INVESTOR DAY

JUNE 6, 2016
NEW YORK CITY

Restorative Therapies Group (RTG)

GEOFF MARTHA

EVP & GROUP PRESIDENT

RESTORATIVE THERAPIES GROUP

Restorative Therapies Group (RTG)

FORWARD LOOKING STATEMENT

This presentation contains forward-looking statements which provide current expectations or forecasts, including those
relating to market and sales growth, growth strategies, financial results, use of free cash flow, product development and
introduction, partnerships, regulatory matters, restructuring initiatives, mergers/acquisitions/divestitures and related effects,
accounting estimates, financing activities, working capital adequacy, competitive strengths and sales efforts. 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 our periodic reports on file 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.
Financial Data
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 also contains nonGAAP financial measures such as free cash flow and historical revenue on a comparable constant currency basis, which sums
historical data of Medtronic and Covidien, aligns Covidiens prior year monthly revenue to Medtronics fiscal quarters and
adjusts for the impact of foreign currency translation. We believe these measures provide a useful way to evaluate our
underlying performance. Detail concerning how all non-GAAP measures are calculated, including all non-GAAP to GAAP
reconciliations, are posted to our website.

2016 Investor Day | 3

KEY GROWTH STRATEGIES

THEMES FOR TODAYS DISCUSSION
1. RTG will reinvigorate therapy innovation across all businesses through the
changes we have made in structure and talent
Our disease focused businesses will deliver meaningful innovation through an
expanded emphasis across the patient care continuum and a consistent cadence
of new products
2. Our global footprint, breadth, and scale give us a fundamental advantage in driving
emerging market therapy penetration and market share
3. Value-Based Healthcare episode of care bundles create a unique opportunity for
business model innovation and entrance into new markets

2016 Investor Day | 4

ATTRACTIVE MARKETS WITH INNOVATION HEADROOM

STRONG SHARE POSITION ACROSS THE PORTFOLIO
Therapy Segment
Core Spine
Biologics
InFuse
Value Orthopedics*

FY17
FY16-21E
WW Market
CAGR
Size
Market Growth
$7.5B
$0.8B
$0.5B
$1.1B

Brain Modulation
Neurosurgery
Stroke

$0.6B
$2.7B
$2.2B

Kyphoplasty & Ablation

Pain Stimulation
Pain Pumps

$0.6B
$1.7B
$0.3B

Pelvic Health
ENT
Advanced Energy

Total RTG

Low-Single
Mid-Teens

FY16
MDT Share
/Trend

FY11

92%
38%
31%

Mid-Single

55%
38%
95%

$0.7B
$1.2B
$0.4B

Mid -Single
Mid-Single
Low-Teens

85%
51%
84%

$20.3B

Mid-Single

~40%

Growth Rate**

Growth Rate

FY16
FY16- FY21

Market

~6%

Market

Constant currency, adjusted for the extra week in Q1.

~4%

RTG
Growth Rate

Growth Rate

5-6%

Growth Rate

RTG
Growth Rate

MidSingle

FUTURE
~$10B
business

TODAY

by FY21

$7.2B
business

~75M patients
>10% served

~50M patients
~10% served

*Market Share represents China only business segment is Kanghui / ** based on comparable portfolio
1)

~0%

RTG

~3%

26%
31%
100%
13%*

Upper-Single

Market

2016 Investor Day | 5

EMPHASIZING EXECUTION TO DELIVER GROWTH

UNLOCKING POTENTIAL
Organized to Innovate

Integrated Platforms

Aligning businesses around disease states

and conditions.

Integrating our suite of surgical solutions

to drive improved clinical and economic
outcomes.

Leverage breadth of product portfolio and

develop new service offerings that together,
improve outcomes.

Empowered GMs prioritizing R&D

investment and delivering a predictable
cadence of new products.

Seamless workflow creates an enhanced

surgical experience for physicians and
makes procedures more predictable.

