What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-31 compared with 2023-03-01 · 202 added, 313 removed, 347 unchanged (60% of the section changed)

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For a full understanding of financial condition and results of operations, you should read this discussion along with Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended April 28, 2023.

In addition, you should read this discussion along with our consolidated financial statements and related notes thereto at and for the three and nine months ended January 27, 2023.

In addition, you should read this discussion along with our consolidated financial statements and related notes thereto at and for the three months ended July 28, 2023.

Amounts reported in millions within this quarterly report are computed based on the amounts in thousands, and therefore, the sum of the components may not equal the total amount reported in millions due to rounding.

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We believe that non-GAAP financial measures provide information useful to investors in understanding the Company's underlying operational performance and trends and may facilitate comparisons with the performance of other companies in the medical technologies industry.

As presented in the GAAP to Non-GAAP Reconciliations section below, our non-GAAP financial measures exclude the impact of certain charges or benefits that contribute to or reduce earnings and that may affect financial trends and include certain charges or benefits that result from transactions or events that we believe may or may not recur with similar materiality or impact to our operations in future periods (Non-GAAP Adjustments).

As presented in the GAAP to Non-GAAP Reconciliations section on the following pages, our non-GAAP financial measures exclude the impact of amortization of intangible assets and certain charges or benefits that contribute to or reduce earnings and that may affect financial trends and include certain charges or benefits that result from transactions or events that we believe may or may not recur with similar materiality or impact to our operations in future periods (Non-GAAP Adjustments).

In the event there is a Non-GAAP Adjustment recognized in our operating results, the tax cost or benefit attributable to that item is separately calculated and reported.

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Medtronic is the leading global healthcare technology company — alleviating pain, restoring health, and extending life for millions of people around the world.

Our primary products include those for cardiac rhythm disorders, cardiovascular disease, advanced and general surgical care, respiratory and monitoring solutions, renal care, neurological disorders, spinal conditions and musculoskeletal trauma, urological and digestive disorders, and ear, nose, and throat, and diabetes conditions.

The global healthcare system is continuing to respond to the challenges posed by the COVID-19 pandemic ("COVID-19" or the "pandemic"), including the impact on China and Japan in the third quarter of fiscal year 2023.

Several of our businesses continued to be affected by the pandemic, including the impacts of healthcare system staffing shortages on procedural volumes, and, in the first quarter of fiscal year 2023, the COVID-19 lockdowns in China, which continued through the end of May.

In addition to the impacts of the pandemic, certain businesses continue to be impacted by supply chain disruptions that began during the fourth quarter of fiscal year 2022.

We cannot predict with confidence the duration and severity of the pandemic and its impact on global procedure volumes.

We expect medical procedure rates may continue to vary by therapy and country and to be impacted by regional COVID-19 case volumes, vaccine and booster immunization rates, and new COVID-19 variants.

Additionally, we cannot predict the impact further healthcare system staffing shortages will have on procedural volumes, and the impact certain supply chain disruptions will have on the business.

The following is a summary of revenue and diluted earnings per share for the three months ended January 27, 2023 and January 28, 2022, and operating cash flow for the nine months ended January 27, 2023 and January 28, 2022:

Our primary products include those for cardiac rhythm disorders, cardiovascular disease, advanced and general surgical care, respiratory and monitoring solutions, neurological disorders, spinal conditions and musculoskeletal trauma, urological and digestive disorders, and ear, nose, and throat, and diabetes conditions.

The following is a summary of revenue, diluted earnings per share, and operating cash flow for the three months ended July 28, 2023 and July 29, 2022:

GAAP to Non-GAAP Reconciliations

Starting with the quarter ended April 29, 2022, the Company no longer adjusts non-GAAP financial measures for certain license payments for, or acquisitions of, technology not approved by regulators due to recent industry guidance from the U.S.

Securities and Exchange Commission.

Historical non-GAAP financial measures presented in this quarterly report have been recast for comparability.

The tables below present our GAAP to Non-GAAP reconciliations for the three months ended January 27, 2023 and January 28, 2022:

Three months ended January 27, 2023

The tables below present our GAAP to Non-GAAP reconciliations for the three months ended July 28, 2023 and July 29, 2022:

Three months ended July 28, 2023

(in millions, except per share data) Income Before Income Taxes Income

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Non-GAAP Adjustments:

Restructuring and associated costs (1)

104 21 83 0.06 20.2

Acquisition-related items (2)

24 4 20 0.02 16.7

(Gain)/loss on minority investments (3)

(8) — (8) (0.01) —

Medical device regulations (4)

37 7 31 0.02 18.9

Amortization of intangible assets 429 65 364 0.27 15.2

RCS impairments / costs (5)

10 1 9 0.01 10.0

Certain tax adjustments, net

Non-GAAP $ 1,973 $ 239 $ 1,727 $ 1.30 12.1 %

Three months ended January 28, 2022

(in millions, except per share data) Income Before Income Taxes Income

Tax Provision (Benefit) Net Income Attributable to Medtronic Diluted EPS

GAAP $ 1,589 $ 106 $ 1,480 $ 1.10 6.7 %

Non-GAAP Adjustments:

Restructuring and associated costs (2)

91 15 76 0.06 16.5

Acquisition-related items (2)

Acquisition and divestiture-related items (3)

50 3 46 0.03 6.0

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31 7 25 0.02 22.6

Amortization of intangible assets 432 67 365 0.27 15.5

Certain tax adjustments, net (6)

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Non-GAAP $ 1,902 $ 300 $ 1,596 $ 1.20 15.8 %

(1) Associated costs include costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses.

(2) The charges primarily include business combination costs and changes in fair value of contingent consideration.

(3) We exclude unrealized and realized gains and losses on our minority investments as we do not believe that these components of income or expense have a direct correlation to our ongoing or future business operations.

(4) The charges represent incremental costs of complying with the new European Union (E.U.) medical device regulations for previously registered products and primarily include charges for contractors supporting the project and other direct third-party expenses.

We consider these costs to be duplicative of previously incurred costs and/or one-time costs, which are limited to a specific time period.

(5) Associated costs as a result of the anticipated sale of half of the Company's Renal Care Solutions (RCS) business related to the May 25, 2022 agreement with DaVita Inc.

(6) The tax benefit primarily relates to the deferred tax impact associated with a step up in tax basis for Swiss Cantonal purposes which is partially offset by the amortization on previously established deferred tax assets from intercompany intellectual property transactions.

The tables below present our GAAP to Non-GAAP reconciliations for the nine months ended January 27, 2023 and January 28, 2022:

Nine months ended January 27, 2023

(in millions, except per share data) Income Before Income Taxes Income

Tax Provision

(Benefit) Net Income Attributable to Medtronic Diluted EPS

GAAP $ 3,813 $ 1,218 $ 2,579 $ 1.94 31.9 %

Non-GAAP Adjustments:

Restructuring and associated costs (1)

275 55 219 0.16 20.0

Acquisition-related items (2)

61 18 43 0.03 29.5

(Gain)/loss on minority investments (3)

(23) — (23) (0.02) —

Medical device regulations (4)

107 20 87 0.07 18.7

Amortization of intangible assets 1,275 194 1,082 0.81 15.2

RCS impairments / costs (5)

109 3 106 0.08 2.8

Debt redemption premium and other charges (6)

53 11 42 0.03 20.8

Exit of business (7)

37 — 37 0.03 —

Certain tax adjustments, net (8)

— (783) 783 0.59 —

Non-GAAP $ 5,706 $ 736 $ 4,953 $ 3.72 12.9 %

Nine months ended January 28, 2022

Three months ended July 29, 2022

(in millions, except per share data) Income Before Income Taxes Income

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Non-GAAP Adjustments:

Amortization of intangible assets 423 65 359 0.27 15.4

Restructuring and associated costs (2)

76 16 60 0.04 21.1

Acquisition-related items (2)

Acquisition and divestiture-related items (3)

109 7 102 0.08 6.4

Certain litigation charges 95 17 78 0.06 17.9

(Gain)/loss on minority investments (4)

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32 6 26 0.02 18.8

Amortization of intangible assets 1,298 205 1,093 0.81 15.8

MCS impairment / costs (9)

Debt redemption premium and other charges (7)

53 11 42 0.03 20.8

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Non-GAAP $ 1,734 $ 230 $ 1,502 $ 1.13 13.3 %

(1) The data in this schedule has been intentionally rounded to the nearest million or $0.01 for EPS figures, and, therefore, may not sum.

(2) Associated costs include costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses.

(2) The charges primarily include business combination costs and changes in fair value of contingent consideration.

(3) The charges primarily include business combination costs, changes in fair value of contingent consideration, and charges related to the impending separation of the Patient Monitoring and Respiratory Interventions businesses within our Medical Surgical Portfolio.

The prior year included non-cash pre-tax impairments, primarily related to goodwill, as a result of the April 1, 2023 sale of half of the Company's Renal Care Solutions (RCS) business.

(4) We exclude unrealized and realized gains and losses on our minority investments as we do not believe that these components of income or expense have a direct correlation to our ongoing or future business operations.

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We consider these costs to be duplicative of previously incurred costs and/or one-time costs, which are limited to a specific time period.

(5) The charges predominantly include non-cash pre-tax impairments, primarily related to goodwill, and other associated costs, as a result of the anticipated sale of half of the Company's Renal Care Solutions (RCS) business related to the May 25, 2022 agreement with DaVita Inc.

(6) The charge relates to an income tax reserve adjustment associated with the June 1, 2023 Israeli Central-Lod District Court decision in Medtronic Ventor Technologies Ltd v.

Kfar Saba Assessing Office and amortization of previously established deferred tax assets from intercompany intellectual property transactions.

