Medtronic : Q3 FY20 Presentation

MEDTRONIC PLC Q3 FY20

EARNINGS PRESENTATION FEBRUARY 18, 2020

• Q3 FY20 CONSOLIDATED RESULTS & GROUP REVENUE HIGHLIGHTS
• FREE CASH FLOW
• Q4 FY20 GUIDANCE & OTHER ASSUMPTIONS

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.

Non-GAAP Financial Measures

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. This presentation contains financial measures and guidance which are considered "non-GAAP" financial measures under applicable SEC rules and regulations. 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-lookingnon-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 material acquisitions or divestitures. Forward-looking diluted non-GAAP EPS projections exclude 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-lookingnon-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. GAAP to non-GAAP reconciliations are provided on our website and can be accessed using this link.

Financial Comparisons

References to quarterly results increasing, decreasing, or remaining flat are in comparison to Q3 FY19, and references to annual results increasing, decreasing, or remaining flat are in comparison to FY19 . References to organic revenue growth exclude the impact of significant acquisitions and currency. Unless stated otherwise, quarterly and annual rates and ranges are given on a constant currency basis, which adjusts for the impact of currency.

Q3 FY20 Earnings Results | February 18, 2020 | 2

Q3 FY20 CONSOLIDATED RESULTS & GROUP REVENUE HIGHLIGHTS

MDT

Q3 FY20 HIGHLIGHTS

Revenue:

DIAB		EM
8%
	CVG	17%
RTG	37%		U.S.
27%		Non-U.S.	52%
		Dev
MITG		31%
28%
	Revenue	As Rep	CC2	Organic
	$M1	Y/Y %	Y/Y %	Y/Y %
CVG	2,819	1.2	1.8	--
MITG	2,176	2.4	3.2	--
RTG	2,111	4.2	4.6	3.6
Diabetes	610	0.0	0.8	--
Total	$7,717	2.3%	2.9%	2.6%
U.S.	4,021	0.5	0.5
Non-U.S. Dev	2,377	0.4	1.5
EM	1,318	12.0	13.6
Total	$7,717	2.3%	2.9%

TOP-LINE SOFTNESS, BUT LARGELY TRANSIENT; OP MARGIN, EPS, & FCF ALL COMFORTABLY BEAT

REVENUE:2.9% constant currency, 2.6% organic

• CVG:grew 1.8% reflecting HSD pacing growth and mid-teens TAVR growth, below market in the U.S.;

offset by customers curbing purchasing ahead of new CRHF product launches, slower-than-expected

recovery in LVADs

• MITG:grew 3.2% driven by HSD growth in Advanced Energy, offset by upgrade of U.S./Canada ERP

system affecting product availability and growth this quarter; upgrade and resulting product availability

issues are now fully resolved

• RTG:organic growth of 3.6%, reflecting customer buying patterns in BMP, a sluggish Pain Therapies

market and slight share loss in ahead of the Stimgenics DTM™ launch on Intellis™ platform; solid quarter

in Brain Therapies, including mid-teens growth in Neurovascular and double digit growth in Neurosurgery

• Diabetes:growth of 0.8% driven by continued strong International growth of 16%, offsetting challenges

in the U.S.

• Emerging Markets:grew 13.6%, driven by mid-teens growth in China, Southeast Asia, and Eastern

Europe

OP MARGIN:Delivered +90 bps non-GAAP operating margin expansion

EPS:Delivered 11.6% non-GAAP diluted EPS growth; 6 cents above guidance mid-point

FREE CASH FLOW3:Delivered $2.1B vs. $1.8B LY this quarter, growth of 21%;

Other Financial Highlights:

	Diluted	As Rep	CC2
	EPS	Y/Y	Y/Y%
GAAP	$1.42	51.1%	NC
Non-GAAP	$1.44	11.6%	11.6%

Cash Flow	$2.4B
from Ops

Free Cash	$2.1B
2
Flow

YTD, delivered $4.9B vs $4.1B, reflecting growth of 19% and 90% conversion

Q4 FY20 GUIDANCE:

• Organic Revenue Growth: Approx. 4.5%, excluding the impact of COVID-19

• Non-GAAP EPS: $1.62 - $1.64, excluding the impact of COVID-19

1. Data has been intentionally rounded to the nearest million and, therefore, may not sum.
2. Figures represent comparison to Q3 FY19 on a constant currency basis.

