PR Newswire | Nov 23, 2021 06:46AM EST

11/23 05:45 CST

Medtronic Reports Second Quarter Fiscal 2022 Financial ResultsCompany continued to launch new products, win share, and deliver strong earnings growth; market procedure volumes impacted by COVID-19 resurgence DUBLIN, Nov. 23, 2021

DUBLIN, Nov. 23, 2021 /PRNewswire/ -- Medtronic plc (NYSE:MDT) today announced financial results for its second quarter of fiscal year 2022, which ended October 29, 2021.

Key Highlights

* Revenue of $7.8 billion increased 3% reported and 2% organic * GAAP diluted EPS of $0.97; non-GAAP diluted EPS of $1.32 * Reiterates full year EPS guidance

"As our markets recover, Medtronic is one of the best positioned companies in healthcare." Chairman & CEO Geoff Martha The company reported second quarter worldwide revenue of $7.847 billion, an increase of 3% as reported and 2% on an organic basis, which excludes the $32 million benefit of foreign currency translation. Unless otherwise stated, all revenue growth rates in this press release are stated on an organic basis, which excludes the impact of foreign currency translation. The company's second quarter revenue results reflect the unfavorable market impact of COVID-19 and health system labor shortages on medical device procedure volumes, primarily in the U.S.

As reported, second quarter GAAP net income and diluted earnings per share (EPS) were $1.311 billion and $0.97, respectively, increases of 168% and 169%, respectively. As detailed in the financial schedules included at the end of this release, second quarter non-GAAP net income and non-GAAP diluted EPS were $1.792 billion and $1.32, respectively, increases of 30% and 29%, respectively.

Second quarter U.S. revenue of $3.997 billion represented 51% of company revenue and decreased 1%. Non-U.S. developed market revenue of $2.478 billion represented 32% of company revenue and increased 1% as reported and 2% organic. Emerging Markets revenue of $1.372 billion represented 17% of company revenue and increased 20% as reported and 16% organic.

"Our second quarter results reflect focused execution of our strategy and the strong underlying health of the business, despite the market impact of the pandemic resurgence and healthcare system staffing challenges on medical procedure volumes, particularly in the U.S., which affected our quarterly revenue growth," said Geoff Martha, Medtronic chairman and chief executive officer. "During the quarter, we continued to advance our pipeline, launched new products, and grew share in the majority of our businesses. Looking ahead, as our markets recover, Medtronic is one of the best positioned companies in healthcare. We have an expansive pipeline of leading technology, a robust balance sheet, and an expanding roster of proven top talent. Coupled with our revitalized operating model and new competitive mindset, we're poised to accelerate and sustain growth."

Cardiovascular PortfolioThe Cardiovascular Portfolio includes the Cardiac Rhythm & Heart Failure (CRHF), Structural Heart & Aortic (SHA), and Coronary & Peripheral Vascular (CPV) divisions. Cardiovascular revenue of $2.827 billion increased 4% as reported and 3% organic, driven by mid-single digit organic growth in CPV and low-single digit organic growth in CRHF and SHA.

* Cardiac Rhythm & Heart Failure revenue of $1.471 billion increased 3% as reported and organic. Adjusting for the discontinuation of HVAD(tm) System sales, CRHF revenue increased 6% organic. Cardiac Rhythm Management revenue increased in the high-single digits, driven by mid-single digit growth in Defibrillation Solutions and high-single digit growth in Cardiac Pacing Therapies, including mid-teens growth in Leadless Pacemakers on the continued global adoption of Micra(tm) transcatheter pacing systems. Cardiovascular Diagnostics revenue declined in the mid-single digits, as procedure volumes were affected by COVID-19 resurgence. Cardiac Ablation Solutions revenue increased in the mid-single digits on the continued adoption of Arctic Front Advance(tm) cryoballoon catheters and consoles. * Structural Heart & Aortic revenue of $750 million increased 2% as reported and organic. Structural Heart grew in the high-single digits, with high-single digit growth in transcatheter aortic valves (TAVR). Cardiac Surgery increased in the high-single digits. Aortic declined in the mid-teens as a result of the previously announced global recall of the Valiant Navion(tm) thoracic stent graft system. * Coronary & Peripheral Vascular revenue of $606 million increased 7% as reported and 6% organic. Coronary & Renal Denervation (CRDN) increased in the mid-single digits, driven by strength in emerging markets. Peripheral Vascular Health increased in the high-single digits, with mid-twenties endoVenous growth on strong sales of the VenaSeal(tm) closure system and the Abre(tm) venous stent.

