MEDTRONIC, INC. 
| Medtronic Reports First Quarter Earnings |
MINNEAPOLIS - Aug. 19, 2014 - Medtronic, Inc. (NYSE: MDT) today announced financial results for its first quarter of fiscal year 2015, which ended July 25, 2014. The company reported worldwide first quarter revenue of $4.273 billion, compared to the $4.083 billion reported in the first quarter of fiscal year 2014, an increase of 4 percent on a constant currency basis after adjusting for a $34 million foreign currency benefit or 5 percent as reported. As reported, first quarter net earnings were $871 million, or $0.87 per diluted share, a decrease of 9 percent and 6 percent, respectively, over the same period in the prior year. First quarter net earnings and diluted earnings per share on a non-GAAP basis were $934 million and $0.93, an increase of 4 percent and 6 percent, respectively, over the same period in the prior year. U.S. revenue of $2.333 billion increased 6 percent. International revenue of $1.940 billion increased 2 percent on a constant currency basis or 3 percent as reported. International sales accounted for 45 percent of Medtronic's worldwide revenue in the quarter. Emerging market revenue of $539 million increased 11 percent on a constant currency basis or 9 percent as reported and represents 13 percent of company revenue. "Our first quarter results are a solid start to fiscal year 2015," said Omar Ishrak, Medtronic chairman and chief executive officer. "Our growth was broad based across businesses and geographies. I was especially pleased that our innovation pipeline is delivering strong results, particularly in the U.S., which had its highest revenue growth performance in 5 years."
Cardiac and Vascular Group Cardiac Rhythm & Heart Failure revenue of $1.256 billion grew 4 percent on a constant currency basis or 5 percent as reported. High Power revenue was $627 million, a decrease of 5 percent on a constant currency basis. The company expects improved performance in High Power going forward as a result of the recent U.S. FDA approval of the company's Viva(TM) XT CRT-D, with its AdaptiveCRT(TM) algorithm and Attain® Performa(TM) quadripolar lead. Low Power revenue was $525 million, an increase of 10 percent on a constant currency basis. Results were driven by the strong ongoing global launch of the Reveal LINQ(TM) insertable cardiac monitor. Coronary & Structural Heart revenue of $766 million grew 1 percent on a constant currency basis or 2 percent as reported. Coronary revenue of $428 million declined 2 percent on a constant currency basis. This above-market performance was driven by sales of drug-eluting stents, which grew 2 percent on a constant currency basis on the strength of the company's Resolute® Integrity® drug-eluting stent. Structural Heart revenue of $338 million grew 6 percent on a constant currency basis. After adjusting for the German customer advance purchases of CoreValve® in Q1 of last fiscal year in anticipation of the since resolved injunction, Structural Heart grew in the upper teens on a constant currency basis. Q1 results were driven by strong execution on the ongoing U.S. launch of the CoreValve® transcatheter aortic heart valve. Aortic & Peripheral revenue of $232 million grew 5 percent on a constant currency basis or 6 percent as reported. In Aortic, the company's market-leading Endurant® II and Valiant® Captivia® stent grafts have each gained 2 points of share in the AAA and Thoracic markets, respectively. In Peripheral, the IN.PACT® Admiral® and Pacific® drug-coated balloons for the SFA continued to deliver strong growth in international markets.
Restorative Therapies Group Spine revenue of $743 million declined 3 percent on both a constant currency and reported basis, with declines in Core Spine and BMP offsetting growth in Interventional Spine. Core Spine revenue of $552 million declined 2 percent on a constant currency basis. Going forward, the company believes new product launches will result in improved performance. Interventional Spine revenue of $81 million grew 4 percent on a constant currency basis. BMP revenue of $110 million declined 11 percent on a constant currency basis, although the company did see sequential stability in underlying demand for BMP. Neuromodulation revenue of $479 million increased 11 percent on a constant currency basis or 12 percent as reported, driven by solid growth in Pain Stim, DBS, and Gastro/Uro. The business continues to see traction from the RestoreSensor® SureScan® MRI system, growth in Activa® deep brain stimulation systems as a result of both the continued referral development in the U.S. and international momentum from the EARLYSTIM data, and strong implant rates for InterStim® Therapy. Surgical Technologies revenue of $381 million grew 5 percent on a constant currency basis or 6 percent as reported with steady growth across all three businesses: ENT, Neurosurgery, and Advanced Energy. The acquisition of Visualase, Inc. was completed at the end of the quarter, a promising MRI-guided laser ablation technology for neurosurgery, adding to the Restorative Therapies Group's broad suite of neuroscience solutions.
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Revenue Outlook and Earnings per Share Guidance "We are confident that our strategies - therapy innovation, globalization, and economic value - will further strengthen, diversify, and expand our market-leading competitive position," said Ishrak. "We believe we can accelerate these strategies with the Covidien acquisition, which we are fully committed to completing in the calendar fourth quarter of 2014 or early 2015."
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About Medtronic NO OFFER OR SOLICITATION This communication is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the acquisition, the merger or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. IMPORTANT ADDITIONAL INFORMATION Medtronic Holdings Limited, which will be renamed Medtronic plc ("New Medtronic"), has filed with the Securities and Exchange Commission (the "SEC") a registration statement on Form S-4 that includes the preliminary Joint Proxy Statement of Medtronic, Inc. ("Medtronic") and Covidien plc ("Covidien") that also constitutes a preliminary Prospectus of New Medtronic. The registration statement is not complete and will be further amended. Medtronic and Covidien plan to make available to their respective shareholders the final Joint Proxy Statement/Prospectus (including the Scheme) in connection with the transactions. INVESTORS AND SHAREHOLDERS ARE URGED TO READ THE PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING THE SCHEME) AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT MEDTRONIC, COVIDIEN, NEW MEDTRONIC, THE TRANSACTIONS AND RELATED MATTERS. Investors and security holders are able to obtain free copies of the preliminary Joint Proxy Statement/Prospectus (including the Scheme) and other documents filed with the SEC by New Medtronic, Medtronic and Covidien through the website maintained by the SEC at www.sec.gov. In addition, investors and shareholders are able to obtain free copies of the preliminary Joint Proxy Statement/Prospectus (including the Scheme) and other documents filed by Medtronic and New Medtronic with the SEC by contacting Medtronic Investor Relations at investor.relations@medtronic.com or by calling 763-505-2696, and will be able to obtain free copies of the preliminary Joint Proxy Statement/Prospectus (including the Scheme) and other documents filed by Covidien by contacting Covidien Investor Relations at investor.relations@covidien.com or by calling 508-452-4650. |
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