3 Operating cash flows less property, plant, and equipment additions.	Q3 FY20 Earnings Results | February 18, 2020 | 4

MDT

Q3 FY20NON-GAAPSELECT FINANCIAL INFORMATION

			Y/Y	FX	Q3 FY20	Q3 FY20
	Q3 FY19	Q3 FY20	Growth /	Impact	Constant	CC Growth
			Change	/ Change	Currency	/ Change1
Net Sales ($M)	7,546	7,717	2.3%	(46)	7,763	2.9%
Operating Profit2	2,204	2,321	5.3%	3	2,318	5.2%
Operating Margin2	29.2%	30.1%	90 bps	20 bps	29.9%	70 bps
Diluted EPS2($)	1.29	1.44	11.6%	--	1.44	11.6%

1. Figures represent comparison to Q3 FY19 on a constant currency basis.
2. Non-GAAP.

Q3 FY20 Earnings Results | February 18, 2020 | 5

OperatingLeverage1230 bps

EPS	870 bps
Leverage1

MDT

Q3 FY20 GAAP TONON-GAAPSELECT FINANCIAL INFORMATION

Non-GAAP Adjustments

	Q3 FY20	Amortization Restructuring	Litigation	Acquisition-	Gain/Loss on	Medical	Exit of	Contribution	Certain Tax	Q3 FY20
	GAAP	Related	Minority	Device	Business	to MDT	Adjustments	Non-GAAP
				Investments	Regulations	Foundation
Net Sales ($M)	7,717										7,717
Cost of Products Sold	2,400		(50)		(2)		(6)				2,342
Gross Margin	68.9%										69.7%
SG&A	2,587		(34)		(23)						2,530
% of Sales	33.5%										32.8%
R&D	573						(7)				566
% of Sales	7.4%										7.3%
Other Operating (Income) Expense,	(39)				(3)						(42)
Net
% of Sales	-0.5%										-0.5%
Amortization of Intangible Assets	436	(436)									0
Restructuring Charges, Net	13		(13)								0
Certain Litigation Charges	108			(108)							0
Operating Profit	1,639	436	97	108	28	--	13	--	--	--	2,321
Operating Margin	21.2%										30.1%
Other Non-Operating Income, Net	(96)										(96)
Net Income Attributable to MDT ($M)	1,949	368	81	107	25	--	11	--	--	(558)	1,949
Diluted EPS ($)1	1.44	0.27	0.06	0.08	0.02	--	0.01	--	--	(0.41)	1.44

Q3 FY19	Y/Y
Growth /
Non-GAAP
Change
7,546	2.3%
2,243	4%
70.3%	(60 bps)
2,500	1%
33.1%	30 bps
561	1%
7.4%	10 bps
38	-211%
0.5%	100 bps
0	0
0	0
0	0
2,204	5%
29.2%	90 bps
(64)	50%
1,751	11%
1.29	11.6%

1 The data in this row has been intentionally rounded to the nearest $0.01 and, therefore, may not sum.

Q3 FY20 Earnings Results | February 18, 2020 | 6

CVG

Q3 FY20 HIGHLIGHTS

SLOWER GROWTH AHEAD OF NEW PRODUCT LAUNCHES

CONTINUED STRENGTH IN PACING

Growth Driven by

CSH and Emerging Markets

APV	EM
17%
19%

U.S.

