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spk26: So in 2015, I started having pain in my low back and the pain would go down my legs. And then it turned into numbness and tingling in my lower legs and feet. And we came to realize that part of the issue was diabetic peripheral neuropathy. My name is Farrah Stewart-Tarver, and I live in Spring, Texas, a suburb of Houston, with my husband, kids, and I am a nurse by trade, a pediatric nurse. So the pain got to be where I would say it was a 10 of 10. I stopped working at several points. I was home in bed most of the time, sitting on a heating pad, pretty much feeling depressed because I felt like I worked so hard for my career. there were things with my children that I was not able to do I went to see numerous providers I've done physical therapy taking medication I've had steroid injections nerve blocks you know they really felt like they couldn't figure out what to do to help So they said, well, maybe you should see Dr. Patel. She's an interventional neurologist. You know, maybe if you see her, there's something that she can do to help you.
spk27: So what I told her is that, you know, Farrah, since you have optimized your oral medications, you've done your physical therapy, you've tried the creams, and you're still in a good amount of chronic pain here, and you're having this painful diabetic peripheral neuropathy, why don't we take the next step for spinal cord stimulation? So we took her to the surgery center. We did a spinal cord stimulator trial. She had a successful trial. which is great because it's like test driving a surgery without committing to the surgery. After the trial, Farah did elect to undergo that surgery with me. So within a week or two, she was back to doing her normal walking, up and down stairs, groceries, all of those things.
spk26: I can go on walks. I mean, that in itself is a big deal because I hadn't been able to get up and go to the park and go for a walk. So I can do that with my daughter now and just do different things with my kids that I had been unable to do for years. We love to travel. We try to travel frequently. I had to stop doing that for a while unless it was absolutely necessary. And now I've been able to go to, I've gone to Vegas twice since I've had the simulator. We went to Hawaii, which was an eight hour flight. So my outlook improved dramatically on the future because now in my head, I'm thinking to myself, well, maybe I won't have to be in a wheelchair in 10 years when I'm in my early 50s.
spk27: For me to be able to see someone like Farrah who came to me almost really depressed, not knowing what her future would hold, reach a point of her life where she's so happy, so active and really hopeful about the future. This is why I do what I do.
spk12: We want the employees at Medtronic to reflect the communities that we serve. And the partnership with TMCF with the HBCUs allows us to have a diverse pipeline. One of the goals that we have is to create some equity in our hiring practices. So this partnership allows us to bring in diverse interns with the goal to convert them to full-time hires.
spk25: One of the highlights for me was meeting a lot of people that are relatable within the company and to see so many people that look like me that have the common goals that we're all striving to reach and being able to connect with them personally and they're here to help. That just makes me feel really good.
spk01: We are the innovation. We are the future. So this is, you know, extremely welcoming for us. And this is just sistering, brothering us into what is our future. Thank you. Thank you.
spk22: We know from human medicine that these devices can detect heart disease signs and symptoms earlier, which in turn allows us to provide better veterinary care.
spk03: This is the first time we've put recorders into bonobos. Bonobos are the least known species of great ape and they're only housed at eight institutions in the United States with a population of less than 100.
spk28: All of this information will be submitted to the Great Ape Crop Project and automatically downloaded to them so they can real-time evaluate if there are any concerns with the health of our animals.
spk26: So in 2015, I started having pain in my low back and the pain would go down my legs and then it turned into numbness and tingling in my lower legs and feet. And we came to realize that part of the issue was diabetic peripheral neuropathy. My name is Farrah Stewart-Tarver, and I live in Spring, Texas, a suburb of Houston with my husband, kids, and I am a nurse by trade, a pediatric nurse. So the pain got to be where I would say It was a 10 of 10. I stopped working at several points. I was home in bed most of the time, sitting on a heating pad, pretty much feeling depressed because I felt like I worked so hard for my career. And there were things with my children that I was not able to do. I went to see numerous providers. I've done physical therapy, taken medication. I've had steroid injections, nerve blocks. You know, they really felt like they couldn't figure out what to do to help. So they said, well, maybe you should see Dr. Patel. She's an interventional neurologist. You know, maybe if you see her, there's something that she can do to help you.
