Medtronic (NYSE:MDT) today announced that Karen Parkhill intends to step down from her role as Executive Vice President and Chief Financial Officer (CFO), a position she has held for eight years, to take on the role of CFO at global technology giant HP.
(Image source: official)
Parkhill said: "I have been honored to serve Medtronic and our mission over the past eight years. I am grateful for the opportunity to lead Medtronic's outstanding finance team, and I believe they will continue to fulfill our commitments. I am thrilled about Medtronic’s future plans, and more importantly, the tremendous impact Medtronic technologies will have on patients' lives worldwide."
HP's market value exceeds $35 billion, which is about one-third of Medtronic's. However, HP's stock price has risen nearly 69% over the past five years, while Medtronic's stock price has fallen more than 18% during the same period.
MDT Shares Dip Over 1% to $79.47 Amid Parkhill's Exit; S&P 500 Edges Lower
Medtronic stated that the company intends to evaluate internal and external successor candidates. Parkhill's departure will take effect on August 2. She will continue to serve as Chief Financial Officer until that date. The company has appointed Gary Corona, Senior Vice President of Global Financial Planning and Analysis, as the interim Chief Financial Officer following her departure.
The company also reiterated the financial guidance for the first quarter and fiscal year 2025 that was released last month.
"On behalf of our employees, executive committee, and board of directors, I would like to thank Karen for her leadership over the past eight years. Personally, I am deeply grateful for Karen’s support during my transition to CEO, for helping me navigate the pandemic, and for bringing a new operating model to our company. We wish her all the best in the next chapter of her career," said Geoff Martha, Chairman and Chief Executive Officer of Medtronic. "Across the company, we are building momentum through our innovation-driven growth strategy, and we remain focused on achieving both our short-term and long-term financial goals."
In Medtronic's recently disclosed executive compensation, Parkhill is the second-highest paid executive in the company.
Analyst's View on Parkhill's Resignation
Truist analysts Richard Newitter, Samuel Brodovsky, Ravi Misra, and Benjamin Goldstein maintained a "Hold" rating on Medtronic following Parkhill's announced departure. They expect the company to provide more details during its Q1 earnings call in August.
The analysts wrote that they "remain on the sidelines, with no increased confidence in the upside potential of the estimates and the execution of margin expansion."
Before having more insights into the acceleration of the company's earnings per share, Truist prefers other large-cap companies.
"Any change in the Chief Financial Officer position naturally triggers a certain level of uncertainty, but this one seems quite benign/explainable (Ms. Parkhill is looking for another opportunity). We understand that, before Medtronic announces a permanent successor and 'revisits' the recently issued guidance, investors may experience some anxiety. We believe that investors are looking for a CFO with a proven track record of achieving margin growth, especially considering Medtronic’s slow progress in improving profitability—a persistent challenge that has puzzled former executives and frustrated investors."Another Employee Leaves Medtronic
In the past few months, several senior executives of Medtronic have left the company, with Parker Shi being one of them. The world's largest medical device company is undergoing significant changes, including portfolio management initiatives such as shutting down Medtronic’s ventilator business, layoffs and last year’s early retirement program, stricter cost controls, and increased use of automation and digitalization. Meanwhile, the company stated that it has made strategic R&D investments to support future growth.
This month, the company confirmed that Rob ten Hoedt, Executive Vice President and Global Regional President, is about to retire. Recently, Endologix hired two former executives to join the company's senior management team, serving as Chief Operating Officer and Chief Commercial Officer respectively.
Last month, Bonnie Handke joined CVRx, having previously served as the Vice President of Global Health Economics at Medtronic, where she was responsible for policy and reimbursement related to coronary and renal denervation, peripheral vascular health, structural heart, aortic, and cardiac surgery businesses.
Christopher Cleary, former Senior Vice President of Corporate Development at Medtronic, left in March after a decade-long tenure. Also in March, Gio Di Napoli, President of the company’s Gastrointestinal business, announced his departure.
Ariel Mactavish (Ariel McTavish), another business unit leader and president of the Respiratory Interventions division at Medtronic, also announced her departure in March. Previously, Medtronic announced plans to exit the ventilator market in February. At the same time, Bob White, executive vice president and president of the Medical Surgical Portfolio at Medtronic, also left the company.
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