Medical Surgical PortfolioThe Medical Surgical Portfolio includes the Surgical Innovations (SI) and the Respiratory, Gastrointestinal & Renal (RGR) divisions. Medical Surgical revenue of $2.299 billion increased 1% as reported and was flat organic, with high-single digit organic growth in SI partially offset by low double-digit organic declines in RGR. Excluding the impact of ventilator sales declines, Medical Surgical revenue increased 6% organic.

* Surgical Innovations revenue of $1.497 billion increased 7% as reported and organic. The division had mid-single digit growth in Advanced Surgical Instruments, driven by the continued adoption of the company's LigaSure(tm), Sonicision(tm), and Tri-Staple(tm) technologies. Hernia & Wound Management increased in the high-single digits, with strength in sutures. * Respiratory, Gastrointestinal & Renal revenue of $802 million decreased 10% as reported and 11% organic. Excluding the impact of ventilator sales declines, RGR revenue increased 4% organic. Respiratory Interventions decreased in the mid-thirties, with sales of ventilators declining in the mid-fifties as demand returns to pre-pandemic levels. Patient Monitoring increased in the low-double digits, with mid-teens growth in the company's Nellcor(tm) pulse oximetry products driven in part by increased monitoring of COVID hospitalized patients. Gastrointestinal revenue increased in the mid-single digits, with low double-digit growth in Chronic & Colorectal on strength of PillCam(tm) system sales. Renal Care Solutions increased in the mid-single digits with low-forties growth in acute therapies driven by increased demand for adult and pediatric continuous renal replacement therapy.

Neuroscience PortfolioThe Neuroscience Portfolio includes the Cranial & Spinal Technologies (CST), Specialty Therapies, and Neuromodulation divisions. Neuroscience revenue of $2.136 billion increased 4% as reported and 3% organic, with high-single digit growth in Specialty Therapies and mid-single digit growth in Neuromodulation, partially offset by low-single digit declines in CST, all on an organic basis.

* Cranial & Spinal Technologies revenue of $1.067 billion was flat as reported and decreased 1% organic. Spine & Biologics decreased in the mid-single digits, driven by decreased spine market procedures as a result of the COVID-19 resurgence. Neurosurgery increased in the high-single digits, with strength in sales of StealthStation(tm) navigation systems, O-arm(tm) imaging systems, and Midas Rex(tm) powered surgical instruments. * Specialty Therapies revenue of $634 million increased 9% as reported and 8% organic. Neurovascular increased in the low double-digits, with high-teens growth in Hemorrhagic Stroke products. Pelvic Health increased in the low-single digits, as market growth was affected by the COVID-19 resurgence. ENT grew in the low double-digits, driven by strong sales of NIM Vital(tm) nerve monitoring systems. * Neuromodulation revenue of $435 million increased 6% as reported and organic. Brain Modulation increased in the mid-twenties, driven by the launch of the Percept(tm) PC deep brain stimulation (DBS) system and SenSight(tm) directional DBS lead system. Pain Therapies decreased in the mid-single digits, as high-single digit declines in Targeted Drug Delivery and flat results in Pain Stim offset high-single digit growth in Interventional.

DiabetesDiabetes revenue of $585 million increased 2% as reported and 1% organic. Durable insulin pumps grew in the low-twenties, including high-teens growth in the U.S. and low-twenties growth in international markets on the continued launches of the MiniMed(tm) 770G and MiniMed(tm) 780G systems, respectively. Strong pump sales were offset by lower sales of consumables, which declined in the high-single digits. Sales of continuous glucose monitoring (CGM) products increased in the low-single digits.

GuidanceThe company today updated its revenue growth guidance and reiterated its EPS guidance range for fiscal year 2022.

Given the greater-than-expected market impact of the pandemic and healthcare system staffing challenges in the fiscal second quarter, which is expected to continue into the second half of the fiscal year, the company now expects fiscal year 2022 revenue growth of 7-8% on an organic basis versus the prior expectation of approximately 9%. If recent foreign currency exchange rates hold, revenue growth in fiscal year 2022 would be positively affected by approximately $0 to $50 million versus the $100 to $200 million positive impact previously.

The company reiterated its fiscal year 2022 diluted non-GAAP EPS guidance range of $5.65 to $5.75, including an estimated 5 to 10 cent positive impact from foreign currency exchange based on recent rates.

"We delivered strong margin improvement, earnings growth, and free cash flow in a tough environment this quarter," said Karen Parkhill, Medtronic chief financial officer. "While we expect our markets to continue to be affected by the pandemic in the second half of our fiscal year, we remain focused on delivering solid revenue growth and strong earnings growth while investing in our robust pipeline."

