued strong hospital capital spending trends for ENT devices • NuVent® sinus balloon and powered ENT blade remain primary growth drivers InterStim II ® O-arm® O2 SolitaireTM FR Infuse® Bone Graft Spine Neuromodulation Surgical Technologies (ST) Neurovascular (NV) Gastro / Uro – HSD • Targeting increased therapy adoption post Q2 US launch of VerifyTM Pain Stim – MSD Decline • Continued competitive pressure • Good reception of AdaptiveStim® HD • MRI Surgical Lead: received FDA approval Neurosurgery – HSD • US launch of O-arm® O2 and core navigation instruments driving strong growth • Strong performance across all product lines and geographies • Flow Diversion: Benefitting from Pipeline™ Flex in the US, Pipeline™ with Shield in Europe and Japan reimbursement approval • Stents: SolitaireTM FR growth driven by ongoing strength of clinical data, recently published AHA guidelines, and field sales investments • Access: Pull-through from Solitaire™ FR and Pipeline™ Flex Interventional – MSD Decline Revenue $M As Rep Y/Y % CC1 Y/Y % Spine 704 -5 -2 Neuromod 465 -5 -1 ST 443 6 10 NV 147 NC 43 Total $1,759 7% 4% U.S. 1,215 7 3 Non-U.S. Dev 367 1 4 EM 177 20 7 Total $1,759 7% 4% Growth Outlook: Low End of MSD Range 1 Figures represent comparison to Q3 FY15 on a comparable constant currency basis
Q3 FY16 Earnings Results | March 1, 2016 | 7 DIABETES Q3 FY16 HIGHLIGHTS US 62% Non-US Dev 30% EM 8% KEY PERFORMANCE DRIVERS1 Intensive Insulin Management (IIM) Strong, Broad-Based Performance Across All Three Divisions MiniMed® 530G MiniMed® Connect 7 Total Group Revenue $474M Revenue $M As Rep Y/Y % CC1 Y/Y % IIM ND ND LDD NDT ND ND >250 DSS ND ND HSD Total $474 6% 11% U.S. 293 5 5 Non-U.S. Dev 144 9 24 EM 37 -3 13 Total $474 6% 11% Growth Outlook: HSD to LDD MiniMed® 640G Non-Intensive Diabetes Therapies (NDT) iPro®2 CGM w/ Pattern Snapshot Diabetes Service & Solutions (DSS) 1 Figures represent comparison to Q3 FY15 on a comparable constant currency basis • Robust OUS results, including pump growth of 65% in Europe on strong sales of the MiniMed® 640G System with the Enhanced Enlite™ sensor • Last patient expected to complete the 670G trial in the next few weeks, with PMA submission to the FDA targeted before the end of June 2016 • >75% of patients enrolled in 670G US clinical trial also opted-in to the FDA’s continued access program • Recent UK NICE guidance recommended MiniMed® Paradigm Veo™ system as the only system to manage those at risk for severe hypoglycemia with type 1 Diabetes • Chengdu manufacturing facility announced in January will expand EM footprint • 2nd consecutive quarter that NDT has doubled revenue growth reflecting strong sales of iPro®2 CGM technology in the US, Latin America, Europe and Russia • Distribution agreement with Henry Schein has launched in the US; broadening access for people with type 2 diabetes under the care of primary care physicians • Strong feedback on the value of Pattern Snapshot for iPro®2 CGM analytics to facilitate interpretation of glucose data • Strong growth in Consumables, Diabeter service revenue, and MiniMed® Connect • MiniMed® Connect uptake and user feedback remains extremely positive • Android version of the glucose monitoring app expected to launch before June 2016 • Partnerships on track to transform diabetes care through innovative solutions • IBM Watson applying cognitive computing to support diabetes management by identifying situations expected to lead to hypoglycemia up to 3 hours in advance of the occurrence • On track to bring our stand-alone sensor product, Guardian® Connect, to EU in early FY17 and to submit the PMA application to the FDA in the next week
Q3 FY16 Earnings Results | March 1, 2016 | 8 APPENDIX ACRONYMS / ABBREVIATIONS KEY PERFORMANCE DRIVERS 1 Growth DD Double Digits HSD High-Single Digit LDD Low-Double Digits LSD Low-Single Digit MSD Mid-Single Digit Other Bps Basis Points CC Constant Currency CY Calendar Year Dev Developed EM Emerging Markets EPS Earnings per Share FCF Free Cash Flow FY Fiscal Year H1 / H2 First Half / Second Half NC Not Comparable ND Not Disclosed Ops Operations OUS Outside the United States Q/Q Quarter-over-Quarter Rep Reported WW Worldwide Y/Y Year-over-Year Business Specific ACC American College of Cardiology HD High Density AF Atrial Fibrillation ICD Implantable Cardioverter Defibrillator AHA American Heart Association IIM Intensive Insulin Management APV Aortic & Peripheral Vascular MDT Medtronic BMP Bone Morphogenetic Protein MITG Minimally Invasive Therapies Group CGM Continuous Glucose Monitoring NDT Non-Intensive Diabetes Therapies CRHF Cardiac Rhythm & Heart Failure Neuromod Neuromodulation CRT-D Cardiac Resynchronization Therapy – Defibrillator NV Neurovascular CSH Coronary & Structural Heart PB980 Puritan Bennett™ 980 CVG Cardiac & Vascular Group PMR Patient Monitoring & Recovery DBS Deep Brain Stimulation RTG Restorative Therapies Group DCB Drug Coated Balloon SC Single Chamber DES Drug Eluting Stent Sol Solutions DIAB Diabetes Group ST Surgical Technologies DSS Diabetes Services & Solutions TAVR Transcatheter Aortic Valve Replacement ENT Ear, Nose, & Throat TCV Transcatheter Valves Extracorp Extracorporeal