Medtronic to save $3B by 2022 in new restructuring plan: 5 things to know. Medtronic is planning a restructuring to save $450 million/year Enlarge Currently, Medtronic is organized into four divisions: Minimally invasive therapies, restorative therapies, diabetes,. Needham analysts wrote they like the changes but the company needs to "show consistent execution to overcome investor skepticism given its track record." U.S. companies such as Johnson & Johnson, General Electric and 3M have been breaking up their businesses amid a growing consensus they perform best with streamlined focus, along with increasing pressure from activist investors to boost shareholder returns. Medtronic to save up to $475M a year from restructuring In 2018, the company announced a restructuring plan expected to. Medtronic (MDT) said that the cost savings resulting from the new operating model are designed to enable reinvestment to drive future revenue growth and to strengthen the companys ability to deliver strong long-term earnings per share growth. Medtronic management believes that non-GAAP financial measures provide information useful to investors in understanding the company's underlying operational performance and trends and to facilitate comparisons with the performance of other companies in the med tech industry. But this operational model is much broader than structural things. Changes are coming to Minneapolis-based Medtronic. Medtronic restructuring plan aims to save $475M - New Haven BIZ Medical device giant Medtronic, which has one of its largest manufacturing facilities in North Haven, has announced plans for a restructuring that aims to cut costs by between $450 million and $475 million a year. Before joining the company, Martha built his medical device career at GE Healthcare and recalls GE serving as a management feeder system for the healthcare and medtech industries. Subscribe to Medical Design & Outsourcing. But Martha said the departures reflect well on Medtronic. From a COVID perspective, Martha said the virus has moved through the company unbelievably quickly, but that the supply chain hasnt had any problems yet. We are optimistic about our future, as we create markets and realize new opportunities.". Many ASCs are looking for cashless options to get capital equipmentas they offset the cost of new buildings, Zimmer Biomet COO Ivan Tornos said. (2) The data in this schedule has been intentionally rounded to the nearest million and, therefore, may not sum. (3) The first quarter of 2023 includes $20 million of inorganic revenue related to the Intersect ENT acquisition, which is included in the reported results of the Specialty Therapies division of the Neuroscience portfolio. The charges predominantly include non-cash pre-tax impairments, primarily related to goodwill, as a result of the anticipated sale of half of the Company's Renal Care Solutions (RCS) business related to the May 25, 2022 agreement with DaVita Inc. (His predecessor, Omar Ishrak, also came to Medtronic from the company; other GE alums include Boston Scientific CEO Mike Mahoney.) See description of non-GAAP financial measures contained in the press release dated August23, 2022. Keep up with the story. "We anticipate the inspection happening in the very near future.". Medtronic does not undertake to update its forward-looking statements or any of the information contained in this press release, including to reflect future events or circumstances. "One of the pushbacks on Medtronic has been that the organization is too big and complex," wrote Evercore ISI analyst Vijay Kumar in a note, adding the spin off would help narrow Medtronic's focus. It is essential that we partner with suppliers who can help us extend our Mission - to alleviate pain, restore health, and extend life. The two businesses contributed $2.2 billion, or around 7%, to Medtronic's revenue in the fiscal year ended April 29. "As we look ahead, our supply chain is improving, we have several near-term pipeline catalysts approaching, and we are confident in our ability to accelerate growth.". Medtronic management will discuss its new operating model at its virtual Investor Day on October 14. Medtronic will be live tweeting during the webcast on its Newsroom Twitter account, @Medtronic. Medtronic said that the cost savings resulting from the new operating model are designed to enable reinvestment to drive future revenue . Neuroscience revenue of $2.115 billion decreased 4% as reported and 2% organic, with mid-single digit declines in CST and Neuromodulation, partially offset by mid-single digit increases in Specialty Therapies, all on an organic basis. The Patient Monitoring technology portfolio includes Nellcor pulse oximetry, Microstream capnography, BIS brain monitoring, INVOS perfusion monitoring, and HealthCast connected care solutions. We had some of that, not a ton, but we had some of that, but it was within our expectations for sure.. Get the free daily newsletter read by industry experts. Share. The data in this schedule has been intentionally rounded to the nearest million or $0.01 for EPS figures, and, therefore, may not sum. Forward-looking diluted non-GAAP EPS guidance also excludes other potential charges or gains that would be recorded as Non-GAAP Adjustments to earnings during the fiscal year. Medtronic, like many medical device makers, has been facing supply chain shortages and rising costs, exacerbated by the Ukraine conflict and strict COVID-19 lockdowns in China. Independently, NewCo will be a leading connected care company with a compelling leadership position, attractive margins, and potential for growth acceleration with increased investment and dedicated capital allocation," said Geoff Martha, chairman and CEO of Medtronic. Bolder actions. Management strongly encourages investors to review the company's consolidated financial statements and publicly filed reports in their entirety. This webcast can be accessed by clicking on the Events icon at investorrelations.medtronic.com and this earnings release will be archived at news.medtronic.com. "Our matrix organization was too bureaucratic. Powered by our diverse knowledge, insatiable curiosity, and desire to help all those who need it, we deliver innovative technologies that transform the lives of two people every second, every hour, every