Webcast InformationMedtronic will host a webcast today, November 23, at 8:00 a.m. EST (7:00 a.m. CST) to provide information about its businesses for the public, investors, analysts, and news media. This webcast can be accessed by clicking on the Investor Events link at investorrelations.medtronic.com and this earnings release will be archived at news.medtronic.com. Medtronic will be live tweeting during the webcast on its Newsroom Twitter account, @Medtronic. Within 24 hours of the webcast, a replay of the webcast and transcript of the company's prepared remarks will be available by clicking on the Investor Events link at investorrelations.medtronic.com.

Medtronic plans to report its fiscal year 2022 third and fourth quarter results on February 22, 2022, and May 26, 2022, respectively. Confirmation and additional details will be provided closer to the specific event.

Financial SchedulesThe second quarter financial schedules and non-GAAP reconciliations can be viewed by clicking on the Investor Events link at investorrelations.medtronic.com. To view a printable PDF of the financial schedules and non-GAAP reconciliations, click here. To view the second quarter earnings presentation, click here.

MEDTRONIC PLC WORLD WIDE REVENUE^(1) (Unaudited)



SECOND QUARTER SECOND QUARTER YEAR-TO-DATE^(2)

REPORTED CONSTANT REPORTED CONSTANT CURRENCY CURRENCY

(in millions) FY22 FY21 Growth Currency FY22 Growth FY22 FY21 Growth Currency FY22 Growth Impact^(4) Impact^(4)

Cardiovascular^(3) $2,827$2,7253.7 %$11 $2,8163.3 %$5,717 $5,158 10.8 %$106 $5,611 8.8 %

Cardiac Rhythm & Heart Failure 1,471 1,426 3.2 5 1,466 2.8 2,954 2,673 10.5 51 2,903 8.6

Structural Heart & Aortic 750 733 2.3 2 748 2.0 1,537 1,360 13.0 30 1,507 10.8

Coronary & Peripheral Vascular 606 567 6.9 3 603 6.3 1,226 1,125 9.0 25 1,201 6.8

Medical Surgical 2,299 2,285 0.6 8 2,291 0.3 4,621 4,086 13.1 85 4,536 11.0

Surgical Innovations 1,497 1,393 7.5 5 1,492 7.1 3,051 2,473 23.4 59 2,992 21.0

Respiratory, Gastrointestinal, & Renal802 893 (10.2) 3 799 (10.5) 1,570 1,613 (2.7) 26 1,544 (4.3)

Neuroscience 2,136 2,063 3.5 10 2,126 3.1 4,340 3,774 15.0 57 4,283 13.5

Cranial & Spinal Technologies 1,067 1,071 (0.4) 3 1,064 (0.7) 2,189 2,015 8.6 22 2,167 7.5

Specialty Therapies 634 581 9.1 6 628 8.1 1,275 1,035 23.2 25 1,250 20.8

Neuromodulation 435 411 5.8 1 434 5.6 875 725 20.7 11 864 19.2

Diabetes 585 574 1.9 3 582 1.4 1,157 1,136 1.8 29 1,128 (0.7)

TOTAL $7,847$7,6472.6 %$32 $7,8152.2 %$15,835$14,15411.9 %$277 $15,5589.9 %

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

(2) Fiscal year 2021 was a 53-week fiscal year, with the extra week occurringin the first fiscal month of the first quarter and included in reported prioryear second quarter year-to-date results. While it is difficult to calculatethe impact of the extra week, the Company estimates the extra week benefitedthe prior year second quarter year-to-date revenue by approximately $360 to$390 million.

(3) In the fourth quarter of fiscal year 2021, the Company realigned itsdivisions within Cardiovascular. As a result, fiscal year 2021 results havebeen recast to adjust for this realignment.

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

MEDTRONIC PLC U.S.^(1)(2) REVENUE (Unaudited)



SECOND QUARTER SECOND QUARTER YEAR-TO-DATE

REPORTED REPORTED

(in millions) FY22 FY21 Growth FY22 FY21 Growth

Cardiovascular^(3) $1,373$1,377(0.3)%$2,793$2,5828.2 %

Cardiac Rhythm & Heart Failure 761 760 0.1 1,530 1,431 6.9

Structural Heart & Aortic 327 328 (0.3) 674 602 12.0

Coronary & Peripheral Vascular 286 289 (1.0) 589 549 7.3

Medical Surgical 970 996 (2.6) 1,959 1,718 14.0

Surgical Innovations 550 560 (1.8) 1,170 960 21.9

Respiratory, Gastrointestinal, & Renal420 436 (3.7) 790 758 4.2

Neuroscience 1,394 1,397 (0.2) 2,840 2,533 12.1

Cranial & Spinal Technologies 749 770 (2.7) 1,544 1,462 5.6

Specialty Therapies 354 346 2.3 714 588 21.4

Neuromodulation 291 281 3.6 582 483 20.5

Diabetes 261 284 (8.1) 506 572 (11.5)

TOTAL $3,997$4,054(1.4)%$8,098$7,4059.4 %

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

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

(3) In the fourth quarter of fiscal year 2021, the Company realigned itsdivisions within Cardiovascular. As a result, fiscal year 2021 results havebeen recast to adjust for this realignment.

