Medtronic's Ishrak set to retire after nearly decade as CEO

Dive Brief:

Medtronic CEO Omar Ishrak will retire following the end of fiscal year 2020 after almost nine years at the helm, the company announced Wednesday morning. He will go on to serve as executive chairman.
Geoff Martha, the current head of Medtronic's Restorative Therapies Group, is set to succeed Ishrak on April 27, 2020. In his four years in charge of RTG — the unit that houses products like spinal and orthopaedic implants, as well as systems for drug infusion, robotic surgery and deep brain stimulation — annual revenues have grown from close to $6.8 billion in fiscal year 2015 to nearly $8.2 billion this past year.
The president of RTG's brain therapies division, Brett Wall, will replace Martha as executive vice president of RTG beginning Nov. 1.

Dive Insight:

Martha will take over at a time when Medtronic, the world's largest medtech, looks to become more competitive in areas like robotic surgery, while adjusting to growing competition in businesses like diabetes.

The selection of 49-year-old Martha was lauded by one analyst, who said he was "instrumental in turning around" Medtronic's spine business, which was losing share for years prior to Martha taking the helm.

"We don't think that the selection of Martha to succeed Ishrak comes as much of a surprise and we believe that investors think highly of Martha given his track record leading the Spine business and RTG after that," Mike Matson with Needham wrote in a research note.

Ishrak, who previously served as CEO of GE Healthcare Systems, is coming up on the company's mandatory executive officer retirement age of 65, Medtronic Lead Director Scott Donnelly said in the announcement Wednesday. Donnelly noted Medtronic annual revenues have doubled during Ishrak's tenure, reaching more than $30.6 billion in fiscal year 2019, and market capitalization has risen more than $100 billion, currently sitting at about $144 billion.

Part of that growth came through the nearly $43 billion acquisition of medical device maker Covidien in 2014, for which Martha served as the chief integration officer. Similarly to Ishrak, Martha worked in business development at GE Healthcare prior to joining Medtronic.

"This plan and its timing enable Geoff and I to partner on achieving Medtronic’s key financial performance goals as well as delivering on our critical pipeline milestones, including several important product launches," Ishrak said in the Medtronic statement.

In the company's most recent earnings period, RTG's quarterly revenues grew more than 3% to just over $2 billion, supported in part by integration of the 2018 acquisition of Mazor Robotics. Martha told investors on the earnings call that offering robotic surgery platforms has helped increase orders for Medtronic implants.

The leadership change-up entails Martha becoming a member of the company's board of directors and stepping into the newly created role of Medtronic president, beginning Nov. 1, at which point Wall will take over RTG, the third largest of Medtronic's four core business groups. In the transitional role, Martha will lead the company's operating groups and regions, Medtronic said.

Wall joined Medtronic in 2015 from Covidien, and previously worked for vascular tech maker ev3 (acquired by Covidien in 2010), Boston Scientific and C.R. Bard.