Medtronic wants to generate $40 billion in free-cash-flow (FCF) by 2021, senior leadership said during a recent Investor Day event in New York City. The company’s strategies for future growth include therapy innovation, globalization, and a leadership position in value-based healthcare.
Recent developments at Medtronic— such as itsacquisition of Covidien and subsequent relocation to Ireland — have put the company in a “unique position to drive consistent revenue growth,” chairman and CEO Omar Ishrak told investors, by allowing the company to capitalize on its “robust innovation pipeline, geographic reach, and innovative new healthcare business models.”
Of the $40 billion Medtronic expects to generate over the next five years, $10 billion will be used for bolt-on M&A and debt reduction, $10 billion will be reserved for financial flexibility, and the remaining $20 billion — or 50 percent of the FCF — will be returned to shareholders, according to Seeking Alpha, which outlined the company’s plans to achieve its long-term goals.
One area targeted as a driver for significant growth is Medtronic’s heart and vascular business. Though the market itself is only expected to grow by 4 percent, Medtronic believes it can achieve 9 percent growth by focusing on sub-segments that are growing faster than the overall markets. This includes a greater emphasis on services — such as diagnostics and care management.