MEDTRONIC PLC WORLD WIDE REVENUE: GEOGRAPHIC ^(1)(2) (Unaudited)



SECOND QUARTER SECOND QUARTER YEAR-TO-DATE^(3)

REPORTED CONSTANT REPORTED CONSTANT CURRENCY CURRENCY

(in millions) FY22 FY21 Growth Currency FY22 Growth FY22 FY21 Growth Currency FY22 Growth Impact^(4) Impact^(4)

U.S. $1,373$1,377(0.3)%$ - $1,373(0.3)%$ 2,793$ 2,5828.2 %$ -$ 2,7938.2 %

Non-U.S. Developed948 945 0.3 (2) 950 0.5 1,9521,7988.6 69 1,8834.7

Emerging Markets 506 404 25.2 13 493 22.0 972 778 24.9 37 935 20.2

Cardiovascular 2,827 2,725 3.7 11 2,8163.3 5,7175,15810.8 106 5,6118.8

U.S. 970 996 (2.6) - 970 (2.6) 1,9591,71814.0 - 1,95914.0

Non-U.S. Developed841 837 0.5 (3) 844 0.8 1,7101,5569.9 54 1,6566.4

Emerging Markets 488 452 8.0 11 477 5.5 951 811 17.3 31 920 13.4

Medical Surgical 2,299 2,285 0.6 8 2,2910.3 4,6214,08613.1 85 4,53611.0

U.S. 1,394 1,397 (0.2) - 1,394(0.2) 2,8402,53312.1 - 2,84012.1

Non-U.S. Developed433 426 1.6 (1) 434 1.9 898 802 12.0 28 870 8.5

Emerging Markets 309 240 28.8 11 298 24.2 602 439 37.1 29 573 30.5

Neuroscience 2,136 2,063 3.5 10 2,1263.1 4,3403,77415.0 57 4,28313.5

U.S. 261 284 (8.1) - 261 (8.1) 506 572 (11.5) - 506 (11.5)

Non-U.S. Developed256 238 7.6 2 254 6.7 519 465 11.6 25 494 6.2

Emerging Markets 69 51 35.3 1 68 33.3 132 100 32.0 4 128 28.0

Diabetes 585 574 1.9 3 582 1.4 1,1571,1361.8 29 1,128(0.7)

U.S. 3,997 4,054 (1.4) - 3,997(1.4) 8,0987,4059.4 - 8,0989.4

Non-U.S. Developed2,478 2,446 1.3 (5) 2,4831.5 5,0794,6219.9 177 4,9026.1

Emerging Markets 1,372 1,147 19.6 37 1,33516.4 2,6582,12824.9 100 2,55820.2

TOTAL $7,847$7,647 2.6 %$ 32 $7,8152.2 %$ 15,835$ 14,15411.9 %$ 277$ 15,5589.9 %

(1) U.S. includes the United States and U.S. territories. Non-U.S. developedmarkets include Japan, Australia, New Zealand, Korea, Canada, and the countriesof Western Europe. Emerging Markets include the countries of the Middle East,Africa, Latin America, Eastern Europe, and the countries of Asia that are notincluded in the non-U.S. developed markets, as previously defined.

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

(3) Fiscal year 2021 was a 53-week fiscal year, with the extra week occurringin the first fiscal month of the first quarter and included in reported prioryear second quarter year-to-date results. While it is difficult to calculatethe impact of the extra week, the Company estimates the extra week benefitedthe prior year second quarter year-to-date revenue by approximately $360 to$390 million.

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

MEDTRONIC PLC CONSOLIDATED STATEMENTS OF INCOME (Unaudited)



Three months ended Six months ended

(in millions, except per share data) October 29, 2021October 30, 2020October 29, 2021October 30, 2020

Net sales $7,847 $7,647 $15,835 $14,154

Costs and expenses:

Cost of products sold 2,497 2,705 5,095 5,209

Research and development expense 676 639 1,426 1,260

Selling, general, and administrative expense 2,615 2,600 5,163 5,017

Amortization of intangible assets 431 443 866 884

Restructuring charges, net 10 97 21 150

Certain litigation charges, net 34 84 60 (4)

Other operating expense, net 21 149 781 35

Operating profit 1,563 930 2,422 1,603

Other non-operating income, net (66) (65) (177) (147)

Interest expense 136 470 273 641

Income before income taxes 1,493 525 2,326 1,109

Income tax provision 176 31 240 124

Net income 1,317 494 2,086 985

Net income attributable to noncontrolling interests(6) (5) (12) (9)

