10-QPeriod: Q2 FY2022

Medtronic plc Quarterly Report for Q2 Ended Oct 29, 2021

Filed December 2, 2021For Securities:MDT

Summary

Medtronic plc reported strong financial results for the six months ended October 29, 2021, with net sales increasing by 12% to $15.8 billion and net income attributable to Medtronic more than doubling to $2.1 billion compared to the same period last year. This growth was driven by a recovery in global procedural volumes following the COVID-19 pandemic, particularly in international markets, and solid performance across its Cardiovascular, Medical Surgical, and Neuroscience segments. The company also demonstrated robust operating cash flow, generating $3.1 billion for the six-month period, and a free cash flow of $2.4 billion, underscoring its financial strength and ability to fund operations and return value to shareholders. The company's strategic focus on innovation and market expansion continues to yield positive results, with key product launches and advancements contributing to segment growth. Despite ongoing challenges related to COVID-19, including supply constraints and healthcare system staffing shortages impacting the U.S. market, Medtronic's diversified portfolio and global presence have enabled it to navigate these headwinds. The company's strong balance sheet and liquidity position provide confidence in its ability to manage foreseeable operating needs and pursue strategic capital allocation alternatives.

Financial Highlights

54 data points
Beta

Revenue

$7.85B

68.2% Gross Margin

Net Income

$1.32B

16.8% Net Margin

EPS (Diluted)

$0.97

Total Assets

$91.76B

Cash & Equivalents

$2.90B

Free Cash Flow

$1.50B

Financial Statements
Beta
Revenue$7.85B
Cost of Revenue$2.50B
Gross Profit$5.35B
SG&A Expenses$2.62B
Operating Income$1.56B
Interest Expense$136.00M
Net Income$1.32B
EPS (Basic)$0.97
EPS (Diluted)$0.97
Shares Outstanding (Basic)1.35B
Shares Outstanding (Diluted)1.36B

Key Highlights

  • 1Net sales increased 12% to $15.8 billion for the six months ended October 29, 2021, compared to $14.1 billion in the prior year.
  • 2Net income attributable to Medtronic significantly increased to $2.07 billion for the six months ended October 29, 2021, up from $976 million in the prior year.
  • 3Diluted earnings per share were $1.53 for the six months ended October 29, 2021, a substantial increase from $0.72 in the prior year.
  • 4Operating cash flow for the six months ended October 29, 2021, was $3.06 billion, a notable increase from $2.14 billion in the prior year.
  • 5Free cash flow for the six months ended October 29, 2021, was $2.41 billion, up from $1.52 billion in the prior year.
  • 6The Cardiovascular segment showed strong growth, with net sales up 11% to $5.7 billion for the six months ended October 29, 2021.
  • 7The company announced a pending acquisition of Intersect ENT for approximately $1.1 billion, expected to close by the end of fiscal year 2022.

Frequently Asked Questions

For the six months ended October 29, 2021, Medtronic reported net sales of $15.8 billion, an increase of 12% compared to $14.1 billion for the same period in the prior year. For the three months ended October 29, 2021, net sales were $7.8 billion, a 3% increase from $7.6 billion in the prior year period. The growth was driven by recovery in global procedural volumes and strong international performance, partially offset by COVID-19 impacts and staffing shortages in the U.S.

Medtronic demonstrated significant improvement in profitability. For the six months ended October 29, 2021, net income attributable to Medtronic more than doubled to $2.07 billion, or $1.53 per diluted share, compared to $976 million, or $0.72 per diluted share, in the prior year. For the three months ended October 29, 2021, net income attributable to Medtronic was $1.31 billion, or $0.97 per diluted share, up from $489 million, or $0.36 per diluted share, in the prior year.

Medtronic generated strong cash flows. For the six months ended October 29, 2021, net cash provided by operating activities was $3.06 billion, an increase from $2.14 billion in the prior year. Free cash flow, a non-GAAP measure, was $2.41 billion for the same period, up from $1.52 billion in the prior year. The company ended the period with $2.9 billion in cash and cash equivalents and $7.8 billion in current investments, indicating a solid liquidity position.

Yes, Medtronic announced a pending acquisition of Intersect ENT for approximately $1.1 billion, expected to close by the end of fiscal year 2022, subject to regulatory and other closing conditions. The company also noted ongoing restructuring programs (Enterprise Excellence and Simplification) aimed at driving efficiency and competitiveness.