In this articleMDT your favorite stocksCREATE FREE ACCOUNTMichael Siluk | Education Images | Universal Images Group | Getty ImagesCompany: Medtronic PLC (MDT): Medtronic PLC is an Ireland-based company, which vides health-care nology solutions.
The company's ducts category includes Advanced Surgical nology; Cardiac Rhythm; Cardiovascular; Digestive & Gastrointestinal; Ear, Nose & Throat; General Surgery; Gynecological; Neurological; Oral & Maxillofacial; Patient Monitoring; Renal Care; Respiratory; Spinal & Orthopedic; Surgical & Imaging; Urological; duct Manuals; duct Ordering & Inquiries; and duct Performance & Advisories.
Its ducts include Cardiac Implantable Electronic Device (CIED) Stabilization, Aortic Stent Graft ducts, CareLink Personal Therapy Management Software, CareLink Therapy Management Software.
Its services and solutions include Ambulatory Surgery Center Resources, Care Management Services, Digital Connectivity Information nology (IT) Support, Equipment Services and Support, Innovation Lab, Medtronic Healthcare Consulting, and Office-Based Sinus Surgery.Stock Market Value: $118.78B ($92.71 per )Stock Chart IconStock chart iconMedtronic s in 2025Activist: Elliott Investment ManagementOwnership: n/aAverage Cost: n/aActivist ary: Elliott is a very successful and astute activist investor.
The firm's team includes analysts from leading private equity firms, engineers, operating partners – former nology CEOs and COOs.
When evaluating an investment, the firm also hires specialty and general management consultants, expert cost analysts and industry specialists.
Elliott often watches companies for many years before and has an extensive stable of impressive board candidates.
The firm has historically focused on strategic activism in the nology sector and has been very successful with that strategy.
However, over the past several years its activism group has grown, and Elliott has been doing a lot more governance-oriented activism and creating value from a board level at a much larger breadth of companies.What's happeningOn Aug.
19, Medtronic PLC announced the appointment of John Groetelaars (former interim CEO of Dentsply Sirona and former president and CEO of Hillrom) and Bill Jellison (former vice president, CFO of Stryker) to the board ing engagement with Elliott.
Further, the board announced the formation of the Growth Committee and the Operating Committee.
Jellison will serve on both, while Groetelaars will join the Growth committee.Behind the scenesMedtronic is the largest med company in the world by revenue, with a history of med innovation and market leadership dating back to the 1940s.
While its cardiology segment remains its legacy core (37% of revenue), Medtronic is now a diversified operator, with its other segments including Neuroscience (29%), Medical Surgical (25% and largely built from their acquisition of Covidien, which closed in 2015) and Other (9%, primarily diabetes treatment).
Despite this positioning as a one-stop shop for medical devices, Medtronic's stock price has stagnated – appreciating just 15% over the past decade and down 8% in the last five years.This stock performance underscores long-term investor frustration in Medtronic's growth file.
Investors have been long waiting for a growth inflection due to the company's attractive end and scale, but Medtronic has been dering underwhelming mid-single digit revenue growth for the past 10 years.
Many have speculated that Medtronic's growth has disappointed due to its strategy of diversification.
While Med peers Boston Scientific and Intuitive Surgical are pursuing depth rather than diversification, executing tuck-in merger and acquisitions, and building scale in focused , Medtronic has sat on the sidelines since the Covidien acquisition, leaving it with a larger – but slower growing revenue base than peers.However, for the first time in many years management is sending a message to the market that it not only acknowledges this issue, but it's doing something it.
That message comes in the form of establishing a Growth Committee and adding as a member newly appointed director Bill Jellison (former vice president and CFO of Stryker).
Notably, these actions were taken ing engagement by Elliott.
The Growth Committee is oriented towards portfolio management, including finding tuck-in M&A opportunities to supplement organic growth, allocating re and development more effectively, and reviewing its existing portfolio of es for inefficiencies to pursue future asset sales.
Jellison will be a value-added director to that end.
In addition, Elliott has shown that even without a board seat for an Elliott principal it can be a valuable active holder, particularly with evaluating and executing M&A opportunities.Med has also seen margin challenges in recent years and management is also addressing that by forming an Operating Committee.
This committee is focused on creating room in the P&L and gross margin expansion. As is the case with most Med es, Medtronic has been under a lot of bottom-line pressure since the Covid-19 pandemic.
However, while peers have generally experienced 100 to 200 basis points of margin pressure, Medtronic's gross margins (now around 65%) have eroded apximately 500 bps.
This is another area where we have seen Elliott assist portfolio companies as an active holder.While these two committees are new, they will be able to start with a little momentum.
Medtronic announced in May that it will be spinning off its diabetes within the next 15 months, which should help the company focus on its core es.
There are also two duct developments that could meaningfully contribute to long-term growth: (i) PulseSelect, a pulse field ablation system used to treat atrial fibrillation, launched in the U.S.
in 2024 and has grown rapidly over the course of this year; and (ii) Symplicity Spyral, a renal denervation duct used for the treatment of hypertension, recently received a favorable reimbursement decision from the Centers for Medicare & Medicaid Services that's being finalized in October, which should significantly increase access and adoption of the duct.
While these duct developments are certainly reasons to be optimistic, more important to holders Elliott is a fessional and sophisticated cess, and with these operational and governance changes, holders should be confident that the company finally has a cess that can der long-term growth.
To paraphrase from the book "Built to Last: Successful Habits of Visionary Companies," it is the difference between being a time teller and a clock builder.
The most successful and enduring companies have been clock builders.Elliott is one of today's most lific activist investors, and it has already successfully the activist phase of this engagement.
Now is the time for phase two: a turnaround of the . Elliott has helped add two directors to the board who are purpose-built for this situation.
Both Jellison and Groetelaars have extensive med experience, with Jellison having served on the boards of two other med companies as the result of activist engagement – Masimo for Politan Capital and Anika Therapeutics for Caligan Partners.
What makes this engagement unique is that Elliott did not enter into any formal agreement with Medtronic, signaling that management did not see it as necessary and that Elliott is supportive of its efforts.
While presently the stage is set for a long-term mutually beneficial relationship between the two parties, Elliott has put itself in position to have unique flexibility should things not go as planned, but we do not expect that they will have to rely on that contingency.Ken Squire is the founder and president of 13D Monitor, an institutional re service on holder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.