New Medtronic CEO's big challenge: Growing revenue in a tough market

Geoff Martha, the incoming CEO at medical device maker Medtronic, likes to take companies into new markets.

First at GE Healthcare, and now at Medtronic, Martha has driven the complex task of buying, selling and integrating companies that produce products millions of people depend on to diagnose and treat serious health problems.

In April, Martha will become Medtronic's eighth CEO, putting him in charge of an organization with $31 billion in annual sales, 90,000 full-time employees and products used by 70 million patients annually.

Under a transition plan announced last week, current CEO Omar Ishrak will become executive chairman after Medtronic's fiscal year ends on April 26, advising his longtime colleague on disruptive technologies like robotic medical systems and leadless pacemakers while expanding sales in large developing markets worldwide.

Martha, who has been running Medtronic's restorative therapies group, will inherit challenges like improving the company's returns for investors, which remain low compared to peers despite a record high stock price, and growing revenue in national heath care markets that are working hard to cut spending.

"You only convince the market when you deliver," former Medtronic CEO Bill George said. "I feel confident he can do that … But that's the biggest challenge he's going to face: How do you keep it going? How do you keep stimulating, or even drive the growth higher and faster? He's very good with the sales organization. He's produced, in his group. But now he's got to do it at a corporate level and continue to build the executive team."

Martha wasn't available to comment for this article. Like past Medtronic CEOs, he's not a health care expert by formal training — his skill set is in business and finance.

"I would go back and forth primarily between mergers and acquisitions, and running businesses," Martha said in a 2014 interview with the Star Tribune. "The one common theme was always taking the company to a new market that it wasn't in before. That's always been my thing: helping an organization … move into an area that they're not in today. That could be a new business line, or a geography, or in some cases inventing something, not just entering an existing market."

Martha led the acquisition and integration efforts behind Medtronic's largest deal ever, the $49.9 billion acquisition of Covidien in January 2015. Today, Medtronic is wading into medical robotics for the first time in its 70-year history, leading with a spine surgery system acquired last year in a $1.7 billion deal by Martha's division.

Rather than a traditional deal, Medtronic acquired Israel's Mazor Robotics in a multiyear process that began with publicly announced investments in 2016 that allowed Mazor and Medtronic engineers to collaborate and optimize Mazor's robotic surgical assistance system for Medtronic's spinal products and surgical navigation systems. Early successes led to an outright acquisition last December, driven partly by how well the Mazor device has driven "pull-through sales" of existing Medtronic products.

"We think the whole enabling technology and robotic strategy — that's where the market is going — is going to cause the market to consolidate around a few players, and we intend to lead that and take [market] share now and going forward," Martha said in an Aug. 20 quarterly earnings call.

The design for a second type of robotic system, highly anticipated by Medtronic analysts, is expected to be unveiled later this month. Medtronic engineers are already working on future robotic systems, including one that could place electrodes in precise locations in the brain for electric stimulation.

Outside of work, Martha is known for his love of hockey, having been a team captain on the Penn State hockey team in 1990s before it moved to NCAA Division I.

A self-described avid sports fan, Martha managed the Medtronic team that established the first commercial partnership between Medtronic and the Minnesota Vikings, leading to the Medtronic Club at U.S. Bank Stadium.

Jackie Boucher — president of the not-for-profit Children's HeartLink, where Martha is a board member — said Martha comes off as approachable and sincere, despite his hectic schedule as an executive.

"He really tends to focus on the areas in an organization where he wants to have an impact, and then he really makes the time to deliver on those commitments," Boucher said. "It's been great having him involved, even though he's a super-busy person. He cares about the organization and the people."