(7) The charges relate to the early redemption of approximately $2.3 billion of debt and were recorded within interest expense, net within the consolidated statements of income.

(7) The charges relate to the exit of a business and are primarily comprised of inventory write-downs.

(8) The charge primarily relates to a $764 million reserve adjustment that was a direct result of the U.S.

Tax Court opinion, issued on August 18, 2022, on the previously disclosed litigation regarding the allocation of income between Medtronic, Inc.

and its wholly owned subsidiary operating in Puerto Rico.

(9) The charges relate to the Company’s June 2021 decision to stop the distribution and sale of the Medtronic HVAD System within the Mechanical Circulatory Support Operating Unit (MCS).

The charges included $515 million of non-cash impairments, primarily related to $409 million of intangible asset impairments, as well as $211 million for commitments and obligations in connection with the decision, including customer support

obligations, restructuring, and other associated costs.

Medtronic is committed to serving the needs of patients currently implanted with the HVAD System.

(10) The charge primarily relates to the amortization on previously established deferred tax assets from intercompany intellectual property transactions and a charge related to a change in the Company's permanent reinvestment assertion on certain historical earnings, which are partially offset by the deferred tax impact associated with a step up in tax basis for Swiss Cantonal purposes.

(8) The net benefit is due to a valuation allowance release associated with certain carryover attributes as a result of the RCS transaction listed above in (3) partially offset by the amortization of previously established deferred tax assets from intercompany intellectual property transactions.

Free Cash Flow

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GAAP measure) and free cash flow are as follows:

Nine months ended

(in millions) January 27, 2023 January 28, 2022

Three months ended

(in millions) July 28, 2023 July 29, 2022

Net cash provided by operating activities $ 875 $ 1,083

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Segment and Division

The charts below illustrate the percent of net sales by segment for the three months ended January 27, 2023 and January 28, 2022:

The table below illustrates net sales by segment and division for the three and nine months ended January 27, 2023 and January 28, 2022:

Prior period revenue has been recast to reflect the new reporting structure, which primarily includes allocating certain prior Medical Surgical businesses to the Other line.

Refer to Note 17 to the consolidated financial statements for additional information regarding the Company's new reporting structure.

The charts below illustrate the percent of net sales by segment for the three months ended July 28, 2023 and July 29, 2022:

The table below illustrates net sales by segment and division for the three months ended July 28, 2023 and July 29, 2022:

Three months ended

Nine months ended

(in millions) January 27, 2023 January 28, 2022 % Change January 27, 2023 January 28, 2022 % Change

(in millions) July 28, 2023 July 29, 2022 % Change

Cardiac Rhythm & Heart Failure $ 1,446 $ 1,381 5 %

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Cardiovascular 2,850 2,701 6

Surgical Innovations 1,425 1,519 (6) 4,162 4,570 (9)

Respiratory, Gastrointestinal, & Renal 712 771 (8) 2,047 2,341 (13)

Medical Surgical 2,137 2,290 (7) 6,208 6,910 (10)

Cranial & Spinal Technologies 1,103 1,043 6

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Neuroscience 2,219 2,115 5

Surgical & Endoscopy 1,546 1,455 6

Patient Monitoring & Respiratory Interventions 493 479 3

Medical Surgical 2,039 1,933 6

Diabetes 578 541 7

Total $ 7,702 $ 7,371 5 %

(1) Includes revenue from the divested Renal Care Solutions business and Transition Manufacturing Agreements from previously divested businesses.

Segment and Market Geography

The charts below illustrate the percent of net sales by market geography for the three months ended January 27, 2023 and January 28, 2022:

The table below includes net sales by market geography for each of our segments for the three and nine months ended January 27, 2023 and January 28, 2022:

The charts below illustrate the percent of net sales by market geography for the three months ended July 28, 2023 and July 29, 2022:

The table below includes net sales by market geography for each of our segments for the three months ended July 28, 2023 and July 29, 2022:

Developed Markets (2)

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Three months ended Three months ended Three months ended

(in millions) January 27, 2023 January 28, 2022 % Change January 27, 2023 January 28, 2022 % Change January 27, 2023 January 28, 2022 % Change

(in millions) July 28, 2023 July 29, 2022 % Change July 28, 2023 July 29, 2022 % Change July 28, 2023 July 29, 2022 % Change

Cardiovascular $ 1,350 $ 1,286 5 % $ 956 $ 892 7 % $ 544 $ 523 4 %

Medical Surgical 965 990 (3) 760 812 (6) 412 488 (16)

Neuroscience 1,497 1,419 5 416 407 2 306 290 6

Diabetes 215 255 (16) 274 261 5 80 68 18

Total $ 4,062 $ 3,939 3 % $ 2,294 $ 2,438 (6) % $ 1,371 $ 1,385 (1) %

Developed Markets (2)

Emerging Markets (3)

Nine months ended Nine months ended Nine months ended

(in millions) January 27, 2023 January 28, 2022 % Change January 27, 2023 January 28, 2022 % Change January 27, 2023 January 28, 2022 % Change

Cardiovascular $ 4,097 $ 4,090 — % $ 2,553 $ 2,886 (12) % $ 1,607 $ 1,486 8 %

Medical Surgical 881 831 6 772 735 5 386 368 5

Neuroscience 4,437 4,237 5 1,189 1,330 (11) 923 918 1

Diabetes 188 206 (9) 315 264 19 75 72 4

8 25 (68) 5 32 (84) 3 24 (88)

Total $ 3,924 $ 3,766 4 % $ 2,463 $ 2,328 6 % $ 1,314 $ 1,276 3 %

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developed markets, as defined above.

The decline in net sales for three and nine months ended January 27, 2023, as compared to the corresponding period in the prior fiscal year, was driven primarily by unfavorable currency impact, sales in China due to volume-based procurement tenders and the impact of COVID-19 resurgence, as well as supply chain challenges in certain businesses, particularly in the first quarter of fiscal year 2023.

For the three months ended January 27, 2023, currency had an unfavorable impact on emerging markets and non-U.S.

developed markets of $89 million and $290 million, respectively.

For the nine months ended January 27, 2023, currency had an unfavorable impact on emerging markets and non-U.S.

developed markets of $190 million and $995 million, respectively.

The decline in net sales for the three and nine months ended January 27, 2023 was partially offset by growth in certain product lines and businesses, including Micra, Transcatheter Aortic Valve replacements (TAVR), Core Spine in the U.S., and Diabetes in international markets.

(4) Includes revenue from the divested Renal Care Solutions business and Transition Manufacturing Agreements from previously divested businesses.

The increase in net sales for the three months ended July 28, 2023, as compared to the corresponding period in the prior fiscal year, was driven primarily by growth in most products lines and businesses, including Micra, Transcatheter Aortic Valve replacements (TAVR), Core Spine in the U.S., Advanced Energy, and Diabetes.

Looking ahead, a number of macro-economic and geopolitical factors could negatively impact our business, including without limitation:

• Competitive product launches and pricing pressure, geographic macro-economic risks including fluctuations in currency exchange rates, general price inflation, rising interest rates, reimbursement challenges, impacts from changes in the mix of our product offerings, delays in product registration approvals, and replacement cycle challenges;

• National and provincial tender pricing for certain products, particularly in China;

• The uncertain and uneven impact of COVID-19 on future procedural volumes, supply constraints including certain electronic components and semiconductors, healthcare staffing in certain regions, and resulting impacts on demand for our products and therapies;

• The potential impact that sanctions and other measures being imposed in response to the Russia-Ukraine conflict could have on revenue and supply chain.

The financial impact of the conflict in the third quarter of fiscal year 2023, including on accounts receivable and inventory reserves, was not material, and for the three and nine months ended January 27, 2023, the business of the Company in these countries represented less than 1% of the Company's consolidated revenues and assets.

• The sanctions and other measures being imposed in response to the Russia-Ukraine conflict are having, and could continue to have impacts on revenue and supply chain.

The financial impact of the conflict in the first quarter of fiscal year 2024, including on accounts receivable and inventory reserves, was not material, and for the three months ended July 28, 2023, the business of the Company in these countries represented less than 1% of the Company's consolidated revenues and assets.

Although the implications of this conflict are difficult to predict at this time, the ongoing conflict may increase pressure on the global economy and supply chains, resulting in increased future volatility risk for our business operations and performance.

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Cardiovascular products include pacemakers, insertable cardiac monitors, cardiac resynchronization therapy devices, implantable cardioverter defibrillators (ICD), leads and delivery systems, electrophysiology catheters, products for the treatment of atrial fibrillation, information systems for the management of patients with Cardiac Rhythm & Heart Failure devices, products designed to reduce surgical site infections, coronary and peripheral stents and related delivery systems, balloons and related delivery systems, endovascular stent graft systems, heart valve replacement technologies, cardiac tissue ablation systems, and open heart and coronary bypass grafting surgical products.

Cardiovascular also includes Care Management Services and Cath Lab Managed Services (CLMS) within the Cardiac Rhythm & Heart Failure division.

Cardiovascular's net sales for the three and nine months ended January 27, 2023 were $2.8 billion and $8.3 billion, respectively, an increase of 1 percent and decrease of 2 percent, respectively, compared to the corresponding periods in the prior fiscal year.

Currency had an unfavorable impact of $152 million and $467 million on net sales for the three and nine months ended January 27, 2023.

The net sales increase for the three months ended January 27, 2023 was primarily due to strong performance of Micra, TAVR and Diagnostics, partially offset by unfavorable currency impact.

The net sales decrease for the nine months ended January 27, 2023 was primarily driven by unfavorable currency impact and supply chain challenges in certain businesses.

The graphs below illustrate the percent of Cardiovascular net sales by division for the three months ended January 27, 2023 and January 28, 2022:

Cardiac Rhythm & Heart Failure (CRHF) net sales for the three and nine months ended January 27, 2023 increased 2 percent and decreased 2 percent, respectively, as compared to the corresponding periods in the prior fiscal year.