spk27: So what I told her is that, you know, Farrah, since you have optimized your oral medications, you've done your physical therapy, you've tried the creams, and you're still in a good amount of chronic pain here, and you're having this painful diabetic peripheral neuropathy, why don't we take the next step for spinal cord stimulation? So we took her to the surgery center. We did a spinal cord stimulator trial. She had a successful trial. which is great because it's like test driving a surgery without committing to the surgery. After the trial, Farah did elect to undergo that surgery with me. So within a week or two, she was back to doing her normal walking, up and down stairs, groceries, all of those things.
spk26: I can go on walks. I mean, that in itself is a big deal because I hadn't been able to get up and go to the park and go for a walk. So I can do that with my daughter now and just do different things with my kids that I had been unable to do for years. We love to travel. We try to travel frequently. I had to stop doing that for a while unless it was absolutely necessary. And now I've been able to go to, I've gone to Vegas twice since I've had the simulator. We went to Hawaii, which was an eight hour flight. So my outlook improved dramatically on the future because now in my head, I'm thinking to myself, well, maybe I won't have to be in a wheelchair in 10 years when I'm in my early 50s.
spk27: For me to be able to see someone like Farrah who came to me almost really depressed, not knowing what her future would hold, reach a point of her life where she's so happy, so active and really hopeful about the future. This is why I do what I do.
spk12: We want the employees at Medtronic to reflect the communities that we serve. And the partnership with TMCF with the HBCUs allows us to have a diverse pipeline. One of the goals that we have is to create some equity in our hiring practices. So this partnership allows us to bring in diverse interns with the goal to convert them to full-time hires.
spk25: One of the highlights for me was meeting a lot of people that are relatable within the company and to see so many people that look like me that have the common goals that we're all striving to reach and being able to connect with them personally and they're here to help. That just makes me feel really good.
spk01: We are the innovation. We are the future. So this is extremely welcoming for us and this is just sistering, brothering us into what is our future. Thank you.
spk17: Good morning. I'm Ryan Weiss-Fenning, Vice President and Head of Medtronic Investor Relations. Welcome to Minnesota, where signs of spring are in the air. I appreciate that you're joining us today for Medtronic's fiscal 2023 third quarter earnings video webcast. Before we go inside to hear our prepared remarks, I'll share a few details about today's webcast. Joining me are Jeff Martha, Medtronic Chairman and Chief Executive Officer, and Karen Parkhill, Medtronic Chief Financial Officer. Jeff and Karen will provide comments on the results of our third quarter, which ended on January 27th, 2023, as well as our outlook for the remainder of the fiscal year. After our prepared remarks, the executive VPs from each of our four segments will join us and we'll take questions from the sell-side analysts that cover the company. Today's program should last about an hour. Earlier this morning, we issued a press release containing our financial statements and divisional and geographic revenue summaries. We also posted an earnings presentation that provides additional details on our performance. The presentation can be accessed in our earnings press release or on our website at investorrelations.medtronic.com. During today's program, many of the statements we make may be considered forward-looking statements and actual results may differ materially from those projected in any forward-looking statement. Additional information concerning factors that could cause actual results to differ is contained in our periodic reports and other filings that we make with the SEC and we do not undertake to update any forward-looking statement. Unless we say otherwise, all comparisons are on a year over year basis and revenue comparisons are made on an organic basis, which excludes the impact of foreign currency and revenue from our Q1 acquisition of Intersect E&T. References to sequential revenue changes compared to the second quarter of fiscal 23 and are made on an as reported basis. and all references to share gains or losses refer to revenue share in the fourth calendar quarter of 2022 compared to the fourth calendar quarter of 2021, unless otherwise stated. Reconciliations of all non-GAAP financial measures can be found in our earnings press release or on our website at investorrelations.medtronic.com. And finally, our EPS guidance does not include any charges or gains that would be reported as non-GAAP adjustments to earnings during the fiscal year. With that, let's head into the studio and hear about the quarter.