day. , Star Tribune This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Our Mission to alleviate pain, restore health and extend life unites a global team of 95,000+ passionate people across 150 . Medtronics stock closed Wednesday at $108.78, up 1.25%. Diabetes ", Martha admitted that previously Medtronic would develop new markets "only to cede share too easily when competitors would enter." Operating "While our markets are facing macroeconomic challenges, we're focused on identifying ways to offset their impact to our financials," said Karen Parkhill, Medtronic chief financial officer. Suppliers - Supplier Selection | Medtronic Unless otherwise stated, all revenue growth rates in this press release are on an organic basis, which excludes the impact of foreign currency translation and revenue from the Intersect ENT acquisition. Support: Surgical Navigation and Imaging | Medtronic In an SEC filing last month, Medtronic said the "Simplification Restructuring Program" is expected to incur total pre-tax costs of about $400 million to $450 million, with the majority to be recognized by the end of fiscal year 2022. Historical non-GAAP financial measures have been recast for comparability. Let MedTech Dive's free newsletter keep you informed, straight from your inbox. ", Webinar The charging industry and the state's Commerce Department question Xcel's nearly $200 million ratepayer-funded plan for over 700 utility-owned chargers. Board of Italy's CDP meets Sunday over bid for Telecom Italia grid, Goldman Sachs arm among bidders in possible $10 bln Subway sale, Sky News says, Reporting by Leroy Leo and Raghav Mahobe in Bengaluru; Editing by Krishna Chandra Eluri and Maju Samuel, Italy close to approve CDP, Macquarie bid for TIM's grid- Bloomberg News, Twitter's revenue, adjusted earnings drop about 40% in December - WSJ, Kilde captures back-to-back World Cup downhill titles, Alonso says his Aston Martin is 'too good to be true', Verstappen leads Red Bull front row sweep in Bahrain, Iran makes sweeping pledge of cooperation to IAEA before board meeting, Exclusive news, data and analytics for financial market professionals, Power restored to parts of Kenya after nationwide blackout. In everything we do, we are engineering the extraordinary. That totals 8% percent of our revenue and there are some operational entanglements we've got to undo,Martha said at the J.P. Morgan Health Conference on Monday. Subscribe to the MedTech Dive free daily newsletter, Subscribe to MedTech Dive for top news, trends & analysis, The free newsletter covering the top industry headlines, Vivera Welcomes Former FDA Investigator Dennis Moore as Regulatory and Compliance Advisor, Viz.ai Announces Agreement with Bristol Myers Squibb to Enable Earlier Detection and Managemen, COUCH Health publishes report to encourage patient engagement in the MedTech sector, Equiva Partners with Infiniti Mobile to Advance Health Equity Via Newly Unveiled Affordable Co, By signing up to receive our newsletter, you agree to our, Martha, on the job for roughly six months, described. We are Medtronic. International sales were driven by mid-twenties growth in sales of continuous glucose monitoring (CGM) products and low-double digit growth in consumable sales, offset by low-single digit declines in sales of durable insulin pumps. Martha said the company plans to invest more money into segments with high growth and high-return opportunities. "We don't have any intention of moving those people," Martha said. As reported, first quarter GAAP net income and diluted earnings per share (EPS) were $929 million and $0.70, respectively, increases of 22% and 25%, respectively. Visitors are having meetings over coffee, checking emails, writing poetry, learning to sew. Medtronic employs more than 90,000 people worldwide and nearly 11,000 in Minnesota, mostly in the Twin Cities. Bold thinking. All Rights Reserved. (3) The currency impact to revenue measures the change in revenue between current and prior year periods using constant exchange rates. Medtronic said on Monday it would spin off two of its smaller businesses into a new company to streamline its portfolio and increase the pace of revenue growth. as a % of Medtronic generally uses non-GAAP financial measures to facilitate management's review of the operational performance of the company and as a basis for strategic planning. The webcast can be accessed by clicking on the Events icon at investorrelations.medtronic.com. MedTech 100 is a financial index calculated using the BIG100 companies covered in When excluding the impact of currency and the inorganic Intersect ENT revenue, first quarter 2023 revenue declined approximately 3.6 percent organic. Medtronic releases 2022 Integrated Performance Report Medtronic reports first quarter fiscal 2023 financial results - Aug 23, 2022 Revenue exceeds guidance, with known supply chain challenges impacting results; notable strength in Pacing, Cardiac Surgery, Core Spine in the U.S., and Diabetes in Europe DUBLIN, Aug. 23, 2022. As part of the revamp, Medtronic is reorganizing its current business groups into operating units (OUs), each focused on specific therapy areas. In 2018, the company announced a restructuring plan expected to help them save $500 million to $700 million annually over five years. Medtronic plans to report its fiscal year 2023 second, third, and fourth quarter results on November 22, 2022, February 21, 2023, and Thursday, May 25, 2023, respectively. Durable growth with an attractive margin and cash flow profile. With the creation of the new units, Medtronic is consolidating operations at the corporate level including the companys global manufacturing, supply chain and facilities, the filing said. Such items could have a substantial impact on GAAP measures of financial performance. Martha said the next step is developing operational standards and procedures, including in product development. Responsible to develop and implement commercial plans for Panama public & private hospitals. The data in this schedule has been intentionally rounded to the nearest million, and, therefore, may not sum. Lead distributors in Guatemala, El Salvador, Honduras and Nicaragua, developing commercial plans, legal . (Here are five things that make Martha especially optimistic about Medtronics future.).