CRHF48%49%

CSH	Non-
34%
U.S. Dev
	33%

	Revenue	As Rep	CC1
	$M	Y/Y %	Y/Y %
CRHF	1,393	(0.3)	0.3
CSH	948	3.8	4.6
APV	478	0.4	1.1
Total	$2,819	1.2%	1.8%
U.S.	1,366	(0.2)	(0.2)
Non-U.S. Dev	915	(1.0)	0.2
EM	538	9.1	10.5
Total	$2,819	1.2%	1.8%

1 Figures represent comparison to Q3 FY19 on a constant currency basis.

• Coronary & Structural Heart:+4.6% growth driven by TAVR in Structural Heart and guide catheters in Coronary
• TAVR:Mid-teens growth, below global market growth
• • Continued rollout of Evolut™ Pro+ with aggressive expansion of field presence to enhance coverage into NCD sites
  • Modest int'l TAVR market share gain
• Cardiac Surgery:LSD growth driven by continued strength in cardiopulmonary
• Coronary:LSD declines as LDD strength in guide catheters was offset by declines in DES
• Renal Denervation:OFF-MED pivotal data to be presented at ACC on March 29
• Cardiac Rhythm & Heart Failure:+0.3% as growth in Pacing, AF, and CRT-P is offset by High Power and LVADs
• Arrhythmia Management:LSD growth led by Pacing and AF
• • HSD Pacing growth fueled by strong Micra™high-20's U.S. growth
  • • U.S. Micra™ AV approval received EOQ
  • LDD ICD declines, driven by continued replacement cycle headwinds & ramping TYRX supply, and customers waiting for Cobalt™/Crome™ approval; CE Mark for Cobalt™/Crome™ EOQ
  • HSD growth in AF, driven by Arctic Front™ cryoballoon
  • MSD Diagnostics growth from continued adoption of Reveal LINQ™, and customers waiting for LINQ™ 2.0 approval
• Heart Failure:LSD declines as mid-teensCRT-P strength offset by continued CRT-D replacement headwinds; LVADs stabilizing, down LSD WW and U.S.
• Aortic, Peripheral & Venous:+1.1% growth behind continued strength in TAA, partially offset by DCB headwinds
• HSD TAA growth despite difficult comp, reflecting strong demand for Valiant Navion™
• MSD Venous growth driven strong uptake of the VenaSeal™closure system
• Mid-30'sWW DCB declines; down low-30's U.S. & mid-30's int'l; sequential growth in the U.S.

CoreValve™ Evolut™PRO+

Bio-Medicus™

NextGen Cannulae

Micra™

Transcatheter

Pacing System

Arctic Front

Advance Pro™

Valiant Navion™

VenaSeal™

Closure System

Q3 FY20 Earnings Results | February 18, 2020 | 7

MITG

Q3 FY20 HIGHLIGHTS

TRANSIENT ITEMS WEIGH ON QUARTER

ISSUES RESULTING FROM ERP UPGRADE NOW FULLY RESOLVED

Strong Emerging Markets Growth

	EM
	21%	U.S.
Surg.	RGR	43%
32%
Innov.
68%	Non-
	U.S. Dev
	36%

	Revenue	As Rep	CC1
	$M	Y/Y %	Y/Y %
SI	1,474	2.8	3.6
RGR	702	1.7	2.2
Total	$2,176	2.4%	3.2%
U.S.	934	0.4	0.4
Non-U.S. Dev	791	(0.6)	0.3
EM	451	13.3	15.3
Total	$2,176	2.4%	3.2%