Net income attributable to Medtronic $1,311 $489 $2,074 $976

Basic earnings per share $0.97 $0.36 $1.54 $0.73

Diluted earnings per share $0.97 $0.36 $1.53 $0.72

Basic weighted average shares outstanding 1,345.1 1,344.4 1,344.8 1,343.1

Diluted weighted average shares outstanding 1,355.3 1,352.1 1,355.9 1,351.1

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

MEDTRONIC PLC GAAP TO NON-GAAP RECONCILIATIONS^(1) (Unaudited)



Three months ended October 29, 2021

Cost of Gross OperatingIncome Net Income (in millions, except per share data) Net ProductsMargin OperatingProfit Before AttributableDilutedEffective Sales Sold PercentProfit Percent Income to MedtronicEPS Tax Rate Taxes

GAAP $7,847$2,49768.2 %$1,563 19.9 % $1,493$1,311 $0.9711.8 %

Non-GAAP Adjustments:

Restructuring and associated costs (2) - (31) 0.4 77 1.0 77 62 0.05 19.5

Acquisition-related items (3) - (5) 0.1 (13) (0.2) (13) (15) (0.01)(15.4)

Certain litigation charges - - - 34 0.4 34 30 0.02 11.8

(Gain)/loss on minority investments (4) - - - - - 6 6 - -

Medical device regulations (5) - (15) 0.2 24 0.3 24 20 0.01 16.7

Amortization of intangible assets - - - 431 5.5 431 361 0.27 16.0

Certain tax adjustments, net (6) - - - - - - 16 0.01 -

Non-GAAP $7,847$2,44768.8 %$2,116 27.0 % $2,052$1,792 $1.3212.4 %

Currency impact (32) 30 (0.5) (58) (0.7) (0.04)

Currency Adjusted $7,815$2,47768.3 %$2,058 26.3 % $1.28



Three months ended October 30, 2020

Cost of Gross OperatingIncome Net Income (in millions, except per share data) Net ProductsMargin OperatingProfit Before AttributableDilutedEffective Sales Sold PercentProfit Percent Income to MedtronicEPS Tax Rate Taxes

GAAP $7,647$2,70564.6 %$930 12.2 % $525 $489 $0.365.9 %

Non-GAAP Adjustments:

Restructuring and associated costs (2) - (32) 0.4 179 2.3 179 135 0.10 24.6

Acquisition-related items (3) - (2) - 47 0.6 47 39 0.03 17.0

Certain litigation charges - - - 84 1.1 84 63 0.05 25.0

(Gain)/loss on minority investments (4) - - - - - 1 1 - -

Medical device regulations (5) - (11) 0.1 19 0.2 19 16 0.01 15.8

Amortization of intangible assets - - - 443 5.8 443 373 0.28 15.8

Debt tender premium and other charges (7)- - - - - 308 248 0.18 19.5

Certain tax adjustments, net (6) - - - - - - 16 0.01 -

Non-GAAP $7,647$2,66065.2 %$1,702 22.3 % $1,606$1,380 $1.0213.8 %

See description of non-GAAP financial measures at the end of the earnings pressrelease.

(1) The data in this schedule has been intentionally rounded to the nearestmillion or $0.01 for EPS figures, and, therefore, may not sum.

(2) Associated costs include costs incurred as a direct result of therestructuring program, such as salaries for employees supporting the programand consulting expenses.

(3) The charges primarily include business combination costs, changes in fairvalue of contingent consideration, and for the three months ended October 30,2020, certain license payments for unapproved technology.

(4) We exclude unrealized and realized gains and losses on our minorityinvestments as we do not believe that these components of income or expensehave a direct correlation to our ongoing or future business operations.

(5) The charges represent incremental costs of complying with the new EuropeanUnion (E.U.) medical device regulations for previously registered products andprimarily include charges for contractors supporting the project and otherdirect third-party expenses.

(6) The charges include the amortization on previously established deferred taxassets from intercompany intellectual property transactions.

(7) The charges relate to the early redemption of approximately $6.0 billion ofdebt.

MEDTRONIC PLC GAAP TO NON-GAAP RECONCILIATIONS^(1) (Unaudited)



Six months ended October 29, 2021

Cost of Gross OperatingIncome Net Income (in millions, except per share data) Net ProductsMargin OperatingProfit Before attributableDilutedEffective Sales Sold PercentProfit Percent Income to MedtronicEPS Tax Rate Taxes

GAAP $15,835$5,09567.8 %$2,422 15.3 % $2,326$2,074 $1.5310.3 %

Non-GAAP Adjustments:

