INVESTOR DAY JUN 5, 2018 NEW YORK CITY

Transcription

1 INVESTOR DAY JUN 5, 2018 NEW YORK CITY

2 MIKE COYLE EVP AND GROUP PRESIDENT CARDIAC AND VASCULAR GROUP

3 FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements. They are based on current assumptions and expectations that involve uncertainties or risks. These uncertainties and risks include, but are not limited to, those described in the filings we make with the U.S. Securities and Exchange Commission (SEC). Actual results may differ materially from anticipated results. Forward-looking statements are made as of today's date, and we undertake no duty to update them or any of the information contained in this presentation. Financial Data Certain information in this presentation includes calculations or figures that have been prepared internally and have not been reviewed or audited by our independent registered public accounting firm. Use of different methods for preparing, calculating or presenting information may lead to differences and such differences may be material. The methodology used to calculate such figures is explained in the footnotes to slides in this presentation where those figures appear. This presentation contains financial metrics, such as dividend payout ratio, cash conversion ratio, free cash flow payout ratio and return on invested capital, that are calculated using previously disclosed non-gaap financial measures under applicable SEC rules and regulations. GAAP to non- GAAP reconciliations of the relevant non-gaap financial measure for a particular reporting period are available with previous earnings release materials for such period, available at 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. Medtronic calculates forward-looking non-gaap financial measures based on internal forecasts that omit certain amounts that would be included in GAAP financial measures. For instance, forward-looking EPS projections exclude the impact of foreign currency fluctuations and other potential charges or gains that would be recorded as non-gaap adjustments to earnings during the fiscal year. Medtronic does not attempt to provide reconciliations of forward-looking non-gaap EPS guidance to projected GAAP EPS guidance, because the combined impact and timing of recognition of these potential charges or gains is inherently uncertain and difficult to predict, and is unavailable without unreasonable efforts. In addition, we believe such reconciliations would imply a degree of precision and certainty that could be confusing to investors. Such items could have a substantial impact on GAAP measures of financial performance Investor Day 3

4 STRATEGY TO CAPTURE HEALTHCARE GROWTH OPPORTUNITIES CVG STRATEGIES Therapy Innovation CVG Driving Therapy Innovation Across all Businesses with Structured Portfolio Prioritization led by the Most Innovative Talent in the Industry Globalization Our Global Footprint, Breadth and Scale give us a Fundamental Advantage in Driving Emerging Market Therapy Penetration and Market Share Economic Value Services and Solutions Driving Growth and Leading the Shift to Value- Based Healthcare Enterprise Excellence Leveraging Medtronic and CVG Size and Scale to Enhance Operating Profitability and Free Cash Flow Generation 2018 Investor Day 4

5 CHRONIC DISEASE BUSINESS UNIT DIVISION GROUP Therapy / Physician Focused Disease / IPU Focused Administrator Focus THERAPY AND DISEASE FOCUSED; CAPITALIZING ON LEVERAGING SIZE AND SCALE CVG STRUCTURE AND OPERATING FRAMEWORK FY18 REVENUE Cardiac & Vascular Group CRHF $11.4B Coronary & Structural Heart (CSH) Cardiac Rhythm & Heart Failure (CRHF) Aortic & Peripheral Vascular (APV) APV CSH Coronary and Renal Denervation Heart Failure Aortic FY18 REVENUE GROWTH Structural Heart Arrhythmia Management Peripheral Vascular CRHF: +3% CSH: +12% Cardiac Surgery Services and Solutions endovenous APV: +5% CVG: +6% Leveraging the portfolio to drive growth in line with overall Corporate Growth Coronary Artery Disease Valvular Heart Disease Structural Heart Disease Bradycardia / Tachycardia Atrial Fibrillation Heart Failure Aortic Aneurysms Peripheral Vascular Disease Venous Insufficiency 1. Growth Rates: FY18 Constant Currency 2018 Investor Day 5

