Omar Ishrak is chairman and CEO of Minneapolis-based devicemaker Medtronic. The company surprised market analysts in June in announcing plans to purchase Ireland-based surgical supplier Covidien for $42.9 billion. Under the deal, Medtronic will move its headquarters to Dublin, joining a wave of companies shifting their head offices to countries with lower corporate tax rates, which has sparked anger in Washington. Ishrak joined Medtronic in 2011 from GE Healthcare Systems, where he served as CEO. Modern Healthcare reporter Jaimy Lee recently spoke with Ishrak about Medtronic's acquisition strategy, how it's working with hospital purchasers and why the Covidien deal makes sense for Medtronic. This is an edited transcript.
Modern Healthcare: Why did you buy Covidien, which offers a very different product portfolio than Medtronic's?
Omar Ishrak: The product portfolio is very complementary. And the philosophies of the two companies are very similar. We're looking toward accelerating our growth strategies, which are around innovation and therapy, globalization and economic value. We find that Covidien's portfolio enables us to accelerate our growth in all of these areas. In addition, the long-term sustainability and the consistency of our financial expectations are further bolstered by the addition.
MH: How do the two companies fit in the U.S. market?
Ishrak: One of the aspects of change in the U.S. driven by the Affordable Care Act is value-based healthcare. Medtronic is a strong supporter of this transition. The value proposition of Covidien's technologies is they primarily deliver hospital efficiency while Medtronic's chronic disease therapies deliver value in post-acute settings. When these two are combined, we've become an attractive partner and a supplier because we can deliver value both within and outside the hospital.