Integrated commercial structure to deliver

value to administrative customers and
broader stakeholders.

Group-level leader driving R&D execution.

Group-level leaders driving collaboration.

Leveraging Breadth

Restorative Therapies Group (RTG)

2016 Investor Day | 6

ORGANIZED TO CONSISTENTLY DELIVER INNOVATION THAT MATTERS

ALIGNING STRUCTURE TO STRATEGY
Restorative Therapies Group

FY 16
$7.2B

General
Managers

BU
Leader

Spine

Brain

Pain

Specialty

Biologics

Modulation

Stimulation

ENT

Core Spine

Neurovascular

Pump

Pelvic Health

Kanghui

Neurosurgery

Interventional

Advanced
Energy

Integrated Global Sales Structure

Enabling Functions (Operations, R&D, Quality, and Marketing)

2016 Investor Day | 7

EXECUTING ON WINNING GROWTH STRATEGIES

EMPHASIS FOR TODAYS DISCUSSION
PRESENTATION TOPICS

Therapy
Innovation

Deliver Steady Cadence of

Innovation that Matters

Spine
Brain
Pain
Specialty Therapies
PANEL DISCUSSION

Globalization

Market Development and

Localization

Emerging Markets

Economic
Value

Sharing Direct Accountability for

Outcomes

Value Based Healthcare

Restorative Therapies Group (RTG)

2016 Investor Day | 8

SPINE THERAPY INNOVATION

Therapy
Innovation

Restorative Therapies Group (RTG)

Deliver Steady Cadence of

Innovation that Matters

HEADWINDS ABATING, WHILE TAILWINDS EMERGING FROM FOCUSED EXECUTION

FOUNDATION ESTABLISHED TO RESTORE GROWTH
Stabilization

Destabilization & Decline

Headwinds

Market Growth
Challenges

InFuse

InFuse & Kyphon

Challenges

MDT Spine
Revenue Trend*

Return to
Growth

Spine Journal
Publication

+2.4%
(0.5%)
(3.4%)

(2.6%)
InFuse

Yale Study

(5.8%)

Reinvigorated Product Development

Tailwinds

FY11

FY12

FY13

Flat

Low
Single
Digits

FY14

FY15

New
Product
Momentum

FY16

FY17-21
CAGR

*WW Core and Biologics (incl. INFUSE) VS PY: constant currency

2016 Investor Day | 10

SPINE MOMENTUM BUILDING: FY16 RECAP

FOUNDATION ESTABLISHED TO RESTORE GROWTH

1
PRODUCT
INNOVATION
AND SET
INVESTMENT

+$60M

15-20% of
Revenue

FY16

FY17-FY21

+$30M
Set Investment

2
INFUSE
Bone Graft
REBOUND

794

515-525
500
468

476

~$25M
FY16 vs FY15

~3.0%
FY16-21 CAGR

As end markets return to

growth and MDT
headwinds abate, a wave
of new innovation is
delivering growth.

Biologics portfolio
shifting to growth from
INFUSE Bone Graft
rebound due to
indication expansion.

Infuse WW Revenue Trend as report in $M

2016 Investor Day | 11

FUTURE GROWTH
PILLARS TO DELIVER GROWTH

SPEED-TO-SCALE

Speed

of Innovation

Synchronized

procedural launches

SURGICAL SYNERGYTM

Scale

at Launch

Accelerating innovation
execution and launching
products as a procedural
solution

Stronger commitment to
Surgical Synergy
differentiating the
Medtronic surgical
experience

2016 Investor Day | 12

SPEED-TO-SCALE
INNOVATION, PREDICTABILITY, AND IMPACT

12
2016 Investor Day | 13

SPEED-TO-SCALE
INNOVATION, PREDICTABILITY, AND IMPACT

Speed

of Innovation

Speed
Reduce
development
cycle times
40-50%
Quality
Maintain or
Enhance
Product Quality