1 Figures represent comparison to Q3 FY19 on a constant currency basis.

• ERP Upgrade:U.S. & Canada business ERP implementation resulted in supply constraints; resulting issues fully resolved
• Surgical Innovations (SI):+3.6% growth driven by Advanced Energy
• Advanced Surgical:MSD growth from continued conversion of surgical procedures from open to minimally invasive
• • Advanced Energy:Strong HSD growth led by continued strength from new innovations:
  • • LigaSure™ Exact Dissector andL-Hook™ Laparoscopic Sealer/Divider
    • Sonicision™ Curved Jaw Cordless Ultrasonic Dissection System
    • Valleylab™ FT10 Energy Platform
  • Advanced Stapling:LSD, led by the Endo GIA™ platform with Tri-Staple™ technology
• General Surgical:Flat performance, as MSD growth in Sutures offset by Instruments & Access
• Respiratory, Gastrointestinal, & Renal (RGR):+2.2% growth led by strength in GI Solutions and Patient Monitoring
• GI Solutions:LDD growth driven by strength across the portfolio, including mid-twenties growth in the reflux care continuum product lines, which include Bravo™ calibration-free & EndoFLIP™ imaging systems; another quarter of above market growth in our PillCam™ portfolio
• Patient Monitoring: MSD performance driven by Nellcor™ Pulse Oximetry, BIS™ brain monitoring consumables, and INVOS™ cerebral oximetry sensor consumables
• Respiratory:LSD, in-line with the market, with notable strength from Puritan Bennett™ 980 ventilators and McGRATH™ MAC video laryngoscopes
• Renal Care Solutions:Down MSD, primarily due to supply constraints in the Chronic and Renal Access business

Valleylab™ FX8

Energy

Platform

LigaSure™

Exact

Dissector

Puritan

Bennett™

980

INVOS™ 7100

Q3 FY20 Earnings Results | February 18, 2020 | 8

RTG	INFUSE AND PAIN STIM DROVE BELOW TREND QUARTER
Q3 FY20 HIGHLIGHTS	STRENGTH IN SPINE + ENABLING TECH, ISCHEMIC STROKE

Growth led by Continued Strength in Neurovascular and Neurosurgery

Pain		EM
14%	Spine	13%
Specialty	32%	Non-US
16%		Dev
		20%	U.S. 67%
Brain
38%

	Revenue	As Rep	CC1	Organic
	$M	Y/Y %	Y/Y %	Y/Y %
Brain	795	8.6	9.2	--
Spine	674	2.9	3.1	(0.2)
Specialty	340	4.6	4.9	--
Pain	303	(3.5)	(3.2)	--
Total	$2,111	4.2%	4.6%	3.6%
U.S.	1409	4.1	4.1
Non-U.S. Dev	436	0.2	1.1
EM	266	12.2	13.5
Total	$2,111	4.2%	4.6%

• Brain Therapies:+9.2% growth driven by Neurovascular & Neurosurgery
• Neurovascular:Mid-teens growth, with double-digit growth in Ischemic Stroke therapy products
• • Ischemic:Mid-20's growth on strong adoption of the Solitaire™ X stent retriever, as well as the Riptide™ aspiration system and React™ aspiration catheters
  • Hemorrhagic: HSD growth led bymid-teens growth in flow diversion
• Neurosurgery:LDD growth driven by continued healthy capital equipment sales
• • Strong Mazor X Stealth™ unit sales; meaningfully outpaced competition
  • Midas Rex™ MR8™ powered surgical instruments delivered robust growth
• DBS:End of quarter launch for Percept™ with BrainSense™ technology
• Spine:-0.2% with +2.3% U.S. Core Spine organic growth offset by customer buying patterns driving HSD declines in WW BMP
• Spine revenue combined with enabling tech2:3.1% organic growth; U.S. Spine plus enabling tech grew 2.4% organic despite Infuse softness
• Core Spine:LSD organic growth aided by Mazor™, which is increasing sales of Core Spine implants, and continued new product penetration, including the T2 Stratosphere™, Infinity™ OCT, and Prestige LP™ systems
• Specialty Therapies:+4.9% led by LDD growth in ENT
• ENT:LDD growth driven by sales of the StealthStation®ENT surgical navigation system, intraoperative NIM®nerve monitoring disposables, and powered ENT instruments
• Pelvic Health:LSD decline; received CE Mark for InterStim™ Micro Neurostimulator and InterStim™ SureScan™ MRI Leads in January 2020; awaiting FDA approval
• Pain Therapies:LDD Emerging Market growth offset by U.S. and Non-U.S. Developed Market declines
• Pain Stim:Declined, reflecting the slowdown of the SCS market and slight share loss; Intellis™ sales grew, offset by primary cell device declines
• • Launched DTM™ at NANS; starting DTM indication expansion trials in upper limb &pre-op spine
• Targeted Drug Delivery:LSD growth on strong SynchroMed™ II system sales; launched Efficio™

