01—Abstract
Summary
Summary of the 10-K filed June 28, 2016. Cited figures are marked; the original filing is the authoritative source.
Medtronic plc's fiscal year 2016 10-K filing highlights a transformative year primarily driven by the $50 billiona acquisition of Covidien plc, which closed in January 2015.
This strategic move significantly expanded Medtronic's global reach and product portfolio, integrating Covidien's operations into its existing structure. The company organized into four primary operating segments: Cardiac and Vascular Group, Minimally Invasive Therapies Group, Restorative Therapies Group, and Diabetes Group, with combined net sales reflecting the significant impact of the Covidien integration. Despite currency headwinds and the costs associated with integration, Medtronic demonstrated revenue growth across most segments.
The company continues to invest heavily in research and development to drive therapy innovation and maintain market leadership in a competitive landscape. Management's focus remains on executing its strategies for therapy innovation, globalization, and economic value creation, aiming to enhance patient outcomes and improve healthcare efficiencies.
02—Key points
Key Highlights
- Completion of the $50 billion acquisition of Covidien plc in January 2015, significantly expanding Medtronic's scale and product offerings.
- Reorganization into four operating segments: Cardiac and Vascular Group, Minimally Invasive Therapies Group, Restorative Therapies Group, and Diabetes Group.
- Net sales grew to $28.83 billion in fiscal year 2016, a 42% increase compared to fiscal year 2015, largely due to the inclusion of Covidien's results.
- Investment in Research and Development remained substantial, totaling $2.2 billion (7.7% of net sales) in fiscal year 2016, underscoring a commitment to innovation.
- Strong performance in the Cardiac and Vascular Group, showing a 9% increase in net sales, driven by growth across its divisions.
- The Minimally Invasive Therapies Group, significantly bolstered by the Covidien acquisition, reported $9.6 billion in net sales.
- The company continued to execute its share repurchase program, demonstrating a commitment to returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Medtronic plc kept $0.12.
- Revenue$28.83B100.0%
- Cost of revenue−$9.14B31.7%
- Gross profit$19.69B68.3%
- Operating costs−$14.33B49.7%
- Operating income$5.36B18.6%
- Interest, other & tax−$1.82B6.3%
- Net income$3.54B12.3%
Where FY2016 revenue went
$28.83B- SG&A: $9.47B, 33% of revenue
- Cost of revenue: $9.14B, 32% of revenue
- Other operating costs: $4.86B, 17% of revenue
- Net income: $3.54B, 12% of revenue
- Interest, other & tax: $1.82B, 6.3% of revenue
Kept 12% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed June 28, 2016Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $28.83B$20.26B | +42.3% |
| Cost of Revenue | $9.14B$6.31B | +44.9% |
| Gross Profit | $19.69B$13.95B | +41.1% |
| SG&A Expenses | $9.47B$6.90B | +37.2% |
| Operating Income | $5.36B$3.77B | +42.4% |
| Interest Expense | $1.39B$666.00M | +108.1% |
| Net Income | $3.54B$2.67B | +32.3% |
| EPS (Basic) | $2.51$2.44 | +2.9% |
| EPS (Diluted) | $2.48$2.41 | +2.9% |
| Shares Outstanding (Basic) | 1.41B1.10B | +28.7% |
| Shares Outstanding (Diluted) | 1.43B1.11B | +28.6% |
05—Questions
Frequently Asked Questions
What was the primary driver of Medtronic's performance in fiscal year 2016?
The primary driver of Medtronic's performance in fiscal year 2016 was the acquisition of Covidien plc, completed in January 2015. This acquisition significantly expanded the company's size, product offerings, and global footprint, leading to a substantial increase in net sales.
How has Medtronic's organizational structure changed following the Covidien acquisition?
Following the Covidien acquisition, Medtronic reorganized its operations into four primary segments: Cardiac and Vascular Group, Minimally Invasive Therapies Group, Restorative Therapies Group, and Diabetes Group. This structure aims to better align with its diverse product portfolio and strategic objectives.
What is Medtronic's strategy regarding innovation and growth?
Medtronic's strategy revolves around three core pillars: Therapy Innovation, Globalization, and Economic Value. This includes a strong cadence of new product launches, expanding access to healthcare in emerging markets, and focusing on value-based healthcare solutions to improve patient outcomes and reduce costs.
How did currency fluctuations impact Medtronic's financial results in fiscal year 2016?
Currency translation had an unfavorable impact of $1.4 billion on net sales in fiscal year 2016 compared to the prior fiscal year, indicating a headwind from foreign currency exchange rate movements.
06—Continue