Execution
On-time & onbudget delivery
to major
milestones
Productivity
Drive 20%
functional
productivity
improvement

Concept to Commercialization
12
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SPEED-TO-SCALE
INNOVATION, PREDICTABILITY, AND IMPACT

Speed

of Innovation

Speed
Reduce
development
cycle times
40-50%
Quality
Maintain or
Enhance
Product Quality

Synchronized

Procedural Launches

Execution
On-time & onbudget delivery
to major
milestones
Productivity
Drive 20%
functional
productivity
improvement

Concept to Commercialization

All components of procedure must be in

place to initiate launch.
12
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SPEED-TO-SCALE
INNOVATION, PREDICTABILITY, AND IMPACT

Speed

of Innovation

Synchronized

Scale

Procedural Launches

at Launch
Historical Model

Quality
Maintain or
Enhance
Product Quality

(# of Sets)

Reduce
development
cycle times
40-50%

Execution
On-time & onbudget delivery
to major
milestones

..
New Model

Productivity
Drive 20%
functional
productivity
improvement

OLIF25 Example
(# of Sets)

Speed

Solera Example

Scale is defined as 75% of predicate sets available

Concept to Commercialization

All components of procedure must be in

place to initiate launch.

Reduce time to scale from 8+ quarters to

<3 quarters.
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CASE STUDY: OLIF PROCEDURE LAUNCH (OBLIQUE LATERAL INTERBODY FUSION)

A PROCEDURAL LAUNCH REACHING SCALE QUICKLY
Procedure Benefits

Synchronized Launch

Patient: Truly MIS (avoids disrupting nerve-

OLIF Procedural Component

filled psoas muscle)

Q1 FY17

Metal

Economic: Neuromonitoring optional; no

Interbody
Fixation

flip (and associated time) to access all lumbar

levels

Biologics
Enabling Technology
Proficiency

Q2 FY17

Access System

Surgeon: Easier to access to more discs;

more comfortable positioning (ergonomic) ;
less fluoro (radiation)

Q4 FY16

Surgeon Training
Rep Training
Clinical Evidence/EV

Component Launch Complete At-Scale

13
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PREDICTABLE CADENCE AROUND PROCEDURAL SOLUTIONS

INNOVATION, PREDICTABILITY, AND IMPACT

From launching
Products..

.to launching
Procedures

Procedural Solution

14
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SURGICAL SYNERGY: SPINE

CREATING A UNIQUE MEDTRONIC SURGICAL EXPERIENCE
FY 16 Business Impact
Accounts with O-arms increased by
24% in FY16
Nearly 1 in 4 procedures navigated
O-Arm accounts grew 4X faster in Q4
~ 15 new deals securing market share
in Q4

Restorative Therapies Group (RTG)

15
2016 Investor Day | 19

SURGICAL SYNERGY: SPINE

CREATING A UNIQUE MEDTRONIC SURGICAL EXPERIENCE
FY 16 Business Impact
Accounts with O-arms increased by
24% in FY16
Nearly 1 in 4 procedures navigated
O-Arm accounts grew 4X faster in Q4

Whats
Different

~ 15 new deals securing market share

in Q4

New Enabling
Technology

More Integrated
Procedures

Better
Outcomes

Technology enhancements across

existing platforms (0-arm, Nav)

Seamless pre-op planning

through post-op confirmation

Creating stronger base of

evidence

Addition of Robotics through

Mazor deal*

Creating a unique MDT

experience

Creating offering to align

financial accountability

* Structured investment

Restorative Therapies Group (RTG)

15
2016 Investor Day | 20

BRAIN THERAPY INNOVATION

Therapy
Innovation

Restorative Therapies Group (RTG)

