MEDTRONIC PLC

WORLD WIDE REVENUE⁽¹⁾

(Unaudited)

FIRST QUARTER

REPORTED

CONSTANT CURRENCY

(in millions)

FY23

FY22

Growth

Currency
Impact⁽²⁾

FY23

Growth⁽³⁾

Cardiovascular

$            2,713

$            2,890

(6.1) %

$             (138)

$            2,851

(1.3) %

Cardiac Rhythm & Heart Failure

1,393

1,483

(6.1)

(71)

1,464

(1.3)

Structural Heart & Aortic

741

787

(5.8)

(43)

784

(0.4)

Coronary & Peripheral Vascular

579

620

(6.6)

(25)

604

(2.6)

Medical Surgical

2,001

2,322

(13.8)

(115)

2,116

(8.9)

Surgical Innovations

1,338

1,554

(13.9)

(82)

1,420

(8.6)

Respiratory, Gastrointestinal, & Renal

664

768

(13.5)

(34)

698

(9.1)

Neuroscience

2,115

2,204

(4.0)

(64)

2,179

(1.1)

Cranial & Spinal Technologies

1,043

1,123

(7.1)

(28)

1,071

(4.6)

Specialty Therapies

667

641

4.1

(22)

689

7.5

Neuromodulation

405

440

(8.0)

(15)

420

(4.5)

Diabetes

541

572

(5.4)

(33)

574

0.3

TOTAL

$            7,371

$            7,987

(7.7) %

$             (351)

$            7,722

(3.3) %

(1) The data in this schedule has been intentionally rounded to the nearest million and, therefore, may not sum.

(2) The currency impact to revenue measures the change in revenue between current and prior year periods using constant exchange rates.

(3) The first quarter of 2023 includes $20 million of inorganic revenue related to the Intersect ENT acquisition, which is included in the reported results of the Specialty Therapies division of the Neuroscience portfolio. When excluding the impact of currency and the inorganic Intersect ENT revenue, first quarter 2023 revenue declined approximately 3.6 percent organic.

MEDTRONIC PLC

U.S.⁽¹⁾⁽²⁾ REVENUE

FIRST QUARTER

REPORTED

(in millions)

FY23

FY22

Growth⁽³⁾

Cardiovascular

$                1,298

$                1,420

(8.6) %

Cardiac Rhythm & Heart Failure

717

770

(6.9)

Structural Heart & Aortic

312

347

(10.1)

Coronary & Peripheral Vascular

269

303

(11.2)

Medical Surgical

843

990

(14.8)

Surgical Innovations

509

620

(17.9)

Respiratory, Gastrointestinal, & Renal

334

370

(9.7)

Neuroscience

1,419

1,446

(1.9)

Cranial & Spinal Technologies

762

795

(4.2)

Specialty Therapies

380

360

5.6

Neuromodulation

276

291

(5.2)

Diabetes

206

245

(15.9)

TOTAL

$                3,766

$                4,101

(8.2) %

(1) U.S. includes the United States and U.S. territories.

(2) The data in this schedule has been intentionally rounded to the nearest million and, therefore, may not sum.

(3) The first quarter of 2023 includes $20 million of inorganic revenue related to the Intersect ENT acquisition, which is included in the reported results of the Specialty Therapies division of the Neuroscience portfolio. When excluding the impact of currency and the inorganic Intersect ENT revenue, first quarter 2023 revenue declined approximately 8.7 percent organic.

MEDTRONIC PLC

WORLD WIDE REVENUE: GEOGRAPHIC ⁽¹⁾⁽²⁾

(Unaudited)

FIRST QUARTER

REPORTED

CONSTANT CURRENCY

(in millions)

FY23

FY22

Growth

Currency
Impact⁽³⁾

FY23

Growth⁽⁴⁾

U.S.

$            1,298

$            1,420

(8.6) %

$                —

$            1,298

(8.6) %

Non-U.S. Developed

892

1,003

(11.1)

(122)

1,014

1.1

Emerging Markets

523

467

12.0

(16)

539

15.4

Cardiovascular

2,713

2,890

(6.1)

(138)

2,851

(1.3)

U.S.

843

990

(14.8)

—

843

(14.8)

Non-U.S. Developed

767

869

(11.7)

(104)

871

0.2

Emerging Markets

392

463

(15.3)

(11)

403

(13.0)

Medical Surgical

2,001

2,322

(13.8)

(115)

2,116

(8.9)

U.S.

1,419

1,446

(1.9)

—

1,419

(1.9)

Non-U.S. Developed

407

465

(12.5)

(56)

463

(0.4)

Emerging Markets

290

293

(1.0)

(9)

299

2.0

Neuroscience

2,115

2,204

(4.0)

(64)

2,179

(1.1)

U.S.

206

245

(15.9)

—

206

(15.9)

Non-U.S. Developed

264

263

0.4

(33)

297

12.9

Emerging Markets

72

63

14.3

—

72

14.3

Diabetes

541

572

(5.4)

(33)

574

0.3

U.S.

3,766

4,101

(8.2)

—

3,766

(8.2)

Non-U.S. Developed

2,328

2,601

(10.5)

(315)

2,643

1.6

Emerging Markets

1,276

1,286

(0.8)

(35)

1,311

1.9

TOTAL

$            7,371

$            7,987

(7.7) %

$             (351)

$            7,722

(3.3) %

(1) U.S. includes the United States and U.S. territories. Non-U.S. developed markets include Japan, Australia, New Zealand, Korea, Canada, and the countries of Western Europe. Emerging Markets include the countries of the Middle East, Africa, Latin America, Eastern Europe, and the countries of Asia that are not included in the non-U.S. developed markets, as previously defined.

(2) The data in this schedule has been intentionally rounded to the nearest million and, therefore, may not sum.

(3) The currency impact to revenue measures the change in revenue between current and prior year periods using constant exchange rates.

(4) The first quarter of 2023 includes $20 million of inorganic revenue related to the Intersect ENT acquisition, which is included in the reported results of the Specialty Therapies division of the Neuroscience portfolio. When excluding the impact of currency and the inorganic Intersect ENT revenue, first quarter 2023 revenue declined approximately 3.6 percent organic.

MEDTRONIC PLC

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited) 

Three months ended

(in millions, except per share data)

July 29, 2022

July 30, 2021

Net sales

$             7,371

$             7,987

Costs and expenses:

Cost of products sold, excluding amortization of intangible assets

2,516

2,598

Research and development expense

692

750

Selling, general, and administrative expense

2,567

2,547

Amortization of intangible assets

423

436

Restructuring charges, net

14

11

Certain litigation charges, net

—

26

Other operating expense, net

35

760

Operating profit

1,125

859

Other non-operating income, net

(83)

(111)

Interest expense

164

137

Income before income taxes

1,044

833

Income tax provision

112

64

Net income

931

769

Net income attributable to noncontrolling interests

(2)

(6)

Net income attributable to Medtronic

$                929

$                763

Basic earnings per share

$               0.70

$               0.57

Diluted earnings per share

$               0.70

$               0.56

Basic weighted average shares outstanding

1,329.4

1,344.5

Diluted weighted average shares outstanding

1,334.5

1,356.4

The data in this schedule has been intentionally rounded to the nearest million, and, therefore, may not sum.

MEDTRONIC PLC

GAAP TO NON-GAAP RECONCILIATIONS⁽¹⁾

(Unaudited)

Three months ended July 29, 2022

(in millions, except per share data)

Net
Sales

Cost of
Products
Sold

Gross
Margin
Percent

Operating
Profit

Operating
Profit
Percent

Income
Before
Income
Taxes

Net Income
Attributable
to Medtronic

Diluted

EPS

Effective
Tax Rate

GAAP

$  7,371

$   2,516

65.9 %

$     1,125

15.3 %

$      1,044

$          929

$   0.70

10.7 %

Non-GAAP Adjustments:

Restructuring and associated costs (2)

—

(20)

0.3

76

1.0

76

60

0.04

21.1

Acquisition-related items (3)

—

(11)

0.1

35

0.5

35

29

0.02

17.1

(Gain)/loss on minority investments (4)

—

—

—

—

—

(4)

(4)

—

—

Medical device regulations (5)

—

(18)

0.2

32

0.4

32

26

0.02

18.8

Amortization of intangible assets

—

—

—

423

5.7

423

359

0.27

15.4

RCS impairments / costs (6)

—

—

—

74

1.0

74

73

0.05

1.4

Debt redemption premium and other charges (7)

—

—

—

—

—

53

42

0.03

20.8

Certain tax adjustments, net (8)

—

—

—

—

—

—

(13)

(0.01)

—

Non-GAAP

$  7,371

$   2,467

66.5 %

$     1,765

23.9 %

$      1,734

$       1,502

$   1.13

13.3 %

Currency impact

351

82

0.5

50

(0.4)

0.03

Currency Adjusted

$  7,722

$   2,549

67.0 %

$     1,815

23.5 %

$   1.16

Three months ended July 30, 2021

(in millions, except per share data)

Net
Sales

Cost of
Products
Sold

Gross
Margin
Percent

Operating
Profit

Operating
Profit
Percent

Income
Before
Income
Taxes

Net Income
Attributable
to Medtronic

Diluted

EPS

Effective
Tax Rate

GAAP

$  7,987

$   2,598

67.5 %

$       859

10.8 %

$         833

$          763

$   0.56

7.7 %

Non-GAAP Adjustments:

Restructuring and associated costs (2)

—

(33)

0.4

81

1.0

81

65

0.05

21.0

Acquisition-related items (1) (3)

—

(5)

0.1

19

0.2

19

17

0.01

5.3

Certain litigation charges

—

—

—

26

0.3

26

21

0.02

19.2

(Gain)/loss on minority investments (4)

—

—

—

—

—

(31)

(29)

(0.02)

—

Medical device regulations (5)

—

(11)

0.1

21

0.3

21

17

0.01

19.0

Amortization of intangible assets

—

—

—

436

5.5

436

366

0.27

15.8

MCS impairments / costs (9)

—

(58)

0.7

726

9.1

726

564

0.42

22.3

Certain tax adjustments, net (10)

—

—

—

—

—

—

53

0.04

—

Non-GAAP (1)

$  7,987

$   2,491

68.8 %

$     2,168

27.1 %

$      2,111

$       1,838

$   1.36

12.7 %

See description of non-GAAP financial measures contained in the press release dated August 23, 2022.

(1)

The data in this schedule has been intentionally rounded to the nearest million or $0.01 for EPS figures, and, therefore, may not sum. Starting with the quarter ended April 29, 2022, the Company will no longer adjust non-GAAP financial measures for certain license payments for, or acquisitions of, technology not approved by regulators due to recent industry guidance from the U.S. Securities and Exchange Commission. Historical non-GAAP financial measures presented in our earnings release have been recast for comparability.

(2)

Associated costs include costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses.

(3)

The charges primarily include business combination costs and changes in fair value of contingent consideration.

(4)

We exclude unrealized and realized gains and losses on our minority investments as we do not believe that these components of income or expense have a direct correlation to our ongoing or future business operations.

(5)

The charges represent incremental costs of complying with the new European Union (E.U.) medical device regulations for previously registered products and primarily include charges for contractors supporting the project and other direct third-party expenses. We consider these costs to be duplicative of previously incurred costs and/or one-time costs, which are limited to a specific time period.

(6)

The charges predominantly include non-cash pre-tax impairments, primarily related to goodwill, as a result of the anticipated sale of half of the Company's Renal Care Solutions (RCS) business related to the May 25, 2022 agreement with DaVita Inc.

(7)

The charges relate to the early redemption of approximately $2.3 billion of debt and were recorded within interest expense within the consolidated statements of income.

(8)

The net benefit is due to a valuation allowance release associated with certain carryover attributes as a result of the anticipated RCS transaction listed above in (6) partially offset by the amortization of previously established deferred tax assets from intercompany intellectual property transactions.

(9)

The charges relate to the Company's June 2021 decision to stop the distribution and sale of the Medtronic HVAD System within the Mechanical Circulatory Support Operating Unit (MCS). The charges included $515 million of non-cash impairments, primarily related to $409 million of intangible asset impairments, as well as $211 million for commitments and obligations in connection with the decision, including customer support obligations, restructuring, and other associated costs. Medtronic is committed to serving the needs of the approximately 3,200 patients currently implanted with the HVAD System.

(10)

The charges are associated with a change in the company's permanently reinvestment assertion on certain historical earnings and the amortization on previously established deferred tax assets from intercompany intellectual property transactions.

MEDTRONIC PLC

GAAP TO NON-GAAP RECONCILIATIONS⁽¹⁾

(Unaudited)

Three months ended July 29, 2022

(in millions)

Net Sales

SG&A
Expense

SG&A
Expense as
a % of Net
Sales

R&D
Expense

R&D
Expense
as a % of
Net Sales

Other
Operating
Expense
(Income),
net

Other
Operating
Expense, net
as a % of
Net Sales

Other Non-
Operating
(Income)
Expense, net

GAAP

$      7,371

$     2,567

34.8 %

$       692

9.4 %

$           35

0.5 %

$            (83)

Non-GAAP Adjustments:

Restructuring and associated costs (2)

—

(41)

(0.6)

—

—

—

—

—

Acquisition-related items (3)

—

—

—

—

—

(24)

(0.3)

—

Medical device regulations (4)

—

—

—

(14)

(0.2)

—

—

—

RCS impairments / costs (5)

—

(7)

(0.1)

—

—

(68)

(0.9)

—

Gain/(loss) on minority investments (6)

—

—

—

—

—

—

—

4

Non-GAAP

$      7,371

$     2,518

34.2 %

$       678

9.2 %

$          (57)

(0.8) %

$            (79)

Currency impact

351

95

(0.4)

9

(0.3)

114

1.5

(2)

Currency Adjusted

$      7,722

$     2,613

33.8 %

$       687

8.9 %

$           57

0.7 %

$            (81)

See description of non-GAAP financial measures contained in the press release dated August 23, 2022.

(1)

The data in this schedule has been intentionally rounded to the nearest million, and, therefore, may not sum.

(2)

Associated costs include costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses.

(3)

The charges primarily include business combination costs and changes in fair value of contingent consideration.

(4)

The charges represent incremental costs of complying with the new European Union (E.U.) medical device regulations for previously registered products and primarily include charges for contractors supporting the project and other direct third-party expenses. We consider these costs to be duplicative of previously incurred costs and/or one-time costs, which are limited to a specific time period.

(5)

The charges predominantly include non-cash pre-tax impairments, primarily related to goodwill, as a result of the anticipated sale of half of the Company's Renal Care Solutions (RCS) business related to the May 25, 2022 agreement with DaVita Inc.

(6)

We exclude unrealized and realized gains and losses on our minority investments as we do not believe that these components of income or expense have a direct correlation to our ongoing or future business operations.

MEDTRONIC PLC

GAAP TO NON-GAAP RECONCILIATIONS⁽¹⁾

(Unaudited)

Three months ended

Three months ended

(in millions)

July 29, 2022

July 30, 2021

Net cash provided by operating activities

$                     1,083

$                     1,292

Additions to property, plant, and equipment

(426)

(378)

Free Cash Flow (2)

$                       657

$                        914

See description of non-GAAP financial measures contained in the press release dated August 23, 2022.

(1)

The data in this schedule has been intentionally rounded to the nearest million, and, therefore, may not sum.

(2)

Free cash flow represents operating cash flows less property, plant, and equipment additions.

MEDTRONIC PLC

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions)

July 29, 2022

April 29, 2022

ASSETS

Current assets:

Cash and cash equivalents

$                2,140

$                3,714

Investments

6,733

6,859

Accounts receivable, less allowances and credit losses of $219 and $230, respectively

5,308

5,551

Inventories, net

4,809

4,616

Other current assets

3,145

2,318

Total current assets

22,135

23,059

Property, plant, and equipment

13,323

13,365

Accumulated depreciation

(8,043)

(7,952)

Property, plant, and equipment, net

5,281

5,413

Goodwill

40,324

40,502

Other intangible assets, net

15,775

15,595

Tax assets

3,311

3,403

Other assets

3,088

3,008

Total assets

$             89,914

$             90,981

LIABILITIES AND EQUITY

Current liabilities:

Current debt obligations

$                5,729

$                3,742

Accounts payable

2,180

2,276

Accrued compensation

1,773

2,121

Accrued income taxes

549

704

Other accrued expenses

3,816

3,551

Total current liabilities

14,049

12,394

Long-term debt

17,481

20,372

Accrued compensation and retirement benefits

1,102

1,113

Accrued income taxes

2,102

2,087

Deferred tax liabilities

899

884

Other liabilities

1,440

1,410

Total liabilities

37,071

38,260

Commitments and contingencies

Shareholders' equity:

Ordinary shares— par value  $0.0001, 2.6 billion shares authorized, 1,329,276,973 and
1,330,743,395 shares issued and outstanding, respectively

—

—

Additional paid-in capital

24,335

24,566

Retained earnings

30,276

30,250

Accumulated other comprehensive loss

(1,939)

(2,265)

Total shareholders' equity

52,672

52,551

Noncontrolling interests

170

171

Total equity

52,843

52,722

Total liabilities and equity

$             89,914

$             90,981

The data in this schedule has been intentionally rounded to the nearest million, and, therefore, may not sum.

MEDTRONIC PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three months ended

(in millions)

July 29, 2022

July 30, 2021

Operating Activities:

Net income

$                     931

$                     769

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

668

671

Provision for credit losses

15

15

Deferred income taxes

(18)

(11)

Stock-based compensation

62

69

Loss on debt extinguishment

53

—

MCS asset impairment and inventory write-down

—

515

Other, net

121

116

Change in operating assets and liabilities, net of acquisitions and divestitures:

Accounts receivable, net

89

(40)

Inventories, net

(380)

(75)

Accounts payable and accrued liabilities

(147)

(416)

Other operating assets and liabilities

(311)

(321)

Net cash provided by operating activities

1,083

1,292

Investing Activities:

Acquisitions, net of cash acquired

(1,191)

—

Additions to property, plant, and equipment

(426)

(378)

Purchases of investments

(1,884)

(2,654)

Sales and maturities of investments

1,886

2,324

Other investing activities, net

30

(76)

Net cash used in investing activities

(1,585)

(784)

Financing Activities:

Proceeds from short-term borrowings (maturities greater than 90 days)

2,284

—

Payments on long-term debt

(2,311)

(1)

Dividends to shareholders

(903)

(846)

Issuance of ordinary shares

43

111

Repurchase of ordinary shares

(336)

(315)

Other financing activities

273

(4)

Net cash used in financing activities

(950)

(1,055)

Effect of exchange rate changes on cash and cash equivalents

(122)

(42)

Net change in cash and cash equivalents

(1,574)

(589)

Cash and cash equivalents at beginning of period

3,714

3,593

Cash and cash equivalents at end of period

$                  2,140

$                  3,004

Supplemental Cash Flow Information

Cash paid for:

Income taxes

$                     260

$                     249

Interest

68

63

The data in this schedule has been intentionally rounded to the nearest million, and, therefore, may not sum.

Contacts:

Erika Winkels           

Ryan Weispfenning

Public Relations         

Investor Relations

+1-763-526-8478       

+1-763-505-4626