spk08: Hello everyone and thank you for joining us today. We reported our Q3 results this morning and we executed to deliver a top and a bottom line that were ahead of our guidance and street expectations. We are urgently forging the path to durable growth and there are many proof points of our progress in these results. our cardiovascular and our neuroscience portfolios had strong, high single-digit organic growth as we launched new products and demonstrated continued strength in our established, market-leading cardiac rhythm management and spine franchises. And at the same time, some of the recent revenue headwinds that have held back our growth are subsiding, including product availability in businesses like Surgical Innovations, Cardiac Diagnostics, Aortic, and ENT. the aggressive transformation at Medtronic is advancing. We're focused on reducing complexity, enhancing our culture, improving capital allocation and portfolio management, and upgrading our global manufacturing operations and supply chain capabilities. At the same time, we're progressing on our plans for significant cost reductions. These are aimed at partially mitigating the continued impacts from macro conditions such as inflation and effects on our profitability and cash flow. These cost reductions also create room on our P&L so that we can increase our growth investments. And I'm very encouraged by the rebound in our revenue growth, despite procedure volumes remaining a little softer in a few markets and volume-based procurement in China. We are confident in delivering durable revenue growth over the coming quarters as recent revenue headwinds continue to dissipate and we execute across our businesses. So let's take a closer look at our Q3 results. As I highlighted at an investor conference last month, we're thinking about our portfolio of businesses in three groups. Highest growth, synergistic, and established market leaders. So I'll start with our established market leaders, a group of our largest businesses that make up about half of our revenue. Both our cardiac rhythm and spine businesses had really good quarters, growing 8% and 5% respectively. In CRM, we continue to see strong market adoption of our micro-leadless pacemakers, which grew 14%, and our defibrillation solutions business grew 7% as replacement headwinds are moderating. And just last week, we received CE Mark for our Aurora Extravascular ICD. In cranial and spinal technologies, we delivered another strong quarter, with 6% growth in core spine, including 12% growth in the United States and 8% growth in neurosurgery. This is driven by our market-leading ecosystem of able, enabling technology and the associated pull-through of our best-in-class spinal implants. From our AI-enabled surgical planning platform to our patient-specific and differentiated spine implants to our imaging, our navigation, and robotic technologies, we're differentiating ourselves with spine surgeons around the world. Turning to our surgical innovations business, SI grew sequentially as we made solid progress recapturing the share that we lost due to supply challenges over the last three quarters. Year over year, SI declined as a result of expected stapling VBP tenders in China, but excluding China sales, SI grew 5% in Q3. Look, surgeons around the world prefer our advanced surgical products, and we expect the momentum we're seeing in SI to continue. In particular, in our leading advanced energy franchise, we're seeing strong adoption of our recently launched cordless sauna-cision 7, and we're preparing to launch our recently approved Ligasure XP. So we're on the right path with our established market leader businesses. And at the same time, we're advancing our position in high, secular growth medtech markets. These businesses are contributing about 20% of our revenue today and collectively growing above our company average. We're investing disproportionately in these businesses and expect them to become an even bigger part of our growth over time. So starting with Structural Heart, while the TAVR market continued to be impacted by healthcare staffing challenges and COVID in Japan, we drove 11% growth in Q3, including 12% growth in the United States. We're seeing great physician reception for our EvolutFX system, which just completed its first full quarter of launch in the U.S. EvolutFX combines industry-leading durability with enhanced and predictable valve deployment. And in addition, data was presented during the quarter at PCR London Valves, showing EvolutFX's commissure alignment has improved significantly, which is important for coronary access and valve hemodynamics. Now looking ahead, we will continue to bring EvolutFX around the world, and we are currently seeking approval in the Japanese and European markets. In cardiac ablation solutions, we grew 3% globally, as provincial China VVP tenders weighed on our results. Outside of China, CAS grew in the high single digits, including low double-digit growth in the United States on the continued strong adoption of our leading Arctic Front cryoablation technology. We're also advancing what we believe will become the leading pulse field ablation portfolio. And in two weeks, highly anticipated data for our