Medtronic to Stop Distribution and Sale of HVAD System

- Company Developing Support Program for Current HVAD Patients

- Medtronic Coordinating with Global Regulators to Assure Patient Access to Left Ventricular Assist Devices

- Medtronic plc (NYSE:MDT), the global leader in medical technology, is stopping the distribution and sale of the Medtronic HVAD™ System. This morning, the company notified physicians to cease new implants of the HVAD System and transition to an alternative means of durable mechanical circulatory support.

Medtronic also announced that it is developing a support program for patients who have had an HVAD implanted and for caregivers and health care professionals who participate in their care. This program is being developed with an independent panel of clinician advisors to ensure the ongoing care and safety of patients who are currently supported by the HVAD system. Though the company will stop distribution and sale of the HVAD System, Medtronic is committed to serving the needs of the approximately 4,000 HVAD patients currently implanted with the device.

Medtronic initiated this action in light of a growing body of observational clinical comparisons indicating a higher frequency of neurological adverse events, including stroke, and mortality with the HVAD System as compared to other circulatory support devices available to patients.

In addition, Medtronic previously issued an Urgent Medical Device Communication informing physicians that the HVAD pump may experience a delay to restart or a failure to restart after it is stopped. Pump restart failure can potentially worsen a patient's heart condition, lead to a heart attack, require hospitalization, and result in death.

Considering these findings and the availability of alternative devices, Medtronic made the decision to stop the distribution and sale of the HVAD System, consistent with its commitment to prioritize patient safety.

"The Medtronic Mission guides us to always do what is in the best interests of patients and that is exactly what we are doing and will do for those impacted by this decision. There is nothing more important than the safety and well-being of patients," said Nnamdi Njoku , president of the Mechanical Circulatory Support business, which is part of the Cardiovascular Portfolio at Medtronic. "We recognize this information may be concerning for patients and their caregivers, and Medtronic is committed to supporting them in coordination with their physicians."

Medtronic has been working closely with the U.S. Food and Drug Administration (FDA), along with other regulatory bodies around the world, to share information related to this decision and its commitment to ongoing support for patients implanted with the HVAD device.

Patient Management Recommendations
Medtronic is committed to patient safety and to serving the needs of the approximately 4,000 HVAD patients currently implanted with the device. Medtronic has consulted with an independent panel of clinician advisors to develop patient management recommendations to reduce stroke risk and mitigate against other potential risks associated with the HVAD System. Elective explant of the HVAD device is not recommended, as risks associated with explantation may outweigh the potential benefits.

Medtronic is also developing an ongoing support program for patients who have had an HVAD implanted, caregivers, and health care professionals who participate in their care. The program will include financial assistance for eligible patients and other resources for physicians and their caregivers. Further details of the program will be announced when they become available.

Medtronic is working closely with other stakeholders including Abbott, which manufactures the HeartMate 3™ LVAD device, and with regulatory bodies globally, to help ensure that alternative treatment options are available for patients who may be candidates for a LVAD device.

Patients with a HVAD implanted should contact their physician with questions or concerns. For more information, please visit www.Medtronic.com/HVADsafety .

Financial Information
In terms of financial impact, the company estimates that on a non-GAAP basis, the actions announced today are expected to be neutral to slightly accretive to fiscal year 2022 non-GAAP diluted earnings per share (EPS). The HVAD System and associated accessory revenue was $141 million in fiscal year 2021. In addition, the potential loss of revenue was contemplated in the guidance issued by the company on May 27, 2021 . As such, there is no change to:

the 9% organic revenue growth outlook for fiscal year 2022;
the Cardiovascular organic revenue growth outlook of 10-11% for fiscal year 2022, including 14-15% in the first quarter; and
the diluted non-GAAP EPS guidance of $5.60 to $5.75 for fiscal year 2022, including the first quarter outlook of $1.31 to $1.34 .

About the HVAD™ System
The Medtronic HVAD System is indicated for hemodynamic support in patients with advanced, refractory left ventricular heart failure; either as a Bridge to Cardiac Transplantation (BTT), myocardial recovery, or as Destination Therapy (DT) in patients for whom subsequent transplantation is not planned.

About Medtronic
Medtronic plc ( www.medtronic.com ), headquartered in Dublin, Ireland , is among the world's largest medical technology, services and solutions companies – alleviating pain, restoring health and extending life for millions of people around the world. Medtronic employs more than 90,000 people worldwide, serving physicians, hospitals and patients in more than 150 countries. The company is focused on collaborating with stakeholders around the world to take healthcare Further, Together.

Any forward-looking statements are subject to risks and uncertainties such as those described in Medtronic's periodic reports on file with the Securities and Exchange Commission. Actual results may differ materially from anticipated results.

HeartMate 3 is a trademark of Abbott group of companies.

