Medtronic updates guidance and announces capital allocation plans

Medtronic announced on Jan. 11 that it will return $5 billion to shareholders through share repurchases by the end of fiscal year 2018.

The company also updated its financial guidance. Medtronic expects diluted non-GAAP earnings per share of $4.36 to $4.40 for fiscal year 2016 and revenue growth in the upper-half of the mid-singles for the second half of fiscal year 2016.

In September 2015, Medtronic announced it would make $9.3 billion available for general corporate purposes. That money had been allocated to its U.S.-controlled, non-U.S. subsidiaries.

Now, $5 billion of that $9.3 billion will be returned to shareholders. Medtronic said that it would continue to return at least half of its free cash flow each year to shareholders, as well, through dividends and share repurchases. It also plans on using most of the rest of the money to prepay existing debt or pay debt due by the end of fiscal year 2018.

“The net result of these capital allocation actions are not expected to materially affect the company's fiscal year 2016 income statement, including expectations for net interest expense, net earnings, diluted weighted shares outstanding, or diluted earnings per share,” Medtronic said in a news release. “However, the company does expect these actions to be accretive to earnings per share starting in fiscal year 2017.”