pulsed AF pivotal trial will be released in the late breaker session at ACC. The trial is evaluating our pulse select PFA catheter in both paroxysmal and persistent patients. And this will be the first results from an IDE trial in the PFA space. And we're on track to be one of the first companies with a PFA catheter in the U.S. market. We also continue to make progress on bringing our Afera mapping and navigation platform and Sphere 9 catheter to the market as we completed enrollment in our pivotal trial during the quarter. Sphere 9 can perform high density mapping and deliver either PFA or RF energy all from the same catheter. And given Sphere 9 is a focal point PFA catheter, it is highly complementary to our Pulse Select anatomical PFA catheter. Finally, our CAST business just launched the AccuCross Transceptile Access System with its zero exchange workflow and the only system approved for both mechanical and RF crossings. So when you think about our Arctic Front Cryo Solution, our Diamond Temp RF catheter, our PFA catheters, our Left Heart Access Solutions, and our Afera Map Nav System, we're assembling a leading ecosystem of technologies to meaningfully increase our participation in the fast-growth 8 billion EP ablation space. In surgical robotics, we're making good progress as the second major player in this exciting space. We continue to see positive sales momentum with the rollout of our differentiated Hugo robotic system in many international markets. And we started our US IDE trial for our urology indication during the quarter. Given less than 5% of surgical procedures globally are done robotically, we expect our surgical robotics business to become a meaningful growth driver for Medtronic. In neurovascular, we grew 9% and would have grown a couple of points more if not for the China VBP. We continue to see very strong growth in several categories, including flow diversion, aspiration, and stent retrievers. Given stroke is the number two cause of death globally, and there is still very low therapy penetration, we see a long runway for high growth in this market that is approaching 4 billion. And in diabetes, we continue to see strong international growth offset by declines in the U.S. where we lack our latest products. We remain focused on resolving our FDA warning letter and are ready for reinspection. We also remain in active review with the FDA on our submission of the MiniMed 780G system with the Guardian Force sensor. Outside the U.S., our diabetes business grew 18% on continued strong sales momentum of 780G and Guardian 4. The 780G is now launched in over 90 countries, up from 60 last quarter. We're seeing strong CGM attachment rates, which drove CGM growth of 34% outside the U.S. We continue to invest heavily in assembling our ecosystem of durable pumps, smart pens, patch pumps, sensors, algorithms, and customer service with multiple programs under development, all with the intent of restoring strong growth of our important diabetes franchise over the coming years. And in our synergistic businesses, we also had strong performances across several businesses. We grew double digits in cardiac diagnostics as we ramped up production of LINK2. In neuromodulation, we grew 12% in pain stem, and the market continues to recover. And our GI business grew high single digits on strong adoption of GI Genius, which uses artificial intelligence to help physicians detect polyps during colonoscopies. With that, I'll turn it over to Karen to discuss our third quarter financial performance and our guidance. Karen?
spk04: Thank you, Jeff. Our third quarter organic revenue increased 4.1%, exceeding our guidance and representing a significant acceleration from our first half results as we begin to put the acute supply chain challenges behind us. Our non-GAAP EPS of $1.30 landed above our guidance by 3 cents on higher revenue growth and increased interest income. and $0.06 if we take into account a larger currency headwind than expected at the beginning of the quarter. Looking at our revenue from a geographic perspective, U.S. grew 2%, and our non-U.S. developed markets increased 6%, even with a 3% decline in Japan as COVID affected procedure volumes. Excluding Japan, non-U.S. developed markets increased 8%, Emerging markets grew 5%, impacted by an 8% decline in China from COVID and VBP provincial tenders in stapling, cardiac ablation, and neurovascular. Outside of China, emerging markets actually grew to 17%. I would also note that China represented 110 basis point headwind on our total company growth. which highlights the strength of the recovery in our other markets. VBP has affected us more than many of our competitors, given the size and breadth of our business in China. However, we do expect that we are now through the majority of the impact. Our adjusted gross margin declined in the quarter as we faced impacts from inflation and currency, with currency driving about a third of the change. These declines were expected, and a result of inflationary pressures that occurred two to three quarters ago. Our incurred manufacturing variances have continued to be significant in the past few quarters. And as they roll off our balance sheet onto our P&L, we expect continued gross margin pressure in Q4 and next year. The gross margin impact translated into a decline in our adjusted operating margin as well, although this was partially muted by expense control and the benefit of our currency hedging program. Our balance sheet remains strong, and we continue to execute our enhanced capital allocation and portfolio management work. balancing future growth investments with returning a minimum of 50% of our free cash flow to shareholders, primarily in the form of our dividend. We see strong opportunities for organic growth investments internally, leading us to target R&D growth at or above revenue growth. And we continue to focus on supplementing our organic investments with tuck-in acquisitions. We've also announced this fiscal year three businesses we intend to separate that account for about 8% of our revenue, and we're making progress towards completing those transactions. We expect to close our renal care joint venture with DaVita here in the fourth quarter and continue to progress with the separation of our patient monitoring and respiratory interventions businesses, which we expect to occur sometime in the second half of next fiscal year. We have also closed on acquisitions that will contribute to our growth in the years ahead, including Afera, which expands our presence in cardiac ablation, and Intersect ENT, which adds unique sinus implants to our ENT portfolio. We have driven these moves to not only focus and streamline our portfolio, but also to improve our weighted average market growth rate over time. Now, turning to our guidance. Given our top and bottom line beat in the third quarter, we are raising our full year revenue growth and EPS outlook. On the top line, we expect our fourth quarter organic revenue growth to be in the range of 4.5% to 5%, which is unchanged from what was implied by our second half guidance that I gave last quarter. I would note that our organic growth guidance excludes the impact of currency and revenue from our Intersect ENT acquisition. and it also now excludes revenue from our renal care solutions business, as we expect the separation to occur during the fourth quarter. If recent exchange rates hold, foreign currency would have a negative impact on our fourth quarter revenue of $165 to $215 million. Taking into account currency, intersect ENT revenue, and the partial quarter of renal care solutions revenue, our guidance would imply reported revenue in the range of $8.2 to $8.3 billion. We are also maintaining the fourth quarter revenue growth segment expectations that were implied by the back half guidance I gave last quarter. We continue to expect cardiovascular to be up 5.5 to 6%. medical-surgical to grow 2.5% to 3%, neuroscience to increase 6.5% to 7%, and diabetes to decline in the low single digits, all on an organic basis. On the bottom line, we continue to drive significant expense reductions to partially offset the impact of inflation and foreign currency. Given our third quarter 3-cent beat, we raise the lower end of our fiscal 23 non-GAAP diluted EPS guidance by 3 cents to the new range of 528 to 530, including an unfavorable currency impact of approximately 21 cents at recent rates. For the fourth quarter, we expect non-GAAP diluted EPS to be in the range of $1.55 to $1.57. At recent rates, FX is about a $0.09 headwind to fourth quarter EPS. While we won't give guidance for next fiscal year until our fourth quarter call in May, I did give some color on last quarter's call and will remind you of it today. We're encouraged by our recent progress on revenue growth. At the same time, current macro factors and our imperative to protect R&D investment are expected to create significant EPS headwinds next fiscal year. At recent rates, FX is a few hundred million dollar tailwind to fiscal 24 revenue and an approximate 27 cent headwind to EPS, which translates to a 5% headwind to EPS growth. While inflationary pressures are starting to moderate, we still see significant mid-single-digit inflationary impacts on our cost of goods sold, as wage and raw material price increases continue to roll off our balance sheet and into our P&L. We are working to partially mitigate these headwinds through significant cost reductions. But both inflation and currency, and to a lesser extent interest and tax, are all looking to be headwinds that reduce our earnings power in fiscal 24. I would summarize by saying that as we navigate this period of increased macro headwinds, we will be driving disciplined cost reduction. And we are committed to investing in our future growth drivers and our turnaround, as we firmly believe these important investments are necessary to drive durable revenue growth and long-term value creation. Before I hand it back to Jeff, I want to take a moment to thank the thousands of employees across Medtronic who delivered this quarter. You are executing with excellence and accountability, leveraging our scale with differentiating capabilities, and managing our resources to accelerate innovation. It is because of your efforts that we will create a durable growth company powered by our people as we continue our mission-driven work of alleviating pain, restoring health, and extending life. Back to you, Jeff.