For the three months ended January 27, 2023 the net sales increase was driven by continued adoption of Micra AV, TYRX antibacterial envelopes, LINQ II implants, and growth from Arctic Front cryoablation catheters in the U.S.

The net sales declines for the nine months ended January 27, 2023 were driven by unfavorable currency partially offset by increases from continued adoption of Micra AV, TYRX antibacterial envelopes, and LINQ II implants.

Additionally, Cardiac Ablation Solutions net sales for the nine months ended January 27, 2023 were negatively impacted by competitive pressures in Western Europe, as well as the pending volume-based procurement (VBP) in China.

Structural Heart & Aortic (SHA) net sales for the three and nine months ended January 27, 2023 increased 3 percent and decreased 1 percent, respectively, as compared to the corresponding periods in the prior fiscal year.

The net sales for the three and nine months ended January 27, 2023 were driven by growth in transcatheter aortic valve replacement (TAVR), including the U.S.

launch of Evolut FX TAVR system.

Net sales for the nine months ended January 27, 2023 were negatively impacted by a field corrective action with the Harmony Transcatheter Pulmonary Valve and Delivery Catheter System, currency impacts, staffing shortages, and supply shortages of contrast.

Coronary & Peripheral Vascular (CPV) net sales for the three and nine months ended January 27, 2023 decreased 4 percent and 5 percent, respectively, as compared to the corresponding periods in the prior fiscal year.

The net sales declines were driven by unfavorable currency, partially offset by strong demand combined with improved product availability of the SpiderFX embolic protection device (EPD) and strong

performance of our superficial venous product portfolio, including the VenaSeal system.

Net sales for the nine months ended January 27, 2023 were also impacted by market procedural volumes in Coronary remaining below pre-COVID levels in several major markets, headwinds related to U.S.

hospital contrast shortages early in the first quarter of fiscal year 2023, and declines in Peripheral Vascular Health due to competitors re-entering the market and supply chain challenges.

Cardiovascular also includes Cath Lab Managed Services (CLMS) within the Cardiac Rhythm & Heart Failure division.

Cardiovascular's net sales for the three months ended July 28, 2023 was $2.9 billion, an increase of 6 percent as compared to the corresponding period in the prior fiscal year.

The net sales increase was primarily due to strong performance of Micra, TAVR, Cannula, and Perfusion.

The graphs below illustrate the percent of Cardiovascular net sales by division for the three months ended July 28, 2023 and July 29, 2022:

Cardiac Rhythm & Heart Failure (CRHF) net sales for the three months ended July 28, 2023 increased 5 percent, as compared to the corresponding period in the prior fiscal year.

The net sales increase was driven by continued adoption of Micra, including the U.S.

launch of Micra AV2 and Micra VR2, and growth from CRT-Ds, transvenous pacemakers, and Arctic Front cryoablation catheters.

Structural Heart & Aortic (SHA) net sales for the three months ended July 28, 2023 increased 10 percent, as compared to the corresponding period in the prior fiscal year.

The net sales increase was driven by growth in TAVR, including the recent U.S.

and Japan launch of Evolut FX TAVR system, and in Cardiac Surgery driven by growth in Cannula and Perfusion particularly in the U.S.

Coronary & Peripheral Vascular (CPV) net sales for the three months ended July 28, 2023 increased 2 percent, as compared to the corresponding period in the prior fiscal year.

The increase in net sales was driven by the launch of Onyx Frontier, as well as growth in guide catheters and drug coated balloons, and performance of our vascular embolization and superficial venous product portfolio, including the VenaSeal system.

In addition to the macro-economic and geopolitical factors described in the Executive Level Overview, looking ahead, we expect Cardiovascular could be affected by the following:

• Continued growth of our Micra transcatheter pacing system.

Micra AV launched in Japan in November 2021 and China in August 2022.

Micra AV expands the Micra target population from 15 percent to 45 percent of pacemaker patients.

• Continued acceptance and growth from the Azure XT and S SureScan pacing systems and the 3830 lead.

• Continued growth of our Micra transcatheter pacing system including the recent U.S.

launch of Micra AV2 and Micra VR2 and increasing global penetration.

• Continued acceptance and growth from the Azure XT and Azure S SureScan pacing systems and the 3830 lead.

Azure pacemakers feature Medtronic-exclusive BlueSync technology, which enables automatic, secure wireless remote monitoring with increased device longevity.

The 3830 lead, previously labeled for His-bundle pacing, has now been expanded to include left bundle branch area pacing.

The 3830 lead, previously labeled for His-bundle pacing, has now been expanded to include left bundle branch area pacing effectively covering all current forms of conduction system pacing.

• Growth of the Cobalt and Crome portfolio of ICDs and CRT-Ds.

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• Continued growth, adoption, and utilization of the TYRX Envelope for implantable devices.

• Continued acceptance and expansion of the LINQ II cardiac monitor.

During the third quarter of fiscal year 2022, we launched two AccuRhythm AI algorithms on the LINQ II platform to significantly reduce false positive alerts for Atrial Fibrillation and pause episodes while retaining sensitivity for true positive detection and reduce clinic workload and burden.

AccuRhythm AI launched in Europe during the first quarter of fiscal year 2023.

• Continued acceptance and expansion of the LINQ II cardiac monitor with AccuRhythm AI algorithms.

• Continued growth of Arctic Front cryoablation for treatment of atrial fibrillation.

• Acceptance and growth of the Affera Mapping/Navigation System and Sphere 9 mapping/ablation catheter.

The system was launched under a limited market release in the fourth quarter of fiscal year 2023 in Western Europe.

• Continued acceptance and growth of the self-expanding CoreValve Evolut transcatheter aortic valve replacement platform.

This includes Evolut PRO which provides enhanced hemodynamics, reliable delivery, enhanced durability, advanced sealing, and Evolut FX, a system designed to improve the overall procedural experience through enhancements in deliverability, implant visibility, and deployment stability.

• Continued expansion and training of field support to increase coverage in the U.S.

centers performing TAVR procedures.

• Continued acceptance and growth of the Onyx Frontier DES platform.

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Onyx Frontier is a drug-eluding stent (DES) that introduces an enhanced delivery system and is used for complex percutaneous coronary intervention (PCI).

• Continued acceptance and growth from the VenaSeal Closure System in the U.S.

• Continued acceptance of the VenaSeal Closure System in the U.S.

The VenaSeal Closure System is a unique non-thermal solution to address superficial venous disease that provides improved patient comfort, reduces the recovery time, and eliminates the risk of thermal nerve injury.

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The product was launched under limited market release in the first quarter of fiscal year 2023 with full market release in the third quarter of fiscal year 2023.

IN.PACT 018 is used in endovascular therapies to treat femoropopliteal disease.

• Pressure from competitors re-entering the market contributing to the decline in sales of the Abre venous self-expanding stent system.

Abre is designed for the unique challenges of venous disease.

It offers easy deployment and delivers demonstrated endurance, to give patients freedom of movement.

• Strengthening our position in the cardiac ablation technologies market as a result of the August 2022 acquisition of Affera, Inc.

The acquisition expands the Cardiovascular segment portfolio of advanced cardiac ablation products and accessories to include its first cardiac mapping and navigation platform to meet physician needs within a growing patient population.

• Our ability to successfully develop, obtain regulatory approval of and commercialize the products within our pipeline, which include, but not limited to, the Symplicity Spyral Multi-Electrode Renal Denervation Catheter, Pulse Field Ablation, a novel energy source that is non-thermal and Aurora Extravascular ICD.

IN.PACT 018 adds to the existing IN.PACT Admiral DCB portfolio and is used to treat femoropopliteal disease.

• Our ability to successfully develop, obtain regulatory approval of and commercialize the products within our pipeline, which include the Symplicity Spyral Multi-Electrode Renal Denervation Catheter, Pulse Field Ablation, a novel energy source that is non-thermal, and Aurora Extravascular ICD.

Neuroscience's products include various spinal implants, bone graft substitutes, biologic products, image-guided surgery and intra-operative imaging systems, robotic guidance systems used in the robot-assisted spine procedures, and systems that incorporate advanced energy surgical instruments.

Neuroscience's products also focus on therapies to treat the diseases of the vasculature in and around the brain, including coils, neurovascular stents, and flow diversion products, as well as products to treat ear, nose, and throat (ENT), and the treatment of overactive bladder, urinary retention, and fecal incontinence.

Neuroscience also manufactures products related to implantable neurostimulation therapies and drug delivery systems for the treatment of chronic pain, movement disorders, and epilepsy.

Neuroscience’s net sales for the three months ended July 28, 2023 were $2.2 billion, an increase of 5 percent compared to the corresponding period in the prior fiscal year.

The net sales increase was primarily due to growth in U.S.

Spine & Biologics, Neurosurgery, and ENT.

The graphs below illustrate the percent of Neuroscience net sales by division for the three months ended July 28, 2023 and July 29, 2022:

Cranial and Spinal Technologies (CST) net sales for the three months ended July 28, 2023 increased 6 percent, as compared to the corresponding period in the prior fiscal year.

The growth was driven by increased sales of Spine & Biologics products in the U.S.

based on the continued adoption of the Aible spinal ecosystem.

The net sales increase was also attributable to strong growth of StealthStation Navigation and O-arm Imaging Systems, outside of the U.S.

Specialty Therapies (Specialty) net sales for the three months ended July 28, 2023 increased 4 percent, as compared to the corresponding period in the prior fiscal year.

The increase was driven by growth in ENT, as well as hemorrhagic stroke flow diversion products.

Pelvic Health experienced slight net sales declines due to recent competitive launches.