Solitaire™ X

Revascularization

Device

Mazor X Stealth™

Edition

DTM™ SCS Therapy on Intellis™ Platform

Efficio™ Software for SynchroMed™ II

1. Figures represent comparison to Q3 FY19 on a constant currency basis.
2. Spine-relatedenabling technologies revenue reflected in Neurosurgery business within Brain division.

Q3 FY20 Earnings Results | February 18, 2020 | 9

DIABETES

Q3 FY20 HIGHLIGHTS

16% INTERNATIONAL GROWTH OFFSET U.S. PRESSURES

CONTINUED INTERNATIONAL ADOPTION OF MINIMED™ 670G

1. CGM & International Pump Growth; MiniMed™ 670G Installed Base Expands

EM

10%

Non-US	U.S. 51%
Dev
39%

	Revenue	As Rep	CC1
	$M	Y/Y %	Y/Y %
U.S.	312	(10.3)	(10.3)
Non-U.S. Dev	236	10.8	12.7
EM	63	28.6	30.6
Total	$610	0.0%	0.8%

1 Figures represent comparison to Q3 FY19 on a constant currency basis.

• International Revenue:Accounting for approximately half of total sales, continued its double digit momentum with 16% growth
• U.S. Revenue:Declined LDD, as anticipated, primarily due to competitive challenges while awaiting new product launches
• CGM:Growth driven by WW strength in both Integrated and Stand Alone CGM
• Integrated CGM:Strong global growth driven by increased CGM penetration & new patient acquisitions
• Stand Alone CGM:Guardian™ Connect Smart CGM system continues momentum with approximately 50% growth
• Insulin Pumps:Performance driven by the ongoing MiniMed™ 670G system launch in international markets, offset by competitive pressures in the U.S.
• Next Tech Pathway program positively received
• • Provides 670G buyers an upgrade to MDT's next generation pump technology when launched
• HSD growth in Western Europe due to strong MiniMed™ 670G sales
• • DD growth in Germany and Italy
• MiniMed™ 670G installed base increased sequentially to ~237,000 trained, active users benefiting from SmartGuard™ technology

MiniMed™

670G

MiniMed ™

640G

Guardian™

Sensor 3

Guardian™

Connect w/

Sugar.IQ™

Q3 FY20 Earnings Results | February 18, 2020 | 10

FREE CASH FLOW

MDT

COMPONENTS OF FREE CASH FLOW

$ Billions	FY16	FY17	FY18	FY19
Operating Cash Flow	$5.2	$6.9	$4.7	$7.0
CAPEX	($1.0)	($1.3)	($1.1)	($1.1)
Free Cash Flow	$4.2	$5.6	$3.6	$5.9
Non-GAAP Net Income	$6.2	$6.4	$6.5	$7.1
Conversion Ratio4	67%	88%	55%	83%
Conversion Ratio adjusted to include post-tax amortization	88%	114%	72%	105%
Included in Operating Cash Flow:
-Tax	Certain Litigation Payments, net1,2	$0.2	$0.3	$0.3	$0.5
Restructuring Payments1	$0.2	$0.2	$0.2	$0.4
Pre	Other Payments1,3	$0.2	$0.3	$0.3	$0.2
Puerto Rico IRS Pre-Payment	--	--	$1.1	--
Certain Other Tax Payments	$0.8	$0.4	$0.4	$0.4

1. Cash flow impact does not reflect associated tax cost / benefit, as timing and amount are difficult to estimate.
2. Includes payments accrued as"Non-GAAP" charges, as well as COV acquisition opening balance sheet adjustments.
3. Includesacquisition-related,divestiture-related, and European Union medical device regulations charges, as well as contributions to the Medtronic Foundation.