Deliver Steady Cadence of

Innovation that Matters

MEDTRONIC BRAIN THERAPIES

VISION & ASPIRATION

FUTURE
$3B+ business
by FY21
#1 Global Market Leader

TODAY
~$2B business
#1 Global Market Share

THE GLOBALLY RECOGNIZED

INNOVATOR
OF BRAIN DISEASE SOLUTIONS
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ARRAY OF PLATFORMS TO ADVANCE SCIENCE

THE INDUSTRYS BROADEST PORTFOLIO OF BRAIN THERAPIES
Neurosurgery

Acute Ischemic Stroke

Modulation
Parkinsons Disease

Brain Tumor**

Hemorrhagic Stroke

Essential Tremor

Epilepsy**

Epilepsy*

Hydrocephalus

Neurovascular

~$600M
FY16 Revenue

Mid Teens

~$500M

Growth
FY16-FY21

FY16 Revenue

Mid Single
Growth
FY16-FY21

~$900M
Enabling Technologies

FY16 Revenue

Visualization, Navigation,
Laser Ablation, Powered Surgical & Robotics
*Current FDA status is approvable

Restorative Therapies Group (RTG)

**Future indications

18
2016 Investor Day | 23

HighSingle
Growth
FY16-FY21

DELIVERING GROWTH IN THE BRAIN BUSINESS

THERAPY INNOVATION
Therapy Innovation
Expanded MRI Labeling

StrataMR
EARLY Onset PD
US Labeling

Olympus DBS
PC & RC+ Sensing

Stealth Connect

Leads
Refresh

Cranial Robot
Stealth Midas

Epilepsy PMA*
SureTune
DBS Planning

UNO
(US)

Axium Gen#2 (Axium

Prime Detachable Coil
Stealth Cranial 3.0
(Extra Soft))

Medina (EU)

Pipeline Gen#4
(Maverick)

Axium Gen#2
(Fitz Roy)
ARC Support Catheter Solitaire Gen#3
(Solitaire Platinum)

FY16

Breadth and Depth

All products not approved, for pipeline illustration purposes only

DBS ExtensionBootless, Seals Pipeline Gen#5

(Oracle)

Solitaire Gen#4
(Resolver)

Artisse Intrasaccular
Device (US)

Barrel
(US IDE)
Medina (US)

Artisse Intrasaccular
Device (EU)

FY17

ARC Catheter Gen# 2

FY18

Steady Cadence

FY19 +

Solitaire Gen#5
(iDelphi)

Advanced Generations
*Current FDA status is approvable

19
2016 Investor Day | 24

BRAIN THERAPIES
ROBUST PIPELINE

INTERVENTIONAL

MODULATION

Solitaire Platinum

Recent Onset PD

Enhanced Visibility
Improved radiopacity and clot capture
feedback to physician
Self-expanding stent-based design creates
simple, single-operator procedure
Launch: EU & US H1FY17

Medina
3D self-expandable mesh implant
Unique coil alternative for the Intrasaccular
Aneurysm market
Launch: EU in FY17 / US in FY20

Pipeline w/Shield
Reduced Thrombogenicity
Durable and biocompatible non-drug
surface treatment for the Pipeline device
Launch: EU in FY15 US TBD

Arc Support Catheter

Arc expanded and enhanced the
Navien Intracranial Guide Catheter family
Launch: EU in Q1FY16 / US inQ2 FY16
All products not approved, for pipeline illustration purposes only

Expanded Indication
Actionable patient criteria
More than doubles US PD candidates
Launch: US H2 FY16

Full Body MRI Labeling

MDT Exclusive
7 out of 10 DBS Patients will need MRI
1st DBS w/ full body MRI conditionally safe scans
Launch: EU H1 FY16, US H2 FY16

SureTune
MDT Exclusive
Image based programming
Visualization of leads, structures, and
stimulation
Launch: EU H1 FY17 / US TBD

TYRX
Reduce Infection Risk
Absorbable antibacterial envelope
Minimizes infection risks for INS implants
Launch: US H1FY16, EU H1FY17

