Medtronic 2015 Annual Report Download - page 11

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PART I
Item 1. Business
Overview
Medtronic plc, headquartered in Dublin, Ireland, is the global leader in medical technology — alleviating pain, restoring health,
and extending life for millions of people around the world. Medtronic was founded in 1949 and today serves hospitals,
physicians, clinicians, and patients in approximately 160 countries worldwide. We remain committed to a mission written by
our founder 55 years ago that directs us “to contribute to human welfare by the application of biomedical engineering in the
research, design, manufacture, and sale of products to alleviate pain, restore health, and extend life.”
With innovation and market leadership, we have pioneered advances in medical technology in all of our businesses. Over the
last five years, our net sales on a compounded annual growth basis have increased approximately 6 percent, from $15.508
billion in fiscal year 2011 to $20.261 billion in fiscal year 2015. Our commitment to enhance our offerings by developing and
acquiring new products, wrap-around programs, and solutions to meet the needs of a broader set of stakeholders is driven by the
following primary strategies:
•Therapy Innovation: Delivering a strong launch cadence of meaningful therapies and procedures.
•Globalization: Addressing the inequity in health care access globally, primarily in emerging markets.
•Economic Value: Becoming a leader in value-based health care by offering new services and solutions to improve
outcomes and efficiencies, lower costs by reducing hospitalizations, improve remote clinical management, and
increase patient engagement.
Our primary customers include hospitals, clinics, third-party health care providers, distributors, and other institutions, including
governmental health care programs and group purchasing organizations (GPOs).
On January 26, 2015 (Acquisition Date), Medtronic completed the acquisition of Covidien plc, a public limited company
organized under the laws of Ireland (Covidien) in a cash and stock transaction valued at approximately $50 billion. In
connection with the transaction, Medtronic, Inc., a Minnesota corporation (Medtronic, Inc.), and Covidien were combined under
and became subsidiaries of Medtronic plc. Covidien was a global leader in the development, manufacture and sale of healthcare
products for use in clinical and home settings and had net sales for its fiscal year ended September 26, 2014 of $10.659 billion.
On a pro forma basis, as if the Covidien merger had occurred at the beginning of fiscal year 2014, our combined net sales would
have been $28.369 billion for fiscal year 2015 and $27.380 billion for fiscal year 2014, see Note 2 to the consolidated financial
statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. The merger with
Covidien provides the combined company with increased financial strength and flexibility and is expected to meaningfully
accelerate all three strategies discussed above.
With the Covidien acquisition, we reorganized our reporting structure and aligned our segments and the underlying divisions
and businesses. The majority of Covidien’s operations are included in our new Minimally Invasive Therapies Group. The net
sales amounts in the summary below include Covidien results for only one quarter since the Acquisition Date. Therefore, the
Minimally Invasive Therapies Group is expected to be similar in size to our Cardiac and Vascular Group as measured by net
sales on an annual basis. For more information on our segments, please see Note 18 to the consolidated financial statements in
“Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
We currently function in four operating segments that primarily manufacture and sell device-based medical therapies. Our
operating segments with each of their reported net sales for fiscal year 2015, along with their related divisions and businesses,
are as follows:
Cardiac and Vascular Group (Fiscal year 2015 net sales of $9.361 billion)
•Cardiac Rhythm & Heart Failure
•Coronary & Structural Heart
•Aortic & Peripheral Vascular
1