Restructuring and associated costs (2) - (64) 0.4 159 1.0 159 128 0.09 19.5

Acquisition-related items (3) - (9) 0.1 96 0.6 96 72 0.05 25.0

Certain litigation charges - - - 60 0.4 60 51 0.04 15.0

(Gain)/loss on minority investments (4) - - - - - (25) (22) (0.02)-

Medical device regulations (5) - (26) 0.2 45 0.3 45 36 0.03 20.0

Amortization of intangible assets - - - 866 5.5 866 728 0.54 16.1

MCS impairments / costs (6) - (58) 0.4 726 4.6 726 564 0.42 22.3

Certain tax adjustments, net (7) - - - - - - 69 0.05 -

Non-GAAP $15,835$4,93868.8 %$4,374 27.6 % $4,253$3,699 $2.7312.8 %

Currency impact (277) (26) (0.4) (105) (0.2) (0.07)

Currency Adjusted $15,558$4,91268.4 %$4,269 27.4 % $2.66



Six months ended October 30, 2020

Cost of Gross OperatingIncome Net Income (in millions, except per share data) Net ProductsMargin OperatingProfit Before attributableDilutedEffective Sales Sold PercentProfit Percent Income to MedtronicEPS Tax Rate Taxes

GAAP $14,154$5,20963.2 %$1,603 11.3 % $1,109$976 $0.7211.2 %

Non-GAAP Adjustments:

Restructuring and associated costs (2) - (59) 0.4 307 2.2 307 241 0.18 21.5

Acquisition-related items (3) - (5) - (49) (0.3) (49) (28) (0.02)42.9

Certain litigation charges - - - (4) - (4) (6) - (50.0)

(Gain)/loss on minority investments (4) - - - - - (9) (10) (0.01)(11.1)

Medical device regulations (5) - (20) 0.1 37 0.3 37 32 0.02 13.5

Amortization of intangible assets - - - 884 6.2 884 743 0.55 16.0

Debt tender premium and other charges (8)- - - - - 308 248 0.18 19.5

Certain tax adjustments, net (7) - - - - - - 20 0.01 -

Non-GAAP $14,154$5,12563.8 %$2,778 19.6 % $2,583$2,216 $1.6413.9 %

See description of non-GAAP financial measures contained in this release.

(1) The data in this schedule has been intentionally rounded to the nearestmillion or $0.01 for EPS figures, and, therefore, may not sum.

(2) Associated costs include costs incurred as a direct result of therestructuring program, such as salaries for employees supporting the programand consulting expenses.

(3) The charges primarily include business combination costs, changes in fairvalue of contingent consideration, and specifically for the six months endedOctober 30, 2020, change in amounts accrued for certain contingent liabilitiesfor recent acquisitions.

(4) We exclude unrealized and realized gains and losses on our minorityinvestments as we do not believe that these components of income or expensehave a direct correlation to our ongoing or future business operations.

(5) The charges represent incremental costs of complying with the new E.U.medical device regulations for previously registered products and primarilyinclude charges for contractors supporting the project and other directthird-party expenses.

(6) The charges relate to the Company's June 2021 decision to stop thedistribution and sale of the Medtronic HVAD System within the MechanicalCirculatory Support Operating Unit (MCS). The charges included $515 million ofnon-cash impairments, primarily related to $409 million of intangible assetimpairments, as well as $211 million for commitments and obligations inconnection with the decision, including customer support obligations,restructuring, and other associated costs. Medtronic is committed to servingthe needs of the approximately 4,000 patients currently implanted with the HVADSystem.

(7) The charges include the amortization on previously established deferred taxassets from intercompany intellectual property transactions, and specificallyfor the six months ended October 29, 2021, charges associated with a change inthe company's permanent reinvestment assertion on certain historical earnings.

(8) The charges relate to the early redemption of approximately $6.0 billion ofdebt.

MEDTRONIC PLC GAAP TO NON-GAAP RECONCILIATIONS^(1) (Unaudited)



Three months ended October 29, 2021

SG&A R&D Other Other Other Non- Net SG&A Expense asR&D Expense asOperatingOperating Operating (in millions) Sales Expense a % of NetExpense a % of NetExpense, Expense, net (Income) Sales Sales net as a % of NetExpense, net Sales

GAAP $7,847 $2,61533.3 % $676 8.6 % $ 21 0.3 % $(66)

Non-GAAP Adjustments:

Restructuring and associated costs (2) - (37) (0.5) - - - - -

Acquisition-related items (3) - - - - - 17 0.2 -

Medical device regulations (4) - - - (9) (0.1) - - -

Gain/(loss) on minority investments (5)- - - - - - - (6)

Non-GAAP $7,847 $2,57832.9 % $667 8.5 % $ 39 0.5 % $(72)

Currency impact (32) (11) (0.1) (2) - 9 0.1 -

Currency Adjusted $7,815 $2,56732.8 % $665 8.5 % $ 48 0.6 % $(72)