Contacts:

Kathleen Janasz	Ryan Weispfenning
Public Relations	Investor Relations
+1-763-526-3676	+1-763-505-4626

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SOURCE Medtronic plc

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Condensed Consolidated Statements of Income (unaudited)
	Three months ended
	March 30,			% of		April 1,			% of
(Dollars in millions except per share amounts)	2024			Revenues		2023			Revenues
Revenues	$	10,345				$	10,710
Costs and operating expenses:
Cost of revenues (a)		6,040		58.4	%		6,437		60.1	%
Selling, general and administrative expenses (b)		1,731		16.7	%		1,646		15.4	%
Amortization of acquisition-related intangible assets		551		5.3	%		606		5.7	%
Research and development expenses		331		3.2	%		346		3.2	%
Restructuring and other costs (c)		29		0.3	%		112		1.0	%
Total costs and operating expenses		8,682		83.9	%		9,147		85.4	%
Operating income		1,663		16.1	%		1,563		14.6	%
Interest income		279					146
Interest expense		(363	)				(300	)
Other income/(expense) (d)		10					(46	)
Income before income taxes		1,589					1,363
Provision for income taxes (e)		(281	)				(46	)
Equity in earnings/(losses) of unconsolidated entities		23					(25	)
Net income		1,331					1,292
Less: net income/(losses) attributable to noncontrolling interests and redeemable noncontrolling interest		4					3
Net income attributable to Thermo Fisher Scientific Inc.	$	1,328		12.8	%	$	1,289		12.0	%

Earnings per share attributable to Thermo Fisher Scientific Inc.:
Basic	$	3.47				$	3.34
Diluted	$	3.46				$	3.32
Weighted average shares:
Basic		382					386
Diluted		384					388

Reconciliation of adjusted operating income and adjusted operating margin
GAAP operating income	$	1,663		16.1	%	$	1,563		14.6	%
Cost of revenues adjustments (a)		15		0.1	%		41		0.4	%
Selling, general and administrative expenses adjustments (b)		19		0.2	%		8		0.1	%
Restructuring and other costs (c)		29		0.3	%		112		1.0	%
Amortization of acquisition-related intangible assets		551		5.3	%		606		5.7	%
Adjusted operating income (non-GAAP measure)	$	2,278		22.0	%	$	2,330		21.8	%

Reconciliation of adjusted net income
GAAP net income attributable to Thermo Fisher Scientific Inc.	$	1,328				$	1,289
Cost of revenues adjustments (a)		15					41
Selling, general and administrative expenses adjustments (b)		19					8
Restructuring and other costs (c)		29					112
Amortization of acquisition-related intangible assets		551					606
Other income/expense adjustments (d)		(11	)				46
Provision for income taxes adjustments (e)		50					(171	)
Equity in earnings/losses of unconsolidated entities		(23	)				25
Adjusted net income (non-GAAP measure)	$	1,959				$	1,956

Reconciliation of adjusted earnings per share
GAAP diluted EPS attributable to Thermo Fisher Scientific Inc.	$	3.46				$	3.32
Cost of revenues adjustments (a)		0.04					0.10
Selling, general and administrative expenses adjustments (b)		0.05					0.02
Restructuring and other costs (c)		0.08					0.29
Amortization of acquisition-related intangible assets		1.44					1.56
Other income/expense adjustments (d)		(0.03	)				0.12
Provision for income taxes adjustments (e)		0.13					(0.44	)
Equity in earnings/losses of unconsolidated entities		(0.06	)				0.06
Adjusted EPS (non-GAAP measure)	$	5.11				$	5.03

Reconciliation of free cash flow
GAAP net cash provided by operating activities	$	1,251				$	729
Purchases of property, plant and equipment		(347	)				(458	)
Proceeds from sale of property, plant and equipment		4					6
Free cash flow (non-GAAP measure)	$	908				$	277

Business Segment Information	Three months ended
	March 30,			% of		April 1,			% of
(Dollars in millions)	2024			Revenues		2023			Revenues

Revenues
Life Sciences Solutions	$	2,285		22.1	%	$	2,612		24.4	%
Analytical Instruments		1,687		16.3	%		1,723		16.1	%
Specialty Diagnostics		1,109		10.7	%		1,108		10.3	%
Laboratory Products and Biopharma Services		5,723		55.3	%		5,763		53.8	%
Eliminations		(460	)	-4.4	%		(496	)	-4.6	%
Consolidated revenues	$	10,345		100.0	%	$	10,710		100.0	%

Segment income and segment income margin
Life Sciences Solutions	$	840		36.8	%	$	836		32.0	%
Analytical Instruments		400		23.7	%		421		24.4	%
Specialty Diagnostics		294		26.5	%		280		25.3	%
Laboratory Products and Biopharma Services		744		13.0	%		793		13.8	%
Subtotal reportable segments		2,278		22.0	%		2,330		21.8	%
Cost of revenues adjustments (a)		(15	)	-0.1	%		(41	)	-0.4	%
Selling, general and administrative expenses adjustments (b)		(19	)	-0.2	%		(8	)	-0.1	%
Restructuring and other costs (c)		(29	)	-0.3	%		(112	)	-1.0	%
Amortization of acquisition-related intangible assets		(551	)	-5.3	%		(606	)	-5.7	%
Consolidated GAAP operating income	$	1,663		16.1	%	$	1,563		14.6	%


