34TH ANNUAL J.P. MORGAN HEALTHCARE Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

download 34TH ANNUAL J.P. MORGAN HEALTHCARE Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

of 36

  • date post

    26-Aug-2020
  • Category

    Documents

  • view

    4
  • download

    0

Embed Size (px)

Transcript of 34TH ANNUAL J.P. MORGAN HEALTHCARE Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

  • 34TH ANNUAL J.P. MORGAN HEALTHCARE CONFERENCE

    OMAR ISHRAK CHAIRMAN & CEO

    JANUARY 11, 2016 SAN FRANCISCO

  • FORWARD LOOKING STATEMENT Some of the statements contained in this program may be considered forward-looking statements which provide current expectations or forecasts of future results. These forward-looking statements generally relate to market and sales growth, growth strategies, financial results, use of free cash flow, product development and introduction, regulatory matters, restructuring initiatives, intellectual property rights, litigation and tax matters, mergers and acquisitions, divestitures, accounting estimates, financing activities, working capital adequacy, ongoing contractual obligations, competitive strengths, and sales efforts. They are based on current assumptions and/or expectations that involve a number of uncertainties or risks. These uncertainties and risks include, but are not limited to, those outlined in Medtronic’s Annual Report on Form 10-K for the year ended April 24, 2015, and other documents previously or subsequently filed with the U.S. Securities and Exchange Commission (SEC). Investors are advised to review any further disclosures which may be made in such reports filed periodically with the SEC. Forward-looking statements are made as of today's date, and the Company undertakes no duty to update them. In addition, non-GAAP to GAAP reconciliations are attached.

    Historical Financial Data Definitions This presentation refers to historical financial data that sums historical data of both Medtronic and Covidien. This data is different than the pro forma information previously included within certain SEC filings. Management believes that using these measures are a useful way to evaluate Medtronic’s underlying performance. All reconciliations of these measures to the most directly comparable GAAP financial measures are attached.

    Comparable Basis: Includes Covidien plc in the prior year comparison and aligns Covidien’s prior year monthly revenue to Medtronic’s fiscal quarters. Combined Basis: Combines Covidien’s closest reported quarter with Medtronic’s fiscal quarter in the prior year comparison.

    34th Annual J.P. Morgan Healthcare Conference | January 11, 20162

  • MEDTRONIC: UNIQUELY POSITIONED TO WIN IN GLOBAL HEALTHCARE

     Revenue Growth: Strong execution leading to consistent mid-single digit growth resulting in above market performance

     Operating Leverage: COV integration resulting in tangible and sustainable operating margin leverage at the high end of our baseline expectation of 200- 400bps of EPS leverage

     Capital Deployment: Disciplined capital deployment with a roadmap to increased accessible cash and dividend growth

    34th Annual J.P. Morgan Healthcare Conference | January 11, 20163

    Sustained Double-Digit Total Shareholder Returns Over the Long Term

    Note: All references to revenue growth and EPS leverage are on a constant currency basis.

  • GUIDANCE UPDATE

    34th Annual J.P. Morgan Healthcare Conference | January 11, 2016

    REITERATING 2H FY16 REVENUE OUTLOOK; UPDATING FY16 EPS

     Reiterating 2H FY16 revenue growth in the upper-half of our mid-single digit baseline range on a comparable, constant currency basis

    REVENUE OUTLOOK

     $4.36 to $4.40, up from $4.33 to $4.40

     Reflects benefit of the permanent enactment of the U.S. R&D tax credit

     Continues to include an expected $0.45 to $0.50 negative FX headwind

     Implied 2H FY16 EPS leverage of over 1,000bps

    FY16 EPS GUIDANCE

    CAPITAL DEPLOYMENT

     Net result of the capital allocations announced today are not expected to materially affect 2H FY16 net interest expense, net earnings, diluted weighted shares outstanding or diluted earnings per share

    4

    1

    1 Constant currency.

  • CONSISTENT STRATEGIES DRIVING GROWTH VECTORS

    Therapy Innovation

    Globalization

    Economic Value

    34th Annual J.P. Morgan Healthcare Conference | January 11, 2016

    MEDTRONIC STRATEGIES

    UNIVERSAL HEALTHCARE

    NEEDS

    Improve Clinical Outcomes

    Expand Access

    Optimize Cost and Efficiency

    SOURCES OF GROWTH

    Growth Vector #1 New

    Therapies

    Growth Vector #2 Emerging Markets

    Growth Vector #3 Services and

    Solutions

    Operational Execution

    +150 to 350bps

    +150 to 200bps

    +40 to 60bps

    5

    FINANCIAL MODEL

    Reliable, consistent mid-

    single digit growth

    EPS leverage of 200-400bps

    Return a minimum of 50% FCF to shareholders

    Note: All references to revenue growth and EPS leverage are on a constant currency basis.