Six months ended October 29, 2021

SG&A R&D Other Other Other Non- Net SG&A Expense asR&D Expense asOperatingOperating Operating (in millions) Sales Expense a % of NetExpense a % of NetExpense Expense, net (Income) Sales Sales (Income),as a % of NetExpense, net net Sales

GAAP $15,835$5,16332.6 % $1,4269.0 % $ 781 4.9 % $(177)

Non-GAAP Adjustments:

Restructuring and associated costs (2) - (74) (0.5) - - - - -

Acquisition-related items (3) - - - (90) (0.6) 4 - -

Medical device regulations (4) - (1) - (18) (0.1) - - -

MCS impairment / costs (6) - - - - - (668) (4.2) -

Gain/(loss) on minority investments (5)- - - - - - - 25

Non-GAAP $15,835$5,08732.1 % $1,3188.3 % $ 118 0.7 % $(152)

Currency impact (277) (80) 0.1 (9) 0.1 (57) (0.3) 1

Currency Adjusted $15,558$5,00732.2 % $1,3098.4 % $ 61 0.4 % $(151)

See description of non-GAAP financial measures at the end of the earnings pressrelease.

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

(2) Associated costs include costs incurred as a direct result of therestructuring program, such as salaries for employees supporting the programand consulting expenses.

(3) The charges primarily includeusiness combination costs, changes in fairvalue of contingent consideration, and specifically in the six months endedOctober 29, 2021, acquisitions of, and certain license payments for, unapprovedtechnology.

(4) The charges represent incremental costs of complying with the new E.U.medical device regulations for previously registered products and primarilyinclude charges for contractors supporting the project and other directthird-party expenses.

(5) We exclude unrealized and realized gains and losses on our minorityinvestments as we do not believe that these components of income or expensehave a direct correlation to our ongoing or future business operations.

(6) The charges relate to the Company's June 2021 decision to stop thedistribution and sale of the Medtronic HVAD System within the MechanicalCirculatory Support Operating Unit (MCS). The charges included $515 million ofnon-cash impairments, primarily related to $409 million of intangible assetimpairments, as well as $211 million for commitments and obligations inconnection with the decision, including customer support obligations,restructuring, and other associated costs. Medtronic is committed to servingthe needs of the approximately 4,000 patients currently implanted with the HVADSystem.

MEDTRONIC PLC GAAP TO NON-GAAP RECONCILIATIONS^(1) (Unaudited)



Six months Six months Fiscal year ended ended

(in millions) October 29, 2021October 30, 20202021

Net cash provided by operating activities $3,061 $2,139 $6,240

Additions to property, plant, and equipment(649) (615) (1,355)

Free Cash Flow (2) $2,412 $1,524 $4,885

See description of non-GAAP financial measures at the end of the earnings pressrelease.

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

(2) Free cash flow represents operating cash flows less property, plant, andequipment additions.

MEDTRONIC PLC CONSOLIDATED BALANCE SHEETS (Unaudited)



(in millions) October 29, 2021April 30, 2021

ASSETS

Current assets:

Cash and cash equivalents $2,900 $3,593

Investments 7,769 7,224

Accounts receivable, less allowances and credit losses of $255 and $241, 5,493 5,462 respectively

Inventories, net 4,349 4,313

Other current assets 2,220 1,955

Total current assets 22,731 22,548

Property, plant, and equipment 12,978 12,700

Accumulated depreciation (7,790) (7,479)

Property, plant, and equipment, net 5,188 5,221

Goodwill 41,612 41,961

Other intangible assets, net 16,523 17,740

Tax assets 3,203 3,169

Other assets 2,499 2,443

Total assets $91,756 $93,083

LIABILITIES AND EQUITY

Current liabilities:

Current debt obligations $16 $11

Accounts payable 1,917 2,106

Accrued compensation 1,934 2,482

Accrued income taxes 467 435

Other accrued expenses 3,469 3,475

Total current liabilities 7,803 8,509

Long-term debt 25,607 26,378

Accrued compensation and retirement benefits 1,505 1,557

Accrued income taxes 2,110 2,251

Deferred tax liabilities 1,024 1,028

Other liabilities 1,547 1,756

Total liabilities 39,596 41,481

Commitments and contingencies

Shareholders' equity:

Ordinary shares- par value $0.0001, 2.6 billion shares authorized, 1,344,861,769 and - - 1,345,400,671 shares issued and outstanding, respectively

Additional paid-in capital 26,059 26,319

Retained earnings 28,974 28,594

Accumulated other comprehensive loss (3,042) (3,485)

Total shareholders' equity 51,991 51,428

Noncontrolling interests 168 174

Total equity 52,159 51,602

Total liabilities and equity $91,756 $93,083

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

MEDTRONIC PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)



