10-QPeriod: Q3 FY2020

Medtronic plc Quarterly Report for Q3 Ended Jan 24, 2020

Filed February 28, 2020For Securities:MDT

Summary

Medtronic plc reported solid financial results for the third quarter and nine months ended January 24, 2020. The company achieved a net sales increase of 2% year-over-year for both periods, reaching $7.7 billion and $22.9 billion, respectively. This growth was driven by strong performance in key segments like Restorative Therapies and Minimally Invasive Therapies, with particular strength noted in emerging markets. Net income attributable to Medtronic saw a significant increase of 51% for the quarter and 20% for the nine months, largely due to a substantial $558 million tax benefit related to the release of a valuation allowance. Diluted EPS also showed strong growth, up 51% for the quarter and 21% for the nine months. While the company faces ongoing challenges such as competitive product launches, pricing pressures, and currency fluctuations, it maintains a strong liquidity position and is executing its growth strategies focused on therapy innovation, globalization, and economic value.

Financial Highlights

54 data points
Beta

Revenue

$7.72B

68.9% Gross Margin

Net Income

$1.92B

24.9% Net Margin

EPS (Diluted)

$1.42

Total Assets

$92.82B

Cash & Equivalents

$3.71B

Free Cash Flow

$2.11B

Financial Statements
Beta
Revenue$7.72B
Cost of Revenue$2.40B
Gross Profit$5.32B
SG&A Expenses$2.59B
Operating Income$1.64B
Interest Expense$156.00M
Net Income$1.92B
EPS (Basic)$1.43
EPS (Diluted)$1.42
Shares Outstanding (Basic)1.34B
Shares Outstanding (Diluted)1.35B

Key Highlights

  • 1Net sales increased by 2% to $7.7 billion for the three months ended January 24, 2020, and by 2% to $22.9 billion for the nine months ended January 24, 2020.
  • 2Net income attributable to Medtronic increased by 51% to $1.9 billion for the three months ended January 24, 2020, and by 20% to $4.1 billion for the nine months ended January 24, 2020.
  • 3Diluted earnings per share rose to $1.42 for the three months ended January 24, 2020, a 51% increase year-over-year, and to $3.07 for the nine months ended January 24, 2020, a 21% increase year-over-year.
  • 4The significant increase in net income and EPS was primarily driven by a $558 million tax benefit from the release of a valuation allowance.
  • 5Emerging markets demonstrated strong growth, with net sales increasing by 12% for the three months and 10% for the nine months ended January 24, 2020.
  • 6The company repurchased 2.1 million shares for approximately $240 million during the quarter and has $6.1 billion remaining under its share repurchase program.
  • 7Free cash flow for the nine months ended January 24, 2020 was $4.9 billion, an increase from $4.1 billion in the prior year period.

Frequently Asked Questions

Medtronic reported net sales of $7.7 billion for the three months ended January 24, 2020, an increase of 2% compared to the prior year. For the nine months ended January 24, 2020, net sales were $22.9 billion, also a 2% increase year-over-year.

The substantial increase in net income attributable to Medtronic and diluted earnings per share was primarily due to a $558 million tax benefit recognized in the quarter related to the release of a valuation allowance against certain net operating losses.

Medtronic experienced strong growth in emerging markets, with net sales up 12% for the quarter and 10% year-to-date. Net sales in the U.S. remained flat for the quarter and saw a 1% increase year-to-date. Non-U.S. developed markets remained largely flat, impacted by currency fluctuations.

Medtronic maintains a strong liquidity position with $3.7 billion in cash and cash equivalents and $7.9 billion in current investments as of January 24, 2020. The company has a $3.5 billion credit facility and no commercial paper outstanding. It continues to return value to shareholders through dividends and share repurchases, with approximately $6.1 billion remaining under its share repurchase authorization.