NEUROSURGERY
Next Gen O-Arm
Intraop targeting/check
50% less dose than current O-arm while
maintaining image quality
Larger field of view enables additional cranial
& ortho procedures
Preview field minimizes the number of
fluoro acquisitions needed prior to 3D scan
Launch: US Q3FY16

StrataMR
Adjustable Valves & Shunts
Adjustable valve designed to resist changes
in an MRI field up to 3.0 Tesla for patients
with hydrocephalus and CSF conditions
Launch: EU Q4FY16 & US Q1FY17

Stealth-Midas
System Integration
Integration of StealthStation into Midas Rex
hand piece
Enables navigation of our powered solutions
for spinal procedures
Launch: US H2FY17

20
2016 Investor Day | 25

DELIVERING GROWTH IN THE BRAIN BUSINESS

EXPANDING ACCESS THROUGH EVIDENCE
Commitment to Evidence
Brain Modulation Evidence

Neurosurgery Evidence

Stroke Evidence
Updated
AHA/ASA Stroke
Guidelines

Current
Evidence
Pipeline

SWIFT Direct
(Stroke)

PREMIER
(Flow Diversion
Indication)

SLATE
(Epilepsy)

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SURGICAL SYNERGY: BRAIN MODULATION

EXPANDING CAPABILITIES
Surgical Synergy Capabilities for Brain Modulation

Business Impact
Expanded Applications
& Technology
Deep Brain Stimulation
Visualase Ablation
Cranial Robot*

Improved Outcomes
Lead placement visualization
to improve efficacy and
decrease procedure time

Multiple deals in Europe signed to

protect or increase DBS share
Extending O-Arm usage to DBS in
navigated spine accounts
Ramping sales training and sales
collaboration initiatives

* Structured Investment

Restorative Therapies Group (RTG)

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PAIN THERAPY INNOVATION

Therapy
Innovation

Restorative Therapies Group (RTG)

Deliver Steady Cadence of

Innovation that Matters

PAIN THERAPIES
OPIOID ADDICTION: A GROWING EPIDEMIC

~$7B
7%

Large market for pain

treatment options (US)
Annual Pain Market Growth*

An Opportunity for Leadership

Fragmented patient care and protocols
Provider, payor, and industry alliances on outcomes
Public health crisis on opioid addiction

259 M

$15 Billion

US prescriptions for
opioid pain
medication; enough
for 1 bottle for every
adult1

Hospital charges for

opioid-related
inpatient care2

1.9M

520K

Number of Americans
who suffer from
opioid abuse or
dependence1

Hospitalizations
related to use and
dependence on
opioids; 70% greater
than in 20022

* Projected growth from 2015 to 2025

1.
2.

http://www.asam.org/docs/default-source/advocacy/opioid-addiction-disease-facts-figures.pdf
http://khn.org/news/opioid-epidemic-fueling-hospitalizations-hospital-costs/

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2016 Investor Day | 29

GLOBAL LEADER IN NON-ORAL PAIN MANAGEMENT

STRONG CORE PRODUCTS AND BROAD PORTFOLIO
Broad & Growing Portfolio

Global Market Leader

Global Revenue*

Global Share

Musculoskeletal

~$600M

38%

PAIN PUMP
Musculoskeletal
Cancer
Spasticity

~$250M

95%

SPINAL CORD STIMULATION (SCS)

INTERVENTIONAL
Kyphoplasty:
Musculoskeletal
Cancer

Ablation:
Cancer
Bone Metastasis

~$300M

55%

Emerging Category

* FY16
1.Systemic opioid elimination after implantation of an intrathecal drug delivery system significantly reduced Neuromodulation. 2015;18(3):207-213.
2.Balloon kyphoplasty for the treatment of acute vertebral compression fractures: 2-year results from a randomized trial. 2011;26(7):1627-1637.
3.Fracture Reduction Evaluation Study 24-month final clinical study report, August 27, 2010. Medtronic Spinal and Biologics Europe BVBA.
4.Spinal cord stimulation versus repeated lumbosacral spine surgery for chronic pain: a randomized, controlled trial. Neurosurgery. 2005;56(1):98-107.

Proven Pain Management

Alternatives

Medtronic is
uniquely positioned
to address the global
Opioid Epidemic by
offering a complete
range of pain
management
solutions for our
customers and
patients.
25
2016 Investor Day | 30

ADDRESSING THE OPIOID EPIDEMIC

STRONG
PRESENCE PAIN
WITH SPECIALISTS
MEDTRONIC
THERAPIES
Pain
Specialists

Interventional
Radiologists

Neurosurgeons

Perform 9 of 10
musculoskeletal pain
procedures.

Perform 9 of 10 cancer
pain procedures.

Perform >25% of pump

implants and >35% of
SCS implants.

75% are MDT

Customers.

80% are MDT

Customers

>80%+ are MDT

Customers

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2016 Investor Day | 31

MEDTRONIC AS THE GLOBAL LEADER IN TREATING PAIN

NEAR TERM PRIORITIES
Interventional
Vertebral Augmentation:
Leverage new products and new
global markets

SPINAL CORD STIMULATION (SCS)

Leverage MDT exclusives, unmatched commercial footprint,
and integrated sales structure

AdaptiveStim
Ablation: Penetrate spine cancer
market and drive BKP pull through

Right Dose to Right Location

TYRX

Return to Growth

Next Gen SCS

Smaller Device
Tablet based programmers
Novel stimulation programs

Infection Control

Pump

Intellis

MRI Safety

Without Compromised
Device Selection

Global Launch Early FY18

27
2016 Investor Day | 32

SPECIALTY THERAPIES
THERAPY INNOVATION
Therapy
Innovation

Restorative Therapies Group (RTG)

Deliver Steady Cadence of

Innovation that Matters

SPECIALTY THERAPIES: PELVIC HEALTH, ENT, ADVANCED ENERGY

ATTRACTIVE GROWTH VERTICALS

NURO External Stim

ENT Office

High Single
Growth
FY16-FY21

Expanding Access and Deeper

Penetration in Large Markets

Emerging
Markets

Hearing Restoration

Market
Penetration

Disease State
Execution &
Expansion

Consistently Positive
Patient Experience

Therapy Expansion

Adjacent
Opportunities

Care
Continuum

Penetration &
Expansion

Improving Access, Advancing MIS, and

Expanding Indications
Leadership Position
in Pelvic Health

Advanced Energy

Ear, Nose & Throat (ENT)

Joint & Spine

Oncology
Lead (Gen Replace.)
ENT & Neuro

AEX Aquamantys + PlasmaBlade

Platform
Innovation

Pelvic Health

>$500M
Growth
FY16-FY21

29
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RESTORATIVE THERAPIES GROUP

POSITIONED FOR GROWTH

GROWTH DRIVERS
MidSingle ~$10B
~+4%
CAGR*

Brain Therapies Product

Innovation
Specialty Therapies Product
Innovation and Care Continuum
Expansion

$7,210

$6,042

Spine: International Growth

Emerging Market Penetration

FY11A
*Growth Rate

FY16A

FY21E

@ Constant FX

30
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THERAPY INNOVATION AS A GROWTH DRIVERS

PORTFOLIO SUPPORTS MID-SINGLE DIGIT GROWTH
Brain

~50%

% of FY16 MDT Revenue

FY16 MDT Growth
FY16-21 Market CAGR
% FY16-21 Growth
Contribution

Specialty

Spine

Pain

~35%

~15%

Low-Teens

Upper-Single

Flat

Negative

Upper-Single

Upper-Single

Low-Single

Mid-Single

~20%

Negligible

~80%

Mid-Single
RTG Growth
FY16-21

Specialty Therapies = Pelvic Health, ENT, Adv. Energy; Spine includes Kanghui

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