Neuromodulation (NM) net sales for the three months ended July 28, 2023 increased 4 percent, as compared to the corresponding period in the prior fiscal year.

The net sales increase was driven by growth within Pain Stim, Targeted Drug Delivery, and Brain Modulation.

Partially offsetting the growth was a decline in Interventional experienced due to competitive pressure.

In addition to the macro-economic and geopolitical factors described in the Executive Level Overview, looking ahead we expect Neuroscience could be affected by the following:

• Continued adoption and growth of our integrated solutions through the Aible offering, which integrates spinal implants with enabling technologies (StealthStation, O-arm Imaging Systems, and Midas), Mazor robotics, and UNiD Adaptive Spine Intelligence AI-driven technology for surgical planning and personalized spinal implants.

• Market acceptance and continued global adoption of innovative new spine products and procedural solutions within our CST operating unit, such as Catalyft PL, ModuLeX, CD Horizon Voyager System, and our Infinity OCT System, as well as continued growth from Titan spine titanium interbody implants with Nanolock technology.

• Continued growth of Pipeline Embolization Devices, endovascular treatments for large or giant wide-necked brain aneurysms.

• Continued acceptance and growth of the Solitaire X revascularization device for treatment of acute ischemic stroke and our React Catheter and Riptide aspiration system.

• Continued acceptance and growth of our Pelvic Health and ENT therapies, including our InterStim therapy with InterStim X and InterStim II recharge-free neurostimulators and InterStim Micro rechargeable neurostimulator for patients suffering from overactive bladder, (non-obtrusive) urinary retention, and chronic fecal incontinence, and capital equipment sales of the Stealth Station ENT surgical navigation system and intraoperative NIM nerve monitoring system.

• Continued acceptance and growth of Intersect ENT products used in the treatment of chronic rhinosinusitis.

• Market acceptance and growth from SCS therapy for treating chronic pain and Diabetic Peripheral Neuropathy (DPN) on the Intellis rechargeable neurostimulator and Vanta recharge-free neurostimulator.

• Continued acceptance and growth of our Percept family of DBS devices with proprietary BrainSense technology for objectifying and personalizing the treatment of Parkinson's Disease, epilepsy, and other movement disorders.

• Our ability to successfully develop, obtain regulatory approval of and commercialize the products within our pipeline, which include our closed-loop Percept devices with adaptive DBS (aDBS) and Inceptiv Neurostimulator, as well as our hemorrhagic stroke intravascular device, and our next-generation spine enabling technologies.

Medical Surgical

Medical Surgical’s products span the entire continuum of patient care from diagnosis to recovery, with a focus on diseases of the gastrointestinal tract, lungs, pelvic region, kidneys, obesity, and preventable complications.

The products include those for advanced and general surgical products, surgical stapling devices, vessel sealing instruments, wound closure, electrosurgery products, hernia mechanical devices, mesh implants, advanced ablation, interventional lung, ventilators, airway products, renal care products, and sensors and monitors for pulse oximetry, capnography, level of consciousness and cerebral oximetry.

Medical Surgical's net sales for the three and nine months ended January 27, 2023 were $2.1 billion and $6.2 billion, respectively, a decrease of 7 percent and 10 percent, respectively, compared to the corresponding periods in the prior fiscal year.

Currency had an unfavorable impact of $117 million and $380 million on net sales for the three and nine months ended January 27, 2023, respectively.

The net sales decrease for both periods was primarily driven by unfavorable currency impact, provincial volume-based procurement (VBP) stapling tenders in China, and a decline in ventilator sales due to the high COVID-19 demand in the corresponding period in the prior fiscal year.

Supply chain disruptions, particularly in Surgical Innovations, also contributed to the net sales decrease for the nine months ended January 27, 2023.

The graphs below illustrate the percent of Medical Surgical net sales by division for the three months ended January 27, 2023 and January 28, 2022:

Surgical Innovations (SI) net sales for the three and nine months ended January 27, 2023 decreased 6 percent and 9 percent, respectively, as compared to the corresponding periods in the prior fiscal year.

The decrease for the three months ended January 27, 2023 was predominantly attributable to declines in Advanced Stapling primarily driven by provincial VBP stapling tenders in China.

The decrease for the nine months ended January 27, 2023 was led by Advanced Surgical Instruments, driven by global supply chain challenges, including resins, semiconductors, and packaging trays, which impacted energy and stapling products, and provincial VBP stapling tenders and COVID-19 lockdowns in China.

Global product availability has improved during the most recent quarter.

Respiratory, Gastrointestinal, & Renal (RGR) net sales for the three and nine months ended January 27, 2023 decreased 8 percent and 13 percent, respectively, as compared to the corresponding periods in the prior fiscal year.

The decrease for three and nine months ended January 27, 2023 was largely due to declines in ventilator demand when compared to the corresponding period in the prior fiscal year as demand dropped below pre-pandemic levels, as well as declines in RCS driven by product availability challenges.

These declines were partially offset by growth in Gastrointestinal driven by strength in sales of GI Genius.

The products include those for advanced and general surgical products, surgical stapling devices, vessel sealing instruments, wound closure, electrosurgery products, hernia mechanical devices, mesh implants, advanced ablation, interventional lung, ventilators, airway products, and sensors and monitors for pulse oximetry, capnography, level of consciousness and cerebral oximetry.

Medical Surgical's net sales for the three months ended July 28, 2023 were $2.0 billion, an increase of 6 percent compared to the corresponding period in the prior fiscal year.

The net sales increase was primarily driven by growth in Advanced Energy, primarily due to improved supply.

The graphs below illustrate the percent of Medical Surgical net sales by division for the three months ended July 28, 2023 and July 29, 2022:

Surgical & Endoscopy (SE) net sales for the three months ended July 28, 2023 increased 6 percent, as compared to the corresponding period in the prior fiscal year.

The increase was predominantly attributable to growth in Advanced Energy and Barrx primarily driven by improved supply, as well as continued growth in GI Genius and PillCam.

Patient Monitoring & Respiratory Interventions (PMRI) net sales for the three months ended July 28, 2023 increased 3 percent, as compared to the corresponding period in the prior fiscal year.

The net sales increase was largely due to growth in airways and monitors.

In addition to the macro-economic and geopolitical factors described in the Executive Level Overview, looking ahead we expect Medical Surgical could be affected by the following:

• The pending separation of the combined Patient Monitoring and Respiratory Interventions businesses from the Medical Surgical Portfolio.

The Company announced its intention to pursue a separation in October 2022 and expects to complete the separation 12 to 18 months from the announcement date.

• The pending contribution of our Renal Care Solutions business as a result of the May 25, 2022 definitive agreement with DaVita Inc.

The Company announced its intention to pursue a separation in October 2022 and expects to complete the separation in the first half of fiscal year 2025.

• Acceptance and continued growth of Open-to-MIS (minimally invasive surgery) techniques and tools through our efforts to transition open surgery to MIS.

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• Continued global acceptance and future growth of powered stapling and energy platform.

• Our ability to execute ongoing strategies addressing the competitive pressure of reprocessing vessel sealing disposables and growth of our surgical soft tissue robotics procedures in the U.S.

• Our ability to execute ongoing strategies addressing the competitive pressure of reprocessing vessel sealing disposables, near-term pressures to bariatric surgery procedure volumes in the U.S.

from pharmaceuticals, and growth of our surgical soft tissue robotics procedures in the U.S.

• Our ability to create markets and drive products and procedures into emerging markets with our high quality and cost-effective surgical products designed for customers in emerging markets.

An example is our ValleyLab LS10 single channel vessel sealing generator, which is compatible with our line of LigaSure instruments and designed for simplified use and affordability.

• Acceptance of less invasive standards of care in gastrointestinal and hepatology products, including products that span the care continuum from diagnostics to therapeutics.

Recently launched products include GI Genius and PillCam capsule endoscopy.

• Acceptance of less invasive standards of care in chronic and colorectal, as well as hepatology products, including products that span the care continuum from diagnostics to therapeutics.

Recently launched products include GI Genius.

• Expanding the use of less invasive treatments and furthering our commitment to improving options for women with abnormal uterine bleeding.

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The Hugo RAS system, which received CE Mark in October 2021, as well as secured additional regulatory approvals outside the U.S., is designed to help reduce unwanted variability, improve patient outcomes, and, by extension, lower per procedure cost.

• Our ability to successfully develop, obtain regulatory approval of and commercialize the products within our pipeline, which include, but are not limited to, our Hugo RAS system in the U.S., Signia power stapling devices, and our Ligasure and Sonicision vessel sealing devices.

Neuroscience's products include various spinal implants, bone graft substitutes, biologic products, image-guided surgery and intra-operative imaging systems, robotic guidance systems used in robot-assisted spine procedures, and systems that incorporate advanced energy surgical instruments.

Neuroscience's products also focus on the treatment of overactive bladder, urinary retention, fecal incontinence, as well as products to treat ear, nose, and throat (ENT), and therapies to treat the diseases of the vasculature in and around the brain, including coils, neurovascular stents and flow diversion products.

Neuroscience also manufactures products related to implantable neurostimulation therapies and drug delivery systems for the treatment of chronic pain, movement disorders, and epilepsy.

Neuroscience’s net sales for the three and nine months ended January 27, 2023 were $2.2 billion and $6.5 billion, respectively, an increase of 5 percent and 1 percent, respectively, compared to the corresponding periods in the prior fiscal year.

Currency had an unfavorable impact of $78 million and $227 million on net sales for the three and nine months ended January 27, 2023, respectively.

The net sales increase for the three and nine months ended January 27, 2023, was primarily due to growth in U.S.

Core Spine, Neurovascular, ENT, and continued supply risk mitigation, partially offset by unfavorable currency impact and supply chain challenges in certain businesses.