  • CREATING LONG-TERM SHAREHOLDER VALUE IMPROVING REVENUE, EPS AND FREE CASH FLOW GROWTH

    NON-GAAP EPS2

    ADJUSTED FREE CASH FLOW3

    $3.00 $3.50 $4.00 $4.50

    FY11 FY12 FY13 FY14 FY15 FY16E

    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

    Billions

    34th Annual J.P. Morgan Healthcare Conference | January 11, 2016

    REVENUE GROWTH1 (Y/Y)

    FY11 FY12 FY13 FY14 FY15 FY16

    Mid-Single Digit Range

    +6.0%+6.0%+4.0%+4.5%+2.0%+1.0%

    0 2,500 5,000 7,500

    FY11 FY12 FY13 FY14 FY15 FY16E 1 Constant currency. Q1 FY11 and Q1 FY16 adjusted for extra week impact. Q4FY15 through Q2 FY16 on a comparable basis. 2 Non-GAAP EPS on a constant currency basis. Leverage rounded to the nearest 50bps. 3 FCF is operating cash flow minus capital expenditures.

    Adjusted for litigation settlements.

    Commitment: mid-single digit growth.

    Commitment: EPS leverage of 200-400 basis points, constant currency.

    Commitment: Return a minimum of 50% to shareholders.

    6

    400 bps of cc leverage

    200bps 700-950bps 400bps

    400bps 100bps

    = Returned to shareholders.

    -3.5%

      

             

        

  • CY2015 IN REVIEW: “THE NEW MEDTRONIC”

    34th Annual J.P. Morgan Healthcare Conference | January 11, 20167

    ACCELERATE  Synergy opportunities for

    COV’s Peripheral Vascular and Neurovascular divisions

     Capital deployment and access to “trapped” cash

     Share repo / dividends

     Debt paydown

    PRESERVE

     Employee satisfaction and talent retention

     Revenue and EPS growth across groups

    OPTIMIZE  >$850M cost synergies by FY18

     Indirect sourcing

     ERP consolidation

     Real estate / manufacturing

    1 2

    3 TRANSFORM

     Delivering higher value in healthcare

     Aligning solutions to emerging value-based payment models

     Partnering with new stakeholders to transform the healthcare marketplace

    4

    Delivering on Commitments Made at Deal Announcement

    Preserving and accelerating core strategies: Therapy Innovation, Globalization & Economic Value

    Offering a more comprehensive and competitive growth platform

    Diversifying revenue mix

    Capturing operational synergies

    Accretive to FY16 cash EPS and significantly accretive thereafter

    Increasing access to capital and optimizing shareholder returns through deployment flexibility

     

    ACQUISITION RATIONALE INTEGRATION PRIORITIES

  • INTEGRATION UPDATE: PRESERVE AND OPTIMIZE

    34th Annual J.P. Morgan Healthcare Conference | January 11, 20168

    TALENT, FINANCIAL METRICS, AND PRODUCTIVITY GAINS

    Service Model Efficiency / Real Estate

    Superior Sourcing

    Global ERP Implementation

     Centralizing targeted back-office processes in shared service centers

     Maximizing real estate productivity

     Renegotiating sourcing contracts for freight, logistics and distribution

     Direct sourcing and self-insurance

     Driving organizational efficiency through a common ERP platform

     Medtronic and Covidien cultures continue to come together

     Talent retention and employee satisfaction remains strong

     Monthly survey encourages open communication

    OPTIMIZE

    PRESERVE1

    2

    TALENT RETENTION SUSTAINABILITY

    VALUE CAPTURE PROGRAMS TO RESULT IN A MINIMUM OF $850M IN SAVINGS BY FY18

    MITG 34%

    CVG 35%

    Diabetes 6%

    RTG 25%

    FY15: $28.2B

    FY14: $17.0B

    CVG 52%

    Diabetes 10%

    RTG 38%

    Manufacturing Consolidation

     Optimizing manufacturing footprint in FY18+ (not included in >$850M guidance)

    GROWTH PRESERVATION

    0%

    2%

    4%

    6%

    8%

    FY14 1H FY15 1H FY16

    MDT INC. COV

    2

    MDT PLC

    1 COV 1H FY15 represents Y/Y constant currency growth for calendar 1Q15 and 4Q14.

    1

    2 Comparable, constant currency. Q1 FY16 adjusted for extra week impact. 3 FY15 revenue on a comparable basis.

    Y/Y Revenue Growth (CC)

    Diversification of MDT Revenue Base

    3

  • 34th Annual J.P. Morgan Healthcare Conference | January 11, 20169

    COMPLIMENTARY