MEDTRONIC 2016 INTEGRATED PERFORMANCE …

1 MEDTRONIC . 2016 . INTEGRATED . PERFORMANCE . REPORT. BUSINESS. GROWTH $ $ fy2016 . BILLION BILLION HIGHLIGHTS. in revenue in net earnings WORKING. 7th 64,800. NON-REGULATED WASTE DOWN. RESPONSIBLY. CONSECUTIVE YEAR. 16% per unit of revenue from 2013. EMPLOYEE HOURS. receiving a perfect score on GHG EMISSIONS DOWN volunteered through Project 6. the Human Rights Campaign Corporate Equality Index 20% per unit of revenue from 2013. VALUE TO. SOCIETY. OF TOTAL SALES. 60,000. MEDICAL. $ MILLION. invested in research PROFESSIONALS in philanthropic giving and development received training on the newest technologies and treatments CEO Letter 4 Product Stewardship 30.

2 Leadership in the New Healthcare Era 4 Our Approach 30. Company Overview 5 Responsible Sourcing 32. About Our Company 5 Supplier Quality Management 32. Organizational Profile 5 Responsible Supply Management 33. Scope of Report 6 Supplier Diversity 33. Sustainability Risks and Opportunities 7 Ethics in Sales and Marketing 35. Our Material Issues 7 Ethical Business Conduct 35. Sustainability Management 7 Customer and Product Security 37. Reducing Sustainability Risk 8 WORKING RESPONSIBLY: OUR COMPANY 38. Creating Opportunities 9 Governance and Engagement 39. Economic Contributions to Society 10 Corporate Governance 39.

3 Financial PERFORMANCE 10 Ethical Workplace 39. Operating Costs 12 Public Policy 41. Acquisitions and Investments 13 Stakeholder Engagement 41. Divestitures 14 Operations 42. Taxes 14 Our Environmental, Health, Safety, and Sustainability Approach 42. Financial Assistance 14 Operational Footprint 43. Return to Shareholders 14 Energy Use and GHG Emissions 43. Philanthropy 14 Managing Waste 44. Non-GAAP Financial Measures 16 Water 45. VALUE TO SOCIETY: OUR PRIORITIES 19 Employees 46. Access 20 Global Workforce 46. Therapy Innovation 20 Investing in Our Workforce 46. Economic Value 21 Employee Engagement 47.

4 Globalization 22 Inclusion and Diversity 47. Product Quality 25 Employee Compensation 48. Responsibility and Quality 25 Safety and Wellness 48. Maintaining Quality Facilities 26 Data Summary 49. Product Use and PERFORMANCE 26 About this Report 52. Customer Feedback 28 MEDTRONIC 2016 Integration Index 53. Clinical Trials 28. Animal Research 29. CEO LETTER. LEADERSHIP IN THE NEW HEALTHCARE ERA Extended our lifesaving HeartRescue Project into China and India, and Healthcare is at a crossroads. Our industry faces intense clinical and expanded the program nationally as the HeartRescue Consortium.

5 Economic challenges that include an aging global population, rising Increased healthcare capacity and access by investing more than incidence of chronic disease, inefficient healthcare delivery, complex $152 million in training for approximately 60,000 medical professionals. regulatory systems, and fragmented fee-for-service payment models. Progressed to meet our goal to reduce operational energy use These challenges require new approaches and creative collaboration as and greenhouse gas emissions by 15 percent by 2020 from a we pursue better healthcare delivery and improved patient outcomes FY2013 baseline.

6 For more people. Launched a Responsible Supply Management function to support MEDTRONIC is leading this evolution with a transformative business strategy socially and environmentally responsible business practices from to advance global healthcare. Our approach combines meaningful our suppliers. innovation in therapies, products, and systems; with value-based, cost- efficient healthcare models; and technologies and partnerships that open Reflecting our focus on reshaping MEDTRONIC for a new healthcare era, the door to quality care for more people around the world. this annual INTEGRATED report is organized primarily around our most material sustainability issues.

7 These are global access to healthcare, I am excited to report that in fy2016 this strategy has produced product quality, product stewardship, responsible sourcing, and ethics significant results. More than 65 million people benefited from MEDTRONIC in sales and marketing. technologies two every second as we helped our customers deliver more seamless, INTEGRATED care for patients across the healthcare For more than half a century, MEDTRONIC has operated with a clear, continuum. In particular, the full integration of Covidien acquired in late compelling Mission: to alleviate pain, restore health, and extend life.

8 FY2015 has greatly expanded our global reach and impact. Further, we We believe that access to quality healthcare is a fundamental right of all expanded our leadership in Value-based Healthcare, with a goal of sharing people around the world. We believe that continuously improving clinical accountability for costs and improved patient outcomes. Additionally, in outcomes through innovation will present virtually limitless opportunities fy2016 MEDTRONIC : to extend our Mission. Each day we challenge ourselves to make this a reality for more people. Delivered strong financial results, with $ billion in revenue and $ billion in net earnings.

9 I'm incredibly proud of our PERFORMANCE in fy2016 and even more excited about our future as we continue to challenge the status quo. In my five Invested $ billion in research and development (R&D), representing years with MEDTRONIC , I see our value as a company, and our business percent of net sales. PERFORMANCE , tied more closely than ever to our citizenship impact. Donated more than 2 percent of pre-tax profits $ million . to charitable causes. Supported Hub & Spoke healthcare delivery models with an investment in Abraaj Group's Growth Markets Health Fund (GMHF). GMHF will purchase and build hub hospitals in several emerging markets, including Omar Ishrak Bangladesh, Ethiopia, Ghana, India, Kenya, Nigeria, and Pakistan, expanding access to specialists for millions of patients.

10 Chairman and Chief Executive Officer CEO Letter | 4. COMPANY. OVERVIEW. ABOUT OUR COMPANY MEDTRONIC OPERATING SEGMENTS: MEDTRONIC is among the world's largest medical technology, services, fy2016 TOTAL SALES AND BUSINESS DIVISIONS. and solutions companies alleviating pain, restoring health, and extending life for millions of people around the world. Founded more than 60 years ago, today we serve hospitals, physicians, clinicians, and Total net sales $ billion patients in approximately 160 countries. Our therapies improve the lives of two people every second. CARDIAC AND MINIMALLY INVASIVE.