The graphs below illustrate the percent of Neuroscience net sales by division for the three months ended January 27, 2023 and January 28, 2022:

Cranial and Spinal Technologies (CST) net sales for the three and nine months ended January 27, 2023 increased 2 percent and decreased 1 percent, respectively, as compared to the corresponding periods in the prior fiscal year.

For the three months ended January 27, 2023, the growth was driven by increased sales of Core Spine products in the U.S.

including the Aible ecosystem of spine products, with a partial offset due to supply constraints within Biologics.

The net sales increase was also attributable to strong sales of StealthStation Navigation and Midas Rex powered surgical instruments.

For the nine months ended January 27, 2023, the net sales decrease was driven by unfavorable currency impact and Biologics, which experienced supply chain challenges.

Specialty Therapies (Specialty) net sales for the three and nine months ended January 27, 2023 increased 10 percent and 8 percent, respectively, as compared to the corresponding periods in the prior fiscal year.

The increase for both periods was driven by growth in hemorrhagic and ischemic stroke, flow diversion and access delivery products.

The net sales increase was also driven by benefits from the recent May 2022 acquisition of Intersect ENT.

For the nine months ended January 27, 2023, the growth in ENT was partially offset by supply chain disruption in disposables.

Neuromodulation (NM) net sales for the three and nine months ended January 27, 2023 increased 3 percent and decreased 3 percent, respectively, as compared to the corresponding periods in the prior fiscal year.

For the three months ended January 27, 2023, the net sales increase was driven by growth within Pain Stim and, to a lesser extent, Targeted Drug Delivery.

For the nine months ended January 27, 2023, declines were largely due to declines of Brain Modulation replacement devices and supply chain challenges in Interventional which has recently seen improvements in product availability.

In addition to the macro-economic and geopolitical factors described in the Executive Level Overview, looking ahead we expect Neuroscience could be affected by the following:

• Continued adoption and growth of our integrated solutions through the Aible offering, which integrates spinal implants with enabling technologies (StealthStation, O-arm Imaging Systems, and Midas), Mazor robotics, and AI-driven technology acquired from Medicrea for surgical planning and personalized spinal implants.

• Market acceptance and continued global adoption of innovative new spine products and procedural solutions within our CST operating unit, such as our Infinity OCT System and Prestige LP cervical disc system, as well as continued growth from spine titanium interbody implants.

• Continued acceptance and growth of our ENT and Pelvic Health therapies, including our InterStim therapy with InterStim X, InterStim II, and InterStim Micro and neurostimulators for the treatment of the symptoms of overactive bladder, urinary retention, and bowel incontinence, and capital equipment sales of the Stealth Station ENT surgical navigation system and intraoperative NIM nerve monitoring system.

• Strengthening our position in the ENT market as a result of the May 2022 acquisition of Intersect ENT, a global ENT medical technology leader.

The acquisition expands Neuroscience's portfolio of products used during ENT procedures and combined with the Company's navigation, powered instruments, and existing tissue health products, offers a broader suite of solutions to assist surgeons treating patients who suffer from chronic rhinosinusitis (CRS).

• Continued acceptance and growth of the Solitaire FR revascularization device for treatment of acute ischemic stroke and our React Catheter and Riptide aspiration system.

• Continued growth of Pipeline Embolization Devices, endovascular treatments for large or giant wide-necked brain aneurysms.

• Market acceptance and continued global adoption of our Intellis spinal cord stimulator and DTM proprietary waveform to treat chronic pain in major markets around the world.

• Continued acceptance and growth of our Percept PC DBS device with BrainSense technology, including its treatment of Parkinson's Disease, epilepsy, and other movement disorders.

• Market acceptance and growth from SCS therapy for treating Diabetic Peripheral Neuropathy (DPN) on Intellis rechargeable neurostimulator and Vanta recharge-free neurostimulator which received U.S.

FDA approval in January 2022.

• Ongoing obligations under the U.S.

FDA consent decree entered in April 2015 relating to the SynchroMed drug infusion system and the Neuromodulation quality system.

FDA lifted its distribution requirements on our implantable drug pump in October 2017 and its warning letter in November 2017.

• Our ability to successfully develop, obtain regulatory approval of and commercialize the products within our pipeline, which include our closed-loop Percept RC device with adaptive DBS (aDBS) and Inceptiv Neurostimulator, as well as our hemorrhagic stroke intravascular device, and our next-generation spine enabling technologies.

Diabetes' products include insulin pumps, continuous glucose monitoring (CGM) systems, consumables, and smart insulin pen systems.

Diabetes' net sales for the three and nine months ended January 27, 2023 were $570 million and $1.7 billion, a decrease of 2 percent and 4 percent, respectively, as compared to the corresponding periods in the prior fiscal year.

Currency had an unfavorable impact of $33 million and $113 million on net sales for the three and nine months ended January 27, 2023, respectively.

The decrease in net sales for both periods was primarily driven by unfavorable currency impacts and declines in the U.S.

The net sales declines were partially offset by strong international growth primarily driven by the continued international expansion of the MiniMed 780G insulin pump system and integrated CGM.

• Our ability to successfully develop, obtain regulatory approval of and commercialize the products within our pipeline, which include our Hugo RAS system in the U.S., Signia powered stapling devices, and our next-gen Ligasure and Sonicision vessel sealing devices.

Diabetes' products include insulin pumps, continuous glucose monitoring (CGM) systems, and consumables.

Diabetes' net sales for the three months ended July 28, 2023 were $578 million, an increase of 7 percent as compared to the corresponding period in the prior fiscal year.

The increase in net sales was primarily driven by strong international growth as a result of the continued international expansion of the MiniMed 780G insulin pump system and integrated CGM.

The launch of the MiniMed 780G insulin pump system in the U.S.

also contributed to the growth.

In addition to the macro-economic and geopolitical factors described in the Executive Level Overview, looking ahead we expect Diabetes could be affected by the following:

• Continued patient demand for the MiniMed 770G insulin pump system, which is powered by SmartGuard technology and features the added benefits of smartphone connectivity and an expanded age indication to children as young as age two.

• Continued acceptance and growth internationally for the MiniMed 780G insulin pump system.

• Continued acceptance and growth for the MiniMed 780G insulin pump system, which is powered by SmartGuard technology and features the added benefits of meal detection technology that automatically adjusts and corrects sugar levels every five minutes.

The global adoption of sensor-augmented insulin pump systems has resulted in strong sensor attachment rates.

The MiniMed 780G insulin pump system with the Guardian 4 Sensor was approved by the U.S.

FDA in late April 2023.

• Continued acceptance and growth of the Guardian Connect CGM system, which displays glucose information directly to a smartphone to help ensure patients have access to their glucose levels seamlessly and discretely.

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• Changes in medical reimbursement policies and programs, along with additional payor coverage on insulin pumps.

• Resolution of findings contained in a December 2021 U.S.

FDA warning letter relating to the MiniMed 600 series insulin pump and a remote controller device for MiniMed 508 and Paradigm pumps.

We are currently working with the U.S.

FDA to resolve the findings.

The existence of the warning letter may limit our ability to launch certain new Diabetes products in the U.S.

prior to resolution of the findings.

• Our ability to successfully develop, obtain regulatory approval of and commercialize the products within our pipeline, which include, but are not limited to, our MiniMed 780G insulin pump, the Guardian 4 sensor, and our next-generation sensor Simplera, which have been submitted to the U.S.

• Our ability to successfully develop, obtain regulatory approval of and commercialize the products within our pipeline, including our next-generation sensor Simplera, which has been submitted for approval to the U.S.

COSTS AND EXPENSES

The following is a summary of cost of products sold, research and development, and selling, general, and administrative expenses as a percent of net sales for the three and nine months ended January 27, 2023 and January 28, 2022:

Cost of Products Sold We continue to focus on reducing our costs of production through supplier management, manufacturing improvements, and optimizing our manufacturing network.

Cost of products sold for the three and nine months ended January 27, 2023 was $2.7 billion and $7.7 billion, respectively, as compared to $2.5 billion and $7.6 billion for the corresponding periods in the prior fiscal year.

The increase in cost of products sold as a percentage of net sales was primarily attributable to increased labor and direct material manufacturing costs, predominantly due to inflationary pressures and supply chain challenges as well as increased freight due to higher fuel costs and expedited shipments for backorders resulting from supply chain challenges.

The nine months ended January 28, 2022 included $58 million of inventory write-downs associated with our June 2021 decision to stop the distribution and sale of Medtronic's HVAD System (MCS charges).

Looking forward, our cost of products sold likely will be further negatively impacted by inflation, supply chain challenges, and higher labor and direct material costs.

The following is a summary of cost of products sold, research and development, and selling, general, and administrative expenses as a percent of net sales for the three months ended July 28, 2023 and July 29, 2022:

Cost of Products Sold Cost of products sold for the three months ended July 28, 2023 was $2.6 billion, as compared to $2.5 billion for the corresponding period in the prior fiscal year.

The cost of products sold as a percentage of net sales was flat as compared to the prior year.

Looking forward, our cost of products sold likely will be further negatively impacted by recent inflation and higher labor and direct material costs.

We continue to focus on managing our costs of production through supplier management, manufacturing improvements, and optimizing our manufacturing network.

Research and Development Expense We remain committed to deliver the best possible experiences for patients, physicians, and caregivers we serve;

to create technologies that expand what’s possible across the entire human body to transform lives;

to turn data and insights into real action to serve patient needs to improve care;

to turn data and insights into real action to serve patient needs improving care;

and to expand healthcare access and deliver positive outcomes.

Research and development expense for the three and nine months ended January 27, 2023 was $688 million and $2.1 billion, respectively, as compared to $668 million and $2.1 billion for the corresponding periods in the prior fiscal year.