6 CVG CREATING NEW GROWTH MARKETS TO ACCELERATE PORTFOLIO GROWTH ~30% OF CVG TODAY DRIVES ~80% OF FUTURE GROWTH TAVR ATRIAL FIBRILLATION ENDOVENOUS / DCB IMPLANTABLE DIAGNOSTICS LVADs OTHER HIGH- GROWTH MARKETS TRADITIONAL MATURE MARKETS MARKET SIZE 1 ~$3B ~$4B ~$2B ~$1B ~$1B -- ~$25B+ MARKET CAGR 2 MID- TEENS HSD HSD / LDD MID - TEENS HSD -- LSD ~4-5% WAMGR 2 MARKET POSITION CONTRIBUTION TO CVG GROWTH 3 ~17% ~16% ~13% ~10% ~8% ~16% ~20% FY12 7% Core Mkts 93% Growth Mkts Today 32% Traditional Mkts 68% Growth Mkts FY22 42% Core Mkts 58% Growth Mkts Growth In Line with Corporate Market leading positions and differential investments in high-growth markets drive growth in line with overall Corporate revenue performance 1. FY18 market estimates 2. FY17-FY22 growth estimates 3. FY18-FY22 growth estimates 2018 Investor Day 6

7 CVG THERAPY INNOVATION PIPELINE ROBUST PIPELINE BASED ON HIGHLY PRODUCTIVE R&D AND SELECT INVESTMENTS INVESTING FOR FUTURE GROWTH (Areas covered in product updates) LAUNCHED AND DRIVING CURRENT GROWTH FY19 / FY20 BEYOND Reveal LINQ TruRhythm HVAD Visia AF Resolute Onyx CoreValve Evolut R IR Cohort Micra Reimbursement Azure Wireless Pacemaker CoreValve Evolut PRO Endurant Heli-FX Short Neck Avalus Surgical Valve Percepta CRT-P Quad LVAD Destination Therapy VenaSeal Closure System Micra AV (VDD) Arctic Front Advanced PRO Polaris SmartSync (HP Bluetooth) LINQ II (Bluetooth + Waferscale) TYRX WRAP-IT LVAD Thoracotomy CoreValve Evolut PRO 34 mm Admiral DCB - AVF TAVR Bicuspid MVAD ALTAIR Intrepid (TMVR) Next Gen Resolute Onyx TAVR (Low Risk) Micra Expansion Symplicity Spyral AF Pulse Field Ablation ExtraVascular ICD Horizon (Next-Gen TAVI) Admiral DCB Below-the-Knee 2018 Investor Day 7

8 $Billions CSH: TRANSCATHETER AORTIC VALVE REPLACEMENT (TAVR) CONSTANT CADENCE OF MEANINGFUL INNOVATION 5.0 Global TAVR Market $4.5B to $5.5B Low Risk Medtronic TAVR Product Pipeline Intermediate Risk High Risk 1.0 Extreme Risk - FY18 FY19 FY20 FY21 FY22 APPROVED LAUNCHING FY20 BEYOND. Continued penetration into ER/HR/IR cohorts Pursuing expanded indications into lower risk patients and those with a bicuspid valve Additional growth opportunities in adjacent markets Evolut platform iterations improving ease of use to complement market leading safety and efficacy Transformative Horizon platform meeting the needs of low risk patients while maintaining key benefits of MDTs self-expanding, supra-annular platforms 2018 Investor Day 8

9 $Billions CSH: TRANSCATHETER MITRAL VALVE REPLACEMENT (TMVR) POTENTIAL LARGE MARKET OVER THE NEXT DECADE FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 Global TMV Repair & Replacement Market ~$4B Intrepid Transcatheter Mitral Valve TMV Repair Active R&D programs to expand valve size range, improve screening yield, and advance Trans Femoral/Trans Septal (TF/TS) to FIH TMV Replacement TF/TS FIH expected in back half of FY19 APOLLO Trial (US FDA approved IDE trial) rapidly enrolling with 40+ sites activated Evidence for intervention in Secondary MR will lead to accelerated penetration of transcatheter therapies TMV replacement will be the preferred procedure in the longterm due to superior efficacy and ease of use Most comprehensive TMVR outcomes published in JACC in January 2018 Device implant success in 48/49 (98%) No device malfunction, hemolysis, or thrombosis 79% of patients in NYHA class I or II in follow-up 2018 Investor Day 9

10 CSH: RENAL DENERVATION FROM LAST RESORT TO COMPLEMENTARY THERAPY INITIAL STUDY RESULTS HYPERTENSION A LARGE UNMET NEED SPYRAL OFF OBP mmhg ABPM -5.5 mmhg SPYRAL ON OBP -9.4 mmhg ABPM -9.0 mmhg Single largest contributor to cardiovascular death >1.0B Today Population with HTN >1.6B 2025 Symplicity Spyral TM BP lowering effect confirmed in 2 randomized shamcontrolled trials, including patients prescribed anti-htn medications Continued safety profile with zero major adverse events reported at 6-months Uniquely always on and provides 24-hr BP lowering at high risk periods of nighttime and early morning when there is an increase in clinical events SPYRAL HTN PIVOTAL Randomized up to 433 patients across 50 sites in the U.S., Europe, Australia, and Japan o 30 sites activated with 160 patients randomized Complete patient enrollment in 1 2 years Develop a foundation of clinical and economic evidence for reimbursement FDA Approval: Beyond FY20 Office Blood Pressure (OBP) Ambulatory Blood Pressure Monitoring (ABPM) 2018 Investor Day 10

11 CRHF: LOW POWER DISRUPTING THE CRM MARKET WITH MICRA AND ITS FUTURE DERIVATIVES LAUNCHED FY20 BEYOND. Micra VR (VVIR) Micra AV (VDD) Micra AR (AAIR) Micra DDD (DDDR) World s smallest pacemaker Approved globally (First transcatheter pacemaker approved in the US) Approved for 1.5 & 3T fullbody MRI 17,000+ patients AV Synchronous Ventricular pacing Mechanical (accelerometer) based atrial sensing from the ventricle Atrial pacing Redesigned fixation Dual chamber pacing & sensing Modular approach will change prevailing dual Chamber Implant paradigm AVB + AF 16% SND Only 30% AVB + AF 16% SND Only 30% AVB + AF 16% SND Only 30% AVB + AF 16% SND Only 30% AVB Only 40% SND + AVB 14% AVB Only 40% SND + AVB 14% AVB Only 40% SND + AVB 14% AVB Only 40% SND + AVB 14% 16% of Total Eligible Market 56% of Total Eligible Market 86% of Total Eligible Market 100% of Total Eligible Market Single Chamber: VVIR= pacing and sensing the ventricle plus rate response feature VDD= dual chamber sensing and AV synchronized ventricular pacing AAIR= pacing and sensing the Atrium plus rate response feature Dual Chamber: DDDR= dual chamber pacing plus rate response feature 2018 Investor Day 11

12 CRHF: HIGH POWER TRANSFORMATIONAL THERAPY INNOVATION WITH EXTRAVASCULAR ICD PROTECTION FROM SUDDEN CARDIAC DEATH WITHOUT COMPROMISE Spec Traditional ICD EV-ICD Conventional SubQ-ICD Size ~30cc ~33cc ~60cc Max Energy 35J 40J 80J Projected Longevity Features ~11 years ~11 years ~7 years Defibrillation Post-Shock Pacing ATP Brady Pacing Defibrillation Post-Shock Pacing ATP Brady Support Pacing Lead Placement Intravascular Extravascular (Substernal) Defibrillation Post-Shock Pacing Subcutaneous (on top of ribs) Address limitations of S-ICD and provide benefits of traditional ICDs, including painless termination of arrhythmias via ATP, through a single device and with a lead outside the heart and vasculature Acute Substernal Defibrillation 2 (ASD2) feasibility study successfully completed and presented at 2018 HRS meeting First chronic implants: FY19 OUS & US release: Beyond FY Investor Day 12

13 CRHF: DIAGNOSTICS TECHNOLOGY ENHANCEMENTS AND INDICATION EXPANSION TODAY LINQ TruRhythm Fifth Generation Detection Algorithm FY19/FY20 LINQ II Wafer Scale Platform 99.7% AF episode detection accuracy 8x fewer false positives than other ICMs 3 year battery life Indicated for: Cryptogenic stroke Syncope AF Up to 5 year battery life Bluetooth connectivity Even better accuracy / AI Vital Signs sensors Current indications plus: Chronic disease management AF management in heart failure Renal arrhythmias 2018 Investor Day 13

14 CRHF: AF SOLUTIONS BEYOND PAROXYSMAL ATRIAL FIBRILLATION TREATMENT DELIVERING A CADENCE OF MEANINGFUL AND TRANSFORMATIVE INNOVATION LAUNCHED / LAUNCHING BEYOND. Arctic Front Advance Pro NG Cryoballoon & ArcticLine NG Cryo Console & NG CardioInsight Pulsed Field Ablation + Volts 0V - Volts Simple, safe and effective treatment of PAF Improved ability to see real-time isolation of the pulmonary veins Ability to treat variable vein anatomies and electrodes for navigation From simple to complex arrhythmias Simple to use plus smarter, connected and predictive Improve EP lab efficiency with streamlined workflow From Cryo and RF to nonthermal energy solutions Potential to improve durability and safety of catheter ablation NG: Next Generation 2018 Investor Day 14

15 CRHF: VENTRICULAR ASSIST DEVICES FOR END STAGE HEART FAILURE SMALLER DEVICES, FEWER COMPLICATIONS LAUNCHED FY19 / FY20 BEYOND. HVAD PAL Controller & RPM MVAD TM Fully Implantable Smallest LVAD U.S. Thoracotomy 40% Smaller LVAD HVAD, MVAD and CircuLite Destination Therapy Superior Clinical Data Remote Patient Monitoring (RPM) Transforming Patient Care Smaller incision Less Shear Stress Broader Range of Patients No External Driveline Better Patient Acceptance 2018 Investor Day 15

16 $Billions $Billions APV: DRUG COATED BALLOONS AND VENASEAL TRANSFORMATIVE INNOVATION AND MEANINGFUL ITERATIONS DRUG COATED BALLOONS ENDOVENOUS IN.PACT TM Admiral TM Clinically proven with the largest base of 4 year evidence on 3,500+ patients that consistently outperforms Expanding global access: US SFA long lesions: 1st to market with 200mm lengths (FY19) Japan SFA: 1st to market & superior data (FY19) China SFA: entry into large potential market (FY20) Innovative therapy expansion: AV Access: IDE enrollment completion in early FY19 BTK: EU trial enrollment completion in FY19 GLOBAL DCB MARKET ~$1B VenaSeal Closure System Unique non-thermal solution to resolve venous reflux in Superficial Venous disease Improved patient comfort, reduce recovery time, eliminate risk of nerve injury Favorable US reimbursement secured and coverage rapidly expanding Deep Venous Expansion into the deep venous market; initiating the Abre TM Venous Stent PMA trial and OUS launch GLOBAL ENDOVENOUS MARKET ~$1.5B OUS SFA US SFA WW BTK WW AV Access Superficial Deep - FY18 FY19 FY20 FY21 FY22 - FY18 FY19 FY20 FY21 FY Investor Day 16

17 CARDIAC AND VASCULAR GROUP CONSISTENT ANNUAL GROWTH IN LINE WITH CORPORATE PERFORMANCE CONSISTENT EXECUTION GROWTH DRIVERS THERAPY INNOVATION Therapy Innovation driven by Transformative Innovation and Meaningful New Product Iteration GLOBALIZATION ECONOMIC VALUE Continued sustainable growth in line with Corporate revenue growth Globalization, through Emerging Market growth will drive double digit growth Expanding Services and Solutions revenue streams led by Integrated Health Solutions, Diagnosis and Referral Mgmt Services, Patient Management as well as shifts towards Value- Based Healthcare ENTERPRISE EXCELLENCE Enterprise Excellence Programs to provide foundation for further leverage and optimization; driving increased profitability and cash flow generation 2018 Investor Day 17