spk08: Thank you, Karen. Now, before we open the lines for questions, I'll make a few closing remarks. Last quarter, I noted that our aggressive agenda to transform this company would take time. And that's still true. But I hope you'll take away that we are operating with a high sense of urgency, which you can see reflected in our results this quarter. We're reducing our complexity, enhancing our capabilities, and augmenting our management team with new leaders that bring an outside, diverse perspective. We're also exercising decisive capital allocation and portfolio management, devoting more capital to high growth opportunities and divesting non-core assets. There is an intense focus from me, our board, our management, and our employees to create a company with sustainable growth that you can count on. We're in attractive markets with growing populations globally that can benefit from our therapies. And we fully expect to deliver durable revenue growth and turn our scale into a long-term competitive advantage. And through this process, create tremendous value for our shareholders. Now let's move to Q&A. We're going to try to get as many analysts as possible, so we ask you limit yourself to just one question and only, if needed, a related follow-up. If you have additional questions, you can reach out to Ryan and the investor relations team after the call. With that, Brad, can you please give the instructions for asking a question?
spk18: For the sell-side analysts that would like to ask a question, please select the Participants button and click Raise Hand. If you're using the mobile app, press the More button and select Raise Hand. Your lines are currently on mute. When called upon, you will receive a request to unmute your line, which you must respond to before asking your question. Lastly, please be advised that this Q&A session is being recorded. Aaron and Ryan are joined by Q Dallara, EVP and President of the Diabetes Operating Unit, Sean Salmon, EVP and President of the Cardiovascular Portfolio, Brett Wall, EVP and President of the Neuroscience Portfolio, and Bob White, EVP and President of the Medical Surgical Portfolio. We'll pause for a few seconds to assemble the queue. We'll take the first question from Robbie Marcus at J.P. Morgan. Robbie, please go ahead.
spk07: Great. Congrats on a nice quarter and good morning. Maybe I could start, and I appreciate, Karen, you're not giving formal guidance, but I was hoping you could discuss where the OPEX cuts are coming from. It sounds like you're going to continue to invest in R&D. So what exactly are you cutting? How aggressively are you cutting? Will this prevent any of your competitiveness on the top line? And then I'll ask my follow-up as well. You know, the street has you at 3% EPS growth for next year. Do you think that's the right place for us to be based on your comments today? Thanks.
spk04: Yeah, thanks for your question, Robbie. You know, when we look at our higher cost environment that we're facing, like many companies you've seen recently, you know, we really have to evaluate our full cost structure and look for opportunities to reduce both spending and cost. So we're in the midst of that right now. We expect to drive a significant expense reduction to help partially offset the headwinds that we're facing and the investment that we believe we need to make. When we look at next fiscal year, I'll just give you a little bit more comments on it. I know there's a desire to give EPS guidance early, but we're still working through our plan. And there are more than a typical number of moving pieces. So that's why we're sticking to our normal timeline of giving guidance in Q4. But when we look at revenue, we grew 4.1% in Q3. And our guidance for Q4 implies sequential improvement. You know, we expect, we've said that we expect to drive greater revenue growth in 24 than we have in 23. And we've said that we're focused on delivering durable mid single digit revenue growth over the longer term. So we like the progress that we've made recently, both on, you know, our recent revenue growth performance and on, you know, important things in our pipeline to drive that revenue growth. And we always have said that we believe our WAMGR is in the mid single digit range. But as we move down the P&L, we've got this delayed inflationary impact on our gross margin that you've seen this quarter, and that will continue in the next quarter in FY24. We've seen inflation, the pressures on inflation beginning to improve, but as you know, that's got a delayed impact on our P&L. We also have currency interest and tax that are macro headwinds as well. And obviously, we've talked about the fact that we're going to continue to drive investments to drive the long-term growth and turnaround of this company. We're still in the process of seeing how all that nets out with our significant expense reduction. And obviously, we're going to give guidance on our fourth quarter call in May. But we have said that this will be a tougher year on the bottom line where our earnings power will be significantly reduced. Hope that helps.
spk16: Thanks, Robbie. Next question, please, Brad.
spk18: The next question comes from Larry Beagleson at Wells Fargo.
spk16: Larry, please go ahead.
spk10: Good morning. Thanks for taking the question and I'll echo my congratulations on a nice quarter here. I'd love to focus on China, which declined high single digits in Q3. Can you talk about, you know, what you're seeing there in terms of procedure volumes coming back? And the VBP headwind, you gave a lot of helpful color in the JP Morgan slides on the percent of the headwind in the first half and the percentage products impacted in fiscal 23 and fiscal 24. I guess what I'm trying to understand is, you know, overall China growth, fiscal 23 and fiscal 24, how much of a headwