SEC Filings

10-Q
MEDTRONIC PLC filed this Form 10-Q on 12/04/2017
Entire Document
 



The table below illustrates net sales by operating segment for the three and six months ended October 27, 2017 and October 28, 2016:
 
Three months ended
 
 
 
Six months ended
 
 
(in millions)
October 27, 2017
 
October 28, 2016
 
% Change
 
October 27, 2017
 
October 28, 2016
 
% Change
Cardiac and Vascular Group
$
2,773

 
$
2,584

 
7
 %
 
$
5,419

 
$
5,102

 
6
 %
Minimally Invasive Therapies Group
1,952

 
2,473

 
(21
)
 
4,438

 
4,897

 
(9
)
Restorative Therapies Group
1,863

 
1,826

 
2

 
3,672

 
3,598

 
2

Diabetes Group
462

 
462

 

 
911

 
914

 

Total Net Sales
$
7,050

 
$
7,345

 
(4
)%
 
$
14,440

 
$
14,511

 
 %

For the three and six months ended October 27, 2017, net sales was unfavorably affected by the divestiture of the Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses within the Minimally Invasive Therapies Group. Further, net sales was unfavorably impacted by Hurricane Maria, which significantly affected our manufacturing operations in Puerto Rico. We estimate that Hurricane Maria had an approximate $55 million to $65 million unfavorable impact to net sales for the three months ended October 27, 2017. The unfavorable growth impacts for the three months ended October 27, 2017 were partially offset by the favorable impact of the acquisition of HeartWare International, Inc. (HeartWare). For the six months ended October 27, 2017, our net sales growth was favorably impacted by the acquisitions of HeartWare and Smith & Nephew's gynecology business, which contributed $112 million to our net sales growth.

Our performance continues to be fueled by our three growth strategies: therapy innovation, globalization, and economic value. We are creating competitive advantages and capitalizing on the long-term trends in healthcare: namely, the desire to improve clinical outcomes; the growing demand for expanded access to care; and the optimization of cost and efficiency within healthcare systems. In our therapy innovation growth strategy, we continue to see strong adoption of our products across all our operating segments. In globalization, net sales in emerging markets and non-U.S. developed markets grew 9 percent and 1 percent, respectively, during the three months ended October 27, 2017, and 10 percent and 3 percent, respectively, during the six months ended October 27, 2017 as compared to the corresponding periods in the prior fiscal year as we continue to expand access to our products and services around the world. In our third growth strategy, economic value, we continue to execute our value-based healthcare signature programs and aggressively develop unique, value-based healthcare solutions across each of our operating segments. We remain focused on leading the shift to healthcare payment systems that reward value and improved patient outcomes over volume. See our discussion in the “Net Sales” section of this Management's Discussion and Analysis for more information on the results of our operating segments.

GAAP to Non-GAAP Reconciliation We provide non-GAAP financial measures to facilitate review of our operational performance and as a basis for strategic planning. Management believes that in order to properly understand its short-term and long-term financial trends, including period over period comparisons of the company’s operations, investors may find it useful to exclude the effect of certain charges or gains that contribute to or reduce earnings but that result from transactions or events that management believes may or may not recur with similar materiality or impact to operations in future periods. Refer to our discussion in the "Costs and Expenses" and "Income Taxes" sections of this Management's Discussion and Analysis for more information on the Non-GAAP Adjustments. Non-GAAP financial measures should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP, and investors are cautioned that we may calculate non-GAAP financial measures in a way that is different from other companies.

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