4 Conversion Ratio = Free Cash Flow divided by Non-GAAP Net Income.

Q3 FY20 Earnings Results | February 18, 2020 | 12

FY20

YTD

$5.8

($0.9)

$4.9

$5.4

90%

114%

$0.1 $0.4

--

--

$0.1

Q4 FY20 GUIDANCE &

OTHER ASSUMPTIONS

MDT

Q4 FY20GUIDANCE & OTHER ASSUMPTIONS, EXCLUDING THE IMPACT OF COVID-19

	Q4 FY19 Base		Organic Growth	FX1	Implied Revenue
REVENUE		Guidance	Range
	$7,546M		~ 4.5%		(1.4%) - (0.8%)	~ $8.4 - 8.5B
	Q4 FY19 Base		Implied Constant	FX1	EPS Guidance
EPS		Currency
	$1.54		7.1 - 8.4%	($0.03)	$1.62 - $1.64

1 While FX rates are fluid, assumptions above are based on recent rates.

Q3 FY20 Earnings Results | February 18, 2020 | 14

APPENDIX

ACRONYMS / ABBREVIATIONS

	Growth
DD	Double Digit
HSD	High-Single Digit
LDD	Low-Double Digit
LSD	Low-Single Digit
MSD	Mid-Single Digit

	Other
~ or Approx.	Approximately
bps	Basis Points
CAPEX	Capital Expenditures
CC	Constant Currency
COV	Covidien
Dev	Developed
EM	Emerging Markets
EPS	Earnings Per Share
FDA	Food and Drug Administration
ERP	Enterprise Resource Planning
System
FX	Foreign Exchange
FY	Fiscal Year
GAAP	Generally Accepted Accounting
Principles

	Other
Int'l	International
IRS	Internal Revenue Service
Op	Operating
Ops	Operations
NC	Not Comparable
PLC	Public Limited Company
Q	Quarter
Q/Q	Quarter-over-Quarter
R&D	Research & Development
Rep	Reported
SEC	U.S. Securities & Exchange Commission
SG&A	Selling, General & Administrative
Tech	Technology
U.S.	United States
WW	Worldwide
YTD	Year to Date
Y/Y	Year-over-Year
$B	Billions of Dollars
$M	Millions of Dollars

	Business Specific
ACC	American College of Cardiology
AF	Atrial Fibrillation
APV	Aortic, Peripheral & Venous
BMP	Bone Morphogenetic Protein
CGM	Continuous Glucose Monitoring
CRHF	Cardiac Rhythm & Heart Failure
CRT-D	Cardiac Resynchronization Therapy -
Defibrillator
CRT-P	Cardiac Resynchronization Therapy -
Pacemaker
CSH	Coronary & Structural Heart
CVG	Cardiac & Vascular Group
DBS	Deep Brain Stimulation
DES	Drug Eluting Stents
DIAB	Diabetes
DCB	Drug Coated Balloon
DTM	Differential Target Multiplexed Waveform
Endo	Endoscopic
ENT	Ear, Nose, & Throat
GI	Gastrointestinal
ICD	Implantable Cardioverter Defibrillator

	Business Specific
LVAD	Left Ventricular Assist Device
MDT	Medtronic
MITG	Minimally Invasive Therapies Group
MRI	Magnetic Resonance Imaging
NCD	National Coverage Determination
OCT	Occipitocervical-Upper Thoracic
PMA	Premarket Approval
RGR	Respiratory, Gastrointestinal, & Renal
RTG	Restorative Therapies Group
SCS	Spinal Cord Stimulation
Stim	Stimulation
Surg	Surgical Innovations
Innov / SI
TAA	Thoracic Aortic Aneurysm
TAVR	Transcatheter Aortic Valve Replacement

Q3 FY20 Earnings Results | February 18, 2020 | 15