The nine months ended January 28, 2022 included $101 million of acquisitions of, and license payments for, technology not yet approved by regulators, primarily in our Diabetes segment.

Research and development expense for the three months ended July 28, 2023 was $668 million, as compared to $692 million for the corresponding period in the prior fiscal year.

A contributing factor to the decrease in research and development expense compared to the prior year is the April 1, 2023 sale of the RCS business.

Selling, General, and Administrative Expense Our goal is to continue to leverage selling, general, and administrative expense initiatives.

Selling, general, and administrative expense primarily consists of salaries and wages, other administrative costs, such as professional fees and marketing expenses, and certain acquisition and restructuring expenses.

Selling, general, and administrative expense for the three and nine months ended January 27, 2023 was $2.6 billion and $7.8 billion, respectively as compared to $2.6 billion and $7.7 billion for the corresponding periods in the prior fiscal year.

The increase in selling, general, and administrative expense as a percentage of net sales was primarily driven by increased sales incentives, employee travel as compared to the corresponding period in the prior fiscal year when travel was limited, and to a lesser extent by net sales declines.

Selling, general, and administrative expense primarily consists of salaries and wages, other administrative costs, such as professional fees and marketing expenses, certain acquisition, divestiture, and separation-related costs, and restructuring expenses.

Selling, general, and administrative expense for the three months ended July 28, 2023 and July 29, 2022 was $2.6 billion for both periods.

The following is a summary of other costs and expenses (income):

Three months ended Nine months ended

(in millions) January 27, 2023 January 28, 2022 January 27, 2023 January 28, 2022

Three months ended

(in millions) July 28, 2023 July 29, 2022

Amortization of intangible assets $ 429 $ 423

Restructuring charges, net 54 14

Certain litigation charges, net — 35 — 95

Other operating (income) expense, net (125) (63) (187) 719

Certain litigation charges 40 —

Other operating expense, net 1 35

Other non-operating income, net (76) (83)

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Amortization of Intangible Assets Amortization of intangible assets includes the amortization expense of our definite-lived intangible assets, consisting of purchased patents, trademarks, tradenames, customer relationships, purchased technology, and other intangible assets.

Restructuring Charges, Net For the three and nine months ended January 27, 2023 and January 28, 2022, restructuring costs primarily related to Enterprise Excellence and Simplification restructuring programs, both of which the Company expects to be substantially completed by the end of this fiscal year.

Further program details are described in Note 4 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended April 29, 2022.

In total, the Company expects it will recognize charges of approximately $1.8 billion for Enterprise Excellence and approximately $450 million for Simplification.

Charges recognized within restructuring charges, net primarily comprise of employee termination benefits for the referenced programs.

Restructuring Charges, Net For the three months ended July 28, 2023, restructuring costs primarily related to employee termination benefits to support cost reduction initiatives.

For the three months ended July 29, 2022, restructuring charges primarily related to Enterprise Excellence and Simplification restructuring programs, both of which were substantially completed as of the end of fiscal year 2023.

Enterprise Excellence was designed to leverage the Company’s global size and scale to focus on global operations, and functional and commercial optimization, and had total pre-tax charges of $1.8 billion.

Simplification was designed to focus the organization on accelerating innovation, enhancing customer experience, driving revenue growth and winning market share, and had total pre-tax charges of $0.5 billion.

For additional information about our restructuring programs, refer to Note 5 to the current period's consolidated financial statements.

Certain Litigation Charges, Net We classify specified certain litigation charges and gains related to significant legal matters as certain litigation charges, net in the consolidated statements of income.

Certain Litigation Charges We classify specified certain litigation charges and gains related to significant legal matters as certain litigation charges in the consolidated statements of income.

For additional information, refer to Note 16 in the current period's consolidated financial statements.

Other Operating (Income) Expense, Net Other operating (income) expense, net primarily includes royalty income and expense, currency remeasurement and derivative gains and losses, Puerto Rico excise taxes, changes in the fair value of contingent consideration, MCS charges, RCS charges, impairment charges, and income from funded research and development arrangements.

For the three months ended January 27, 2023, the change in other operating (income) expense, net was primarily driven by the net currency impact of remeasurement expense and our hedging programs, which resulted in a net gain of $134 million as compared to a net gain of $42 million for the corresponding period in the prior year.

The three months ended January 28, 2022 also included $81 million of income related to changes in the fair value of contingent consideration.

For the nine months ended January 27, 2023, the change in other operating (income) expense, net was primarily driven by MCS charges recorded during nine months ended January 28, 2022.

The charges of $668 million primarily included $409 million of intangible asset impairments and $211 million for commitments and obligations, including customer support obligations, restructuring, and other associated costs.

Additionally, the change was driven by the net currency impact of remeasurement expense and our hedging programs, which resulted in a net gain of $353 million combined for the nine months ended January 27, 2023 as compared to a net gain of $6 million for the corresponding period in the prior year.

During the nine months ended January 27, 2023, the Company also recorded non-cash pre-tax charges of $81 million, primarily related to impairment of goodwill, as a result of the anticipated sale of half of the Company's RCS business, related to the May 25, 2022 agreement with DaVita Inc.

Other Operating Expense, Net Other operating expense, net primarily includes royalty expense, currency remeasurement and derivative gains and losses, Puerto Rico excise taxes, changes in the fair value of contingent consideration, certain acquisition and divestiture-related items, and income from funded research and development arrangements.

For the three months ended July 28, 2023, the change in other operating expense, net was driven by a $21 million decrease in Puerto Rico Excise Tax compared to the corresponding period in the prior year.

As a result of newly enacted tax legislation in Puerto Rico, the Company is no longer subject to Puerto Rico Excise Tax, but is now subject to a higher withholding tax, which is recorded in income tax provision in the consolidated statements of income .

Additionally, the change was driven by the net currency impact of remeasurement expense and our hedging programs, which resulted in a net loss of $3 million for the three months ended July 28, 2023 as compared to a net gain of $81 million for the corresponding period in the prior year.

Further driving the change in other operating expense, net was $67 million of non-cash pre-tax impairments, primarily related to goodwill, as a result of the April 1, 2023 sale of half of the Company's RCS business and $22 million of integration and deal costs recorded during the three months ended July 29, 2022.

Other Non-Operating Income, Net Other non-operating income, net includes the non-service component of net periodic pension and postretirement benefit cost, investment gains and losses, and interest income.

For the three and nine months ended January 27, 2023, the increase in other non-operating income, net is primarily attributable to an increase in interest income, partially offset by reduced gains on our equity method and minority investment portfolios.

Interest income was $118 million and $246 million for the three and nine months ended January 27, 2023, respectively, and $45 million and $134 million for the three and nine months ended January 28, 2022, respectively.

Gains on equity method and minority investments were $7 million and $22 million for the three and nine months ended January 27, 2023, respectively, compared to a loss of $3 million and gain of $36 million for the three and nine months ended January 28, 2022, respectively.

For the three months ended July 28, 2023, the decrease in other non-operating income, net is primarily attributable to losses on our minority investment portfolio, partially offset by an increase in interest income.

Net losses on minority investments were $64 million for the three months ended July 28, 2023, compared to a net gain of $4 million for the three months ended July 29, 2022.

Interest income was $111 million and $55 million for the three months ended July 28, 2023 and July 29, 2022, respectively.

Interest Expense, Net Interest expense, net includes interest incurred on our outstanding borrowings, amortization of debt issuance costs and debt premiums or discounts, amortization of amounts excluded from the effectiveness assessment of certain net investment hedges, and charges recognized in connection with the early redemption of senior notes.

For the three and nine months ended January 27, 2023, the increase in interest expense, net was primarily due to the Company's outstanding commercial paper balance and the issuance of four tranches of Euro-denominated Senior Notes with an aggregate principal of €3.5 billion in September 2022.

Additionally, for the nine months ended January 27, 2023, the increase is due to the $53 million charge incurred as a result of the early redemption of approximately $2.3 billion of senior notes, during the three months ended July 29, 2022.

Partially offsetting the increase for the three and nine months was $26 million and $74 million, respectively, in after-tax unrealized gains representing amounts excluded from the effectiveness assessment of certain net investment hedges.

Three months ended Nine months ended

(in millions) January 27, 2023 January 28, 2022 January 27, 2023 January 28, 2022

For the three months ended July 28, 2023, the decrease in interest expense, net was primarily due to $49 million in after-tax gains representing amounts excluded from the effectiveness assessment of certain net investment hedges, compared to $21 million for the corresponding period in the prior year.

Further driving the decrease in interest expense, net was the $53 million charge incurred as a result of the early redemption of approximately $2.3 billion of senior notes during the three months ended July 29, 2022.

Three months ended

(in millions) July 28, 2023 July 29, 2022

Income tax provision $ 400 $ 112

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Difference between the effective tax rate and Non-GAAP Nominal Tax Rate (17.6) % 2.6 %

On August 18, 2022, the U.S.

Tax Court (Tax Court) issued its opinion on the previously disclosed litigation regarding the allocation of income between Medtronic, Inc.

and its wholly-owned subsidiary operating in Puerto Rico for fiscal years 2005 and 2006 (Opinion).

While the Opinion rejected the IRS’s position and the Tax Court determined the methodology advanced by Medtronic was appropriate for purposes of determining the intercompany royalty rate between Puerto Rico and the U.S., it determined that the royalty rate should be higher, thereby increasing income allocated to the U.S.

and consequently subject to U.S.

This case relates only to fiscal years 2005 and 2006.

The Opinion remains subject to finalization by the Tax Court and to appeal by either or both parties.

We have assumed the Tax Court findings will be applied for all years following fiscal year 2006.

As a result, the Company recorded a $764 million net tax charge during the three months ended October 28, 2022 to recognize the estimated tax impact of the Tax Court Opinion.

