Eight weeks into his new job as Medtronic’s CEO, Omar Ishrak came out swinging this morning as he outlined his vision to make the company a leader in creating cost-effective medical technology and delivering health care to underserved populations in emerging markets
In his first earnings conference call with investors and analysts, Ishrak told analysts and investors that the pressure of rising health care costs is “clearly unsustainable.”
He said Medtronic’s path to growth will be built on medical technology that improves health care and delivers “better economic value” for both health care providers and patients as a way to differentiate Medtronic from its competition.
Medical technology often has often been singled out as a major factor in rising health care costs, so Ishrak’s focus on harnessing Medtronic’s patent portfolio and research capability injects a different spin on the health care debate from a recognized industry leader.
Ishrak — who joined Medtronic this past June from GE, where he was president and CEO of its $12 billion Healthcare Systems division — pledged that the company will increase investments in local research and development, manufacturing and strategic partnerships overseas.
“The global health care opportunity, especially in emerging markets, is immense,” Ishrak told analysts.
Promising to make “major changes” in the company’s technology development process, he also said Medtronic’s recent substantial research and development expenditures have delivered “frankly unsatisfactory returns.” Ishrak said revenue growth will be the key measure of R&D effectiveness.
The company reported worldwide first-quarter revenue of $4.049 billion, up 7 percent from a year ago, or 2 percent growth after adjusting for favorable foreign currency benefits.
International revenue of $1.843 billion increased 19 percent as reported, or 7 percent on a constant currency basis. International sales accounted for 46 percent of Medtronic’s worldwide revenue. Emerging-market revenue of $408 million increased 30 percent as reported, or 25 percent on a constant currency basis.
First-quarter net earnings were $821 million, or $0.77 per diluted share, a decrease of 1 percent and an increase of 1 percent, respectively.
“Our first quarter results showed growth across many of our businesses,” Ishrak said in a prepared release. “The major exceptions were ICDs [implantable cardiac defibrillators] and spinal products, where we continued to face challenges. My top priority is aligning the management team around improving execution and optimizing sources of growth.”
The company will host its annual shareholder meeting Thursday morning.