(a) Adjusted results in 2024 and 2023 exclude charges for inventory write-downs associated with large-scale abandonment of product lines. Adjusted results in 2023 exclude $10 of charges for the sale of inventory revalued at the date of acquisition.
(b) Adjusted results in 2024 and 2023 exclude certain third-party expenses, principally transaction/integration costs related to recent acquisitions, and charges/credits for changes in estimates of contingent acquisition consideration.
(c) Adjusted results in 2024 and 2023 exclude restructuring and other costs consisting principally of severance, impairments of long-lived assets, abandoned facility, and other expenses of headcount reductions and real estate consolidations. Adjusted results in 2023 also exclude $18 of net charges for pre-acquisition litigation and other matters.
(d) Adjusted results in 2024 and 2023 exclude net gains/losses on investments.
(e) Adjusted results in 2024 and 2023 exclude incremental tax impacts for the reconciling items between GAAP and adjusted net income, incremental tax impacts as a result of tax rate/law changes, and the tax impacts from audit settlements.
Note:
Consolidated depreciation expense is $285 and $253 in 2024 and 2023, respectively.

Organic and Core organic revenue growth		Three months ended
		March 30, 2024
Revenue growth		-3%
Acquisitions		0%
Currency translation		0%
Organic revenue growth (non-GAAP measure)		-4%
COVID-19 testing revenue		-1%
Core organic revenue growth (non-GAAP measure)		-3%

Note:
For more information related to non-GAAP financial measures, refer to the section titled "Supplemental Information Regarding Non-GAAP Financial Measures" of this release.

Condensed Consolidated Balance Sheets (unaudited)

	March 30,		December 31,
(In millions)	2024		2023

Assets
Current assets:
Cash and cash equivalents	$	5,499	$	8,077
Short-term investments		1,751		3
Accounts receivable, net		7,931		8,221
Inventories		5,133		5,088
Other current assets		3,326		3,200
Total current assets		23,640		24,589
Property, plant and equipment, net		9,324		9,448
Acquisition-related intangible assets, net		16,048		16,670
Other assets		4,241		3,999
Goodwill		43,843		44,020
Total assets	$	97,095	$	98,726

Liabilities, redeemable noncontrolling interest and equity
Current liabilities:
Short-term obligations and current maturities of long-term obligations	$	4,451	$	3,609
Other current liabilities		9,486		10,403
Total current liabilities		13,937		14,012
Other long-term liabilities		6,378		6,564
Long-term obligations		31,157		31,308
Redeemable noncontrolling interest		119		118
Total equity		45,504		46,724
Total liabilities, redeemable noncontrolling interest and equity	$	97,095	$	98,726

Condensed Consolidated Statements of Cash Flows (unaudited)

	Three months ended
	March 30,			April 1,
(In millions)	2024			2023

Operating activities
Net income	$	1,331		$	1,292
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		837			859
Change in deferred income taxes		(253	)		(146	)
Other non-cash expenses, net		123			257
Changes in assets and liabilities, excluding the effects of acquisitions		(787	)		(1,533	)
Net cash provided by operating activities		1,251			729

Investing activities
Purchases of property, plant and equipment		(347	)		(458	)
Proceeds from sale of property, plant and equipment		4			6
Proceeds from cross-currency interest rate swap interest settlements		64			2
Acquisitions, net of cash acquired		—			(2,704	)
Purchases of investments		(1,758	)		(2	)
Other investing activities, net		7			14
Net cash used in investing activities		(2,030	)		(3,142	)

Financing activities
Net proceeds from issuance of debt		1,205			—
Net proceeds from issuance of commercial paper		—			1,027
Repayment of commercial paper		—			(523	)
Purchases of company common stock		(3,000	)		(3,000	)
Dividends paid		(135	)		(117	)
Other financing activities, net		110			20
Net cash used in financing activities		(1,821	)		(2,593	)

Exchange rate effect on cash		22			(31	)
Decrease in cash, cash equivalents and restricted cash		(2,578	)		(5,037	)
Cash, cash equivalents and restricted cash at beginning of period		8,097			8,537
Cash, cash equivalents and restricted cash at end of period	$	5,519		$	3,500

Free cash flow (non-GAAP measure)	$	908		$	277



Note:
For more information related to non-GAAP financial measures, refer to the section titled "Supplemental Information Regarding Non-GAAP Financial Measures" of this release.

Medtronic to Stop Distribution and Sale of HVAD System

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