Medtronic Announces Strategic Restructuring to Enhance Revenue Generation

Compiled by Rainbow

Recently, according to foreign media reports, Geoff Martha, the new CEO of Medtronic who took office in late April, announced a corporate restructuring aimed at enhancing revenue generation capabilities. To this end, he has formulated strategies involving “targeted adjustments” and “comprehensive reorganization.” Under the new organizational structure, significant changes have been made to leadership relationships and business operations.

It is reported that the “New Medtronic Plan” will cost approximately $400 million to $450 million in fiscal year 2022, and upon full implementation in fiscal year 2023, will generate annual savings of $450 million to $475 million (approximately RMB 3 billion).

According to reports, the restructuring plan has been filed with the U.S. Securities and Exchange Commission (SEC), and the new organizational structure will be fully implemented on February 1, 2021 (Medtronic’s fourth quarter of fiscal year 2021). As part of localized adjustments, Medtronic will establish highly centralized “Operating Units,” with its existing businesses split into twenty more focused business units. Sean Salmon, formerly the Global Leader of Diabetes Operations, will head the Operating Units and hold authority over the allocation of Medtronic’s strategic capital. This unit will bear comprehensive responsibility for markets and customers to enhance the company’s operational capabilities. Consequently, the task of formulating operational plans, previously handled elsewhere, will now be executed by this core unit.

Business Structure Before Adjustment

Adjusted Business Structure

Operating Units will be split into three portfolios for operations, led by Mike Coyle, Brett Wall, and Bob Whitel, who currently serve as the Global Head of Cardiovascular, Global Head of Restorative Therapies, and Global Head of Minimally Invasive Surgery, respectively.

Among these, the Cardiovascular portfolio underwent the most significant restructuring, followed by Minimally Invasive Therapies. With the exception of Innovative Surgical Technologies, which remained intact, the former integrated Respiratory, Gastrointestinal, and Renal Monitoring business was split into four smaller units. Reportedly, these twenty business units will serve as the core of Medtronic’s future profit and loss (P/L) structure.

Furthermore, on August 26, according to the SEC’s official website, Medtronic released its financial results for the first quarter of fiscal year 2021 (covering the period from April 27, 2020, to July 31, 2020).

Medtronic’s first quarter of fiscal 2021 comprised 14 weeks, one week longer than the first quarter of fiscal 2020. Its revenue for the first quarter of this year was $6.5 billion (approximately RMB 44.6 billion), representing a 13% year-on-year decline.

From the perspective of the original business segments:

CVG’s first-quarter revenue was $2.433 billion, a 13% decrease compared to the same period last year;

Medtronic's first-quarter revenue was $1.801 billion, a 14% decrease compared to the same period last year;

RTG’s first-quarter revenue was $1.712 billion, a 15% year-over-year decline;

DIAB’s first-quarter revenue was $562 million, a 5% year-over-year decline, impacted by delays in new patients initiating insulin pump therapy and ongoing competitive pressures.