Omar Ishrak, who led Medtronic’s growth to become the world’s largest med-tech manufacturer, will step down from the top executive role next spring after what will be nine years on the job.
Taking over in the planned CEO succession next April will be Geoff Martha. He held one of the most difficult roles at Medtronic PLC as the head of integration and global strategic planning as the company acquired health care tech and supply company Covidien PLC in a $49 billion deal that transformed both companies, and relocated Medtronic’s legal headquarters from Minnesota to Ireland.
Medtronic’s board of directors appointed Martha, 49, to a newly created role of president, leading the company’s operating groups and regions and taking a seat on the board, effective Nov. 1. On April 27, the start of Medtronic’s 2021 fiscal year, Martha will become CEO while Ishrak will take on the job of executive chairman, the company announced Wednesday.
Like Ishrak, Martha has background with General Electric. A Pittsburgh native, Martha graduated from Penn State in 1992 and went to work at General Electric, where he stayed for 19 years, including 15 years in GE’s financial-services division before becoming a managing director in GE Healthcare. Ishrak was CEO of GE Healthcare Systems at the time, and when Ishrak came to Medtronic in June 2011, Martha followed him two months later.
Martha’s current title is executive vice president of Medtronic’s $8 billion Restorative Therapies Group, which includes devices used in the brain, nervous system, spine and elsewhere. That division made one of Medtronic’s splashiest deals in recent years, acquiring Israeli startup Mazor Robotics for $1.6 billion in 2018, marking the diverse med-tech company’s first foray into medical robotics. Ishrak said this month that Medtronic hopes to someday apply robotics to therapies across the company’s portfolio.
Martha also led the January 2015 acquisition of Covidien, which was at the time the largest med-tech deal in the industry, after becoming chief integration officer for Medtronic in July 2014.
The acquisition of Covidien brought a raft of low-tech medical supplies like wound dressings (which were spun out to Cardinal Health as part of a $6 billion deal in 2017) along with cutting-edge products that can do things like image the insides of diseased lungs and apply an array of surgical staples. The deal boosted Medtronic’s annual revenue from $17 billion in fiscal 2014 to $29 billion in fiscal 2016, and swelled its global full-time workforce to 90,000.
“The news of Mr. Ishrak’s retirement does not come as a surprise because he is reaching MDT’s mandatory retirement age of 65 next year, therefore, investors were expecting a CEO transition to be announced sometime this year,” Wells Fargo analyst Larry Biegelsen wrote in a note to investors Wednesday morning. “The appointment of Geoff Martha as the new CEO may come as a surprise to some investors given that the division he has led since 2015 is the third largest at MDT, after the Cardiac and Vascular Group (CVG) and Minimally Invasive Therapies Group (MITG).”
Analysts with BMO Capital Markets wrote that the Ishrak-Martha succession appear to be a “seamless transition,” and the firm reiterated its outperform rating on Medtronic stock.
Medtronic shares closed at $108 on Wednesday, the latest in a series of all-time highs in recent weeks. Year-to-date, shares are up nearly 20%.
Martha, who will turn 50 in December, was not doing media interviews Wednesday, a spokeswoman said.
Some investors had been expecting another executive named Mike Coyle to be appointed the next CEO, since Coyle leads Medtronic’s largest business group, the Cardiac and Vascular Group, Biegelsen wrote. Although company management said Coyle is “fully supportive” of Martha becoming CEO, Biegelsen said there is a risk that Coyle may take on a CEO role at a different med-tech company.
BMO analyst Joanne Wuensch wrote Wednesday that, “while it was less clear to us who would be Ishrak’s successor, in retrospect this announcement makes sense to us given the breadth of Martha’s roles at Medtronic.”
As executive chairman, Ishrak will provide counsel to Medtronic’s leadership and concentrate on the long-term strategic plan.
“Today, we announced leadership changes that meet both the board’s objective of executing a thoughtful leadership transition as well as my personal desire to begin transitioning my duties as CEO to a new leader coinciding with the start of our next fiscal year,” Ishrak said in a statement. “Leading Medtronic as CEO is an honor and a privilege, and I know that Geoff is the right leader to take Medtronic to the next level of its growth and evolution.”
Brett Wall, president of Medtronic’s Brain Therapies division, will succeed Martha on Nov. 1 as head of the Restorative Therapies Group.
“The Board is extremely grateful to Omar for his outstanding leadership — as the company’s annual revenues have doubled and its market capitalization has increased by more than $100 billion during his tenure,” said Scott Donnelly, Medtronic’s lead director and CEO of Textron Inc. “We are confident Omar’s contributions to Medtronic will continue as executive chairman.”
Donnelly said Martha “has demonstrated his unique ability to lead, innovate and drive results.”
Martha said in a statement he was “humbled and grateful.”
“Since coming to Medtronic, I have been deeply motivated and inspired by the company’s mission, its people and its unique ability to create and commercialize technology that directly improves and saves people’s lives,” Martha said.