Our effective tax rate for the three and nine months ended January 27, 2023 was 10.6% and 31.9%, respectively, as compared to 6.7% and 8.8% for the three and nine months ended January 28, 2022, respectively.

The increase in our effective tax rate for the three months ended January 27, 2023, as compared to the three months ended January 28, 2022, primarily relates to the deferred tax impact associated with a step up in tax basis for Swiss Cantonal purposes recorded during the three months ended January 28, 2022.

The increase in our effective tax rate for the nine months ended January 27, 2023 as compared to the nine months ended January 28, 2022, primarily relates to the $764 million net tax charge referenced above, and the deferred tax impact associated with a step up in tax basis for Swiss Cantonal purposes recorded during the prior fiscal year.

Our Non-GAAP Nominal Tax Rate for the three and nine months ended January 27, 2023 was 12.1% and 12.9%, as compared to 12.4% and 12.5% for the three and nine months ended January 28, 2022, respectively.

The change in our Non-GAAP Nominal Tax Rate was primarily due to year-over-year changes in operational results by jurisdiction, and the year-over-year decrease in stock based compensation benefits, which were offset by the benefits from the finalization of certain income tax returns and statute of limitation lapses.

An increase in our Non-GAAP Nominal Tax Rate of 1 percent would result in an additional income tax provision for the three and nine months ended January 27, 2023 of approximately $20 million and $57 million, respectively.

The Israeli Central-Lod District Court issued its decision in Medtronic Ventor Technologies Ltd (Ventor) v.

Kfar Saba Assessing Office on June 1, 2023.

The court determined that there was a deemed taxable transfer of intellectual property.

As a result, the Company has recorded a $187 million income tax charge during the three months ended July 28, 2023.

At this time, the Company is evaluating whether or not it will appeal the decision.

Our effective tax rate for the three months ended July 28, 2023 was 33.4%, as compared to 10.7% for the three months ended July 29, 2022.

The increase in our effective tax rate primarily relates to an income tax reserve adjustment associated with the Ventor court decision discussed above, an increase in Puerto Rico withholding tax rates, and the benefit from the release of a valuation allowance during the three months ended July 29, 2022.

Our Non-GAAP Nominal Tax Rate for the three months ended July 28, 2023 was 15.8%, as compared to 13.3% for the three months ended July 29, 2022, respectively.

The change in our Non-GAAP Nominal Tax Rate was primarily due to an increase in Puerto Rico withholding tax rates and year-over-year changes in operational results by jurisdiction.

An increase in our Non-GAAP Nominal Tax Rate of 1 percent would result in an additional income tax provision for the three months ended July 28, 2023, of approximately $19 million.

LIQUIDITY AND CAPITAL RESOURCES

We are currently in a strong financial position, and we believe our balance sheet and liquidity as of January 27, 2023 provide us with flexibility, and our cash, cash equivalents, and current investments, along with our credit facility and related commercial paper programs will satisfy our foreseeable operating needs.

We are currently in a strong financial position, and we believe our balance sheet and liquidity as of July 28, 2023 provide us with flexibility, and our cash, cash equivalents, and current investments, along with our credit facility and related commercial paper programs will satisfy our foreseeable operating needs.

Our liquidity and capital structure are evaluated regularly within the context of our annual operating and strategic planning processes.

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The following is a summary of cash provided by (used in) operating, investing, and financing activities, the effect of exchange rate changes on cash and cash equivalents, and the net change in cash and cash equivalents:

Nine months ended

(in millions) January 27, 2023 January 28, 2022

Three months ended

(in millions) July 28, 2023 July 29, 2022

Cash provided by (used in):

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Net change in cash and cash equivalents $ (204) $ (1,574)

Operating Activities The $1.7 billion decrease in net cash provided was primarily driven by a decrease in cash collected from customers, an increase in cash paid for income taxes and an increase in spend on inventory.

The decrease in net cash was partially offset by a decrease in cash paid to employees.

The decrease in cash collected from customers was primarily related to timing of sales, slower collections and supply chain challenges, as compared to the corresponding period in the prior fiscal year.

The increase in cash paid for income taxes in the nine months ended January 27, 2023, was due to estimated income tax payments including a cash deposit associated with the Tax Court Opinion, and the increase in spend for inventory was due to inflationary impacts to direct labor and material costs.

Cash paid to employees decreased due to lower annual incentive plan payouts for prior year performance compared to the corresponding period in the prior fiscal year.

For more information about the tax cash deposit paid, refer to Note 11 to the current period's consolidated financial statements.

Investing Activities The $1.1 billion increase in cash used was primarily attributable to an increase in cash paid for acquisitions of $1.8 billion, partially offset by a decrease in net purchases of investments of $704 million, as compared to the corresponding period in the prior fiscal year.

For more information on the aforementioned acquisitions, refer to Note 4 to the current's period's consolidated financial statements.

Financing Activities There was a $3.3 billion decrease in net cash used during the nine months ended January 27, 2023, as compared to the corresponding period in the prior fiscal year.

In the second quarter of fiscal year 2023, the Company issued four tranches of Euro-denominated Senior Notes of approximately $3.4 billion.

The Company used a portion of the net proceeds to repay at maturity €750 million of Medtronic Luxco Senior Notes for $772 million of total consideration in December 2022.

Additionally, the Company had $625 million of commercial paper that was issued and outstanding at the end of the current period.

Operating Activities The $208 million decrease in net cash provided was primarily driven by timing of payments to vendors.

The decrease in net cash was partially offset by an increase in cash collected from customers and decrease in cash paid for income taxes.

increase in cash collected from customers was primarily related to increase in sales and the decrease in cash paid for income taxes was due to estimated income tax payments.

Investing Activities The $1.0 billion decrease in cash used was primarily attributable to a decrease in cash paid for acquisitions of $1.2 billion, partially offset by an increase in net purchases of investments of $170 million, as compared to the corresponding period in the prior fiscal year.

Financing Activities There was a $449 million decrease in net cash used during the three months ended July 28, 2023, as compared to the corresponding period in the prior fiscal year, which is primarily attributable to the $500 million of commercial paper that was issued and outstanding at quarter end.

In the first quarter of fiscal year 2023, the Company issued short-term borrowings of approximately $2.3 billion under the Fiscal 2023 Loan Agreement and used the proceeds to fund the early redemption of senior notes for total consideration of $2.3 billion.

For more information on the issuance and payment of the senior notes, commercial paper, and Term Loan and redemption of senior notes, refer to the Debt and Capital section.

For more information on the commercial paper and Term Loan and redemption of senior notes, refer to the Debt and Capital section.

Debt and Capital

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From time to time, we may repurchase our outstanding debt obligations in the open market or through privately negotiated transactions.

Total debt at January 27, 2023 was $28.1 billion as compared to $24.1 billion at April 29, 2022.

The increase in total debt was driven by issuance of Euro-denominated Senior Notes of $3.4 billion and commercial paper outstanding of $625 million, offset by fluctuations in exchange rates and repayment of Euro-denominated Senior Notes of $772 million.

Total debt at July 28, 2023 was $25.0 billion as compared to $24.4 billion at April 28, 2023.

The increase in total debt was driven by commercial paper outstanding of $500 million, as well as fluctuations in exchange rates.

In May 2022, we entered into a term loan agreement (Fiscal 2023 Loan Agreement) with Mizuho Bank, Ltd.

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Senior Notes for $1.9 billion of total consideration, and $368 million of Medtronic Luxco Senior Notes for $376 million of total consideration.

The Company recognized a total loss on debt extinguishment of $53 million in the quarter ended July 29, 2022, which primarily included cash premiums and accelerated amortization of deferred financing costs and debt discounts and premiums.

The loss was recognized in interest expense, net in the consolidated statements of income.

The Company recognized a total loss on debt extinguishment of $53 million within interest expense, net in the consolidated statements of income in the quarter ended July 29, 2022, which primarily included cash premiums and accelerated amortization of deferred financing costs and debt discounts and premiums.

During the fourth quarter of fiscal year 2023, the Company repaid the term loan in full, including interest.

In September 2022, we issued four tranches of Euro-denominated Senior Notes with an aggregate principal of €3.5 billion, with maturities ranging from fiscal year 2026 to 2035, resulting in cash proceeds of approximately $3.4 billion, net of discounts and issuance costs.

The Company used a portion of the net proceeds to repay at maturity €750 million of 0.000% Medtronic Luxco Senior Notes for $772 million of total consideration in December 2022.

The Company intends to use the remaining proceeds to repay at maturity €1.5 billion of 0.375% Medtronic Luxco Senior Notes and €1.25 billion of 0.000% Medtronic Luxco Senior Notes in March 2023.

The Company used the net proceeds to repay at maturity €750 million of 0.000% Medtronic Luxco Senior Notes for $772 million of total consideration in December 2022 and €1.5 billion of 0.375% Medtronic Luxco Senior Notes and €1.25 billion of 0.000% Medtronic Luxco Senior Notes for $2.9 billion of total consideration in March 2023.

In March 2023, Medtronic Luxco issued two tranches of USD-denominated Senior Notes with an aggregate principal of $2.0 billion, with maturities ranging from 2028 to 2033, resulting in cash proceeds of approximately $2.0 billion, net of discounts and issuance costs.

The Company used the net proceeds supplemented by additional cash to repay the ¥297 billion Fiscal 2023 Loan Agreement discussed above for $2.3 billion of total consideration.

We repurchase our ordinary shares on occasion as part of our focus on returning value to our shareholders.

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There is no specific time period associated with these repurchase authorizations.

During the nine months ended January 27, 2023, the Company repurchased a total of 5 million shares under this program at an average price of $93.24.

At January 27, 2023, we had approximately $2.5 billion remaining under the share repurchase program authorized by our Board of Directors.