Six months ended

(in millions) October 29, 2021October 30, 2020

Operating Activities:

Net income $2,086 $985

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

Depreciation and amortization 1,347 1,340

Provision for doubtful accounts 34 86

Deferred income taxes (78) (69)

Stock-based compensation 209 210

Loss on debt extinguishment - 308

MCS asset impairment and inventory write-down 515 -

Other, net 130 112

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

Accounts receivable, net (171) (669)

Inventories (156) (145)

Accounts payable and accrued liabilities (446) 108

Other operating assets and liabilities (409) (127)

Net cash provided by operating activities 3,061 2,139

Investing Activities:

Acquisitions, net of cash acquired (91) (370)

Additions to property, plant, and equipment (649) (615)

Purchases of investments (5,311) (5,360)

Sales and maturities of investments 4,637 4,337

Other investing activities, net (79) (4)

Net cash used in investing activities (1,493) (2,012)

Financing Activities:

Change in current debt obligations, net - (57)

Proceeds from short-term borrowings (maturities greater than 90 days) - 2,789

Issuance of long-term debt - 7,172

Payments on long-term debt (1) (6,336)

Dividends to shareholders (1,693) (1,558)

Issuance of ordinary shares 274 119

Repurchase of ordinary shares (744) (68)

Other financing activities (46) (70)

Net cash provided by (used in) financing activities (2,210) 1,991

Effect of exchange rate changes on cash and cash equivalents (51) 162

Net change in cash and cash equivalents (693) 2,280

Cash and cash equivalents at beginning of period 3,593 4,140

Cash and cash equivalents at end of period $2,900 $6,420



Supplemental Cash Flow Information

Cash paid for:

Income taxes $615 $384

Interest 280 321

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

About MedtronicBold thinking. Bolder actions. We are Medtronic. Medtronic plc, headquartered in Dublin, Ireland, is the leading global healthcare technology company that boldly attacks the most challenging health problems facing humanity by searching out and finding solutions. Our Mission - to alleviate pain, restore health, and extend life - unites a global team of 90,000+ passionate people across 150 countries. Our technologies and therapies treat 70 health conditions and include cardiac devices, surgical robotics, insulin pumps, surgical tools, patient monitoring systems, and more. Powered by our diverse knowledge, insatiable curiosity, and desire to help all those who need it, we deliver innovative technologies that transform the lives of two people every second, every hour, every day. Expect more from us as we empower insight-driven care, experiences that put people first, and better outcomes for our world. In everything we do, we are engineering the extraordinary. For more information on Medtronic (NYSE:MDT), visit www.Medtronic.com and follow @Medtronic on Twitter and LinkedIn.

FORWARD LOOKING STATEMENTSThis press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties, including risks related to competitive factors, difficulties and delays inherent in the development, manufacturing, marketing and sale of medical products, government regulation and general economic conditions and other risks and uncertainties described in the company's periodic reports on file with the U.S. Securities and Exchange Commission including the most recent Annual Report on Form 10-K of the company, as filed with the U.S. Securities and Exchange Commission. In some cases, you can identify these statements by forward-looking words or expressions, such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "intend," "looking ahead," "may," "plan," "possible," "potential," "project," "should," "going to," "will," and similar words or expressions, the negative or plural of such words or expressions and other comparable terminology. Actual results may differ materially from anticipated results. Medtronic does not undertake to update its forward-looking statements or any of the information contained in this press release, including to reflect future events or circumstances.

NON-GAAP FINANCIAL MEASURESThis press release contains financial measures, including adjusted net income, adjusted diluted EPS, and organic revenue, which are considered "non-GAAP" financial measures under applicable SEC rules and regulations. References to quarterly figures increasing, decreasing or remaining flat are in comparison to the second quarter of fiscal year 2021.

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. Non-GAAP net income and diluted EPS 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 (Non-GAAP Adjustments). Medtronic generally uses non-GAAP financial measures to facilitate management's review of the operational performance of the company and as a basis for strategic planning. Non-GAAP financial measures should be considered supplemental to and not a substitute for financial information prepared in accordance with U.S. generally accepted accounting principles (GAAP), and investors are cautioned that Medtronic may calculate non-GAAP financial measures in a way that is different from other companies. Management strongly encourages investors to review the company's consolidated financial statements and publicly filed reports in their entirety. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the financial schedules accompanying this press release.

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 organic revenue growth guidance excludes the impact of foreign currency fluctuations, as well as significant acquisitions or divestitures. Forward-looking diluted non-GAAP EPS guidance also excludes 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, the company believes 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.

Contacts:

Erika Winkels Ryan Weispfenning

Public Relations Investor Relations

+1-763-526-8478 +1-763-505-4626

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SOURCE Medtronic plc