During the three months ended July 28, 2023, the Company repurchased a total of 2 million shares under this program at an average price of $87.35.

At July 28, 2023, we had approximately $2.2 billion remaining under the share repurchase program authorized by our Board of Directors.

For more information on credit arrangements, refer to Note 7 to the current period's consolidated financial statements and Note 6 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended April 28, 2023.

Our liquidity sources at January 27, 2023 included $4.5 billion of cash and cash equivalents and $6.6 billion of current investments.

Our liquidity sources at July 28, 2023 included $1.3 billion of cash and cash equivalents and $6.5 billion of current investments.

Additionally, we maintain commercial paper programs and a Credit Facility.

Our investments primarily include available-for-sale debt securities, including U.S.

government and agency securities, corporate debt securities, mortgage-backed securities, certificates of deposits, and other asset-backed securities.

government and agency securities, corporate debt securities, mortgage-backed securities, certificates of deposit, and other asset-backed securities.

Refer to Note 6 to the current period's consolidated financial statements for additional information regarding fair value measurements.

We maintain multicurrency commercial paper programs for short-term financing, which allow us to issue unsecured commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of $3.5 billion.

At January 27, 2023 and April 29, 2022, we had $625 million and no commercial paper outstanding, respectively.

At July 28, 2023 and April 28, 2023, we had $500 million and no commercial paper outstanding, respectively.

The issuance of commercial paper reduces the amount of credit available under our existing line of credit, as explained below.

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The Credit Facility provides us with the ability to increase our borrowing capacity by an additional $1.0 billion at any time during the term of the agreement.

At January 27, 2023 and April 29, 2022, no amounts were outstanding under the Credit Facility.

At July 28, 2023 and April 28, 2023, no amounts were outstanding under the Credit Facility.

Interest rates on advances of our Credit Facility are determined by a pricing matrix based on our long-term debt ratings assigned by Standard & Poor's Ratings Services (S&P) and Moody's Investors Service (Moody’s).

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Agency Rating (1)

January 27, 2023 April 29, 2022

July 28, 2023 April 28, 2023

Standard & Poor's Ratings Services

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A security rating is not a recommendation to buy, sell or hold securities, and may be subject to revision or withdrawal at any time by the rating agency, and each rating should be evaluated independently of any other rating.

S&P and Moody's long-term debt ratings and short-term debt ratings at January 27, 2023 were unchanged as compared to the ratings at April 29, 2022.

S&P and Moody's long-term debt ratings and short-term debt ratings at July 28, 2023 were unchanged as compared to the ratings at April 28, 2023.

We do not expect the S&P and Moody's ratings to have a significant impact on our liquidity or future flexibility to access additional liquidity given our balance sheet, Credit Facility, and related commercial paper programs.

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We believe our off-balance sheet arrangements do not have a material current or anticipated future effect on our consolidated earnings, financial position, and/or cash flows.

Refer to the Debt and Capital section above for changes in debt obligations during the second quarter of fiscal year 2023;

Refer to the Debt and Capital section above for changes in debt obligations during the first quarter of fiscal year 2024;

there have been no other material changes to our long-term contractual obligations as reported in our most recent Annual Report filed on Form 10-K for the fiscal year ended April 28, 2023.

Ltd Acquisition

On May 25, 2023, the Company entered into a set of definitive agreements to acquire EOFlow Co.

(EOFlow), manufacturer of the EOPatch device – a tubeless, wearable, and fully disposable insulin delivery device.

The acquisition expands the Diabetes segment portfolio of products.

To the extent that all the public shares participate in the tender offer, the total consideration for the acquisition of the shares in EOFlow would be KRW 971 billion, or $760 million, at exchange rates on July 28, 2023.

The acquisition is expected to close in the second half of calendar year 2023 subject to the satisfaction of the minimum tender condition and certain customary closing conditions, including receipt of required regulatory clearances.

Information regarding acquisitions is included in Note 4 to the current period's consolidated financial statements.

We assess goodwill and indefinite-lived intangible assets for impairment annually in the third quarter of the fiscal year and whenever an event occurs or circumstances change that would indicate the carrying amount may be impaired.

There were no impairments of goodwill in the current period as a result of the annual impairment test.

As further described in Note 10, we have certain new operating segments as of the beginning of fiscal year 2024.

Goodwill reporting units were tested for impairment before and after the alignment.

There was no impairment of goodwill in the current period as a result of the impairment test.

The goodwill allocation and the tests for impairment of goodwill requires us to make several estimates related to projected future cash flows to determine the fair value of the goodwill reporting units.

We calculate the excess of each reporting unit's fair value over its carrying amount, including goodwill, utilizing a discounted cash flow analysis.

The test for goodwill is based on future cash flows that require significant judgment with respect to future revenue and expense growth rates and discount rates.

The discount rate applied to the cash flow analysis is based on the weighted average cost of capital (“WACC”) for each reporting unit.

An impairment loss is recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit.

A change in any of these estimates and assumptions could produce a different fair value, which could have a material impact on the our results of operations.

Definite-lived intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of an intangible asset (asset group) may not be recoverable.

Refer to our Other Operating (Income) Expense, Net section for further details on impairment charges in the current fiscal year.

There were no impairments of intangible assets in the current period.

Further adverse changes to macroeconomic conditions or significant changes to our current and future expected financial performance could lead to goodwill or intangible asset impairment charges in future periods, and such charges could be material to our results of operations.

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We base our estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

As of January 27, 2023, there were no material changes to our critical accounting estimates.

As of July 28, 2023, there were no material changes to our critical accounting estimates.

NEW ACCOUNTING PRONOUNCEMENTS

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(CIFSA Subsidiary Guarantors)

The following tables present summarized results of operations for the nine months ended January 27, 2023 and summarized balance sheet information at January 27, 2023 and April 29, 2022 for the obligor groups of Medtronic and Medtronic Luxco Senior Notes, and CIFSA Senior Notes.

The following tables present summarized results of operations for the three months ended July 28, 2023 and summarized balance sheet information at July 28, 2023 and April 28, 2023 for the obligor groups of Medtronic and Medtronic Luxco Senior Notes, and CIFSA Senior Notes.

The obligor group consists of the parent company guarantor, subsidiary issuer, and subsidiary guarantors for the applicable senior notes.

The summarized financial information is presented after elimination of (i) intercompany transactions and balances among the guarantors and issuers and (ii) equity in earnings from and investments in any subsidiary that is a non-guarantor or issuer.

The summarized results of operations information for the nine months ended January 27, 2023 was as follows:

The summarized results of operations information for the three months ended July 28, 2023 was as follows:

(in millions) Medtronic & Medtronic Luxco Senior Notes (1)

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Net loss attributable to Medtronic (921) (582)

The summarized balance sheet information at January 27, 2023 was as follows:

The summarized balance sheet information at July 28, 2023 was as follows:

(in millions) Medtronic & Medtronic Luxco Senior Notes (1)

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Total noncurrent liabilities 60,256 67,062

57,260 64,101

Noncontrolling interests 188 188

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(3) Includes receivables due from non-guarantor subsidiaries of $20.9 billion and $8.4 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.

(4) Includes loans receivable due from non-guarantor subsidiaries of $21 million and $2.0 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.

(4) Includes loans receivable due from non-guarantor subsidiaries of $20.0 million for Medtronic & Medtronic Luxco Senior Notes.

No loans receivable due from non-guarantor subsidiaries for CIFSA Senior Notes.

(5) Includes payables due to non-guarantor subsidiaries of $32.2 billion and $26.4 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.

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(3) Includes receivables due from non-guarantor subsidiaries of $22.5 billion and $8.3 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.

(4) Includes loans receivable due from non-guarantor subsidiaries of $6.5 billion and $8.3 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.

(4) Includes loans receivable due from non-guarantor subsidiaries of $20.0 million for Medtronic & Medtronic Luxco Senior Notes.

No loans receivable due from non-guarantor subsidiaries for CIFSA Senior Notes.

(5) Includes payables due to non-guarantor subsidiaries of $31.8 billion and $25.0 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.

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These statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.

Our forward-looking statements may include statements related to our growth and growth strategies, developments in the markets for our products, therapies and services, financial results, product development launches and effectiveness, research and development strategy, regulatory approvals, competitive strengths, the potential or anticipated direct or indirect impact of COVID-19 on our business, results of operations, and/or financial condition, restructuring and cost-saving initiatives, intellectual property rights, litigation and tax matters, governmental proceedings and investigations, mergers and acquisitions, divestitures, market acceptance of our products, therapies and services, accounting estimates, financing activities, ongoing contractual obligations, working capital adequacy, value of our investments, our effective tax rate, our expected returns to shareholders, and sales efforts.

Our forward-looking statements may include statements related to our growth and growth strategies, developments in the markets for our products, therapies and services, financial results, product development launches and effectiveness, research and development strategy, regulatory approvals, competitive strengths, the potential or anticipated direct or indirect impact of public health crises on our business, results of operations, and/or financial condition, restructuring and cost-saving initiatives, intellectual property rights, litigation and tax matters, governmental proceedings and investigations, mergers and acquisitions, divestitures, market acceptance of our products, therapies and services, accounting estimates, financing activities, ongoing contractual obligations, working capital adequacy, value of our investments, our effective tax rate, our expected returns to shareholders, and sales efforts.

In some cases, such statements may be identified by the use of terminology such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “looking ahead,” “may,” “plan,” “possible,” “potential,” “project,” “should,” “will,” and similar words or expressions.

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• delays in regulatory approvals;

• the global COVID-19 pandemic, including new COVID-19 variants that may emerge, as well as impacts of the pandemic on healthcare staffing levels;

• public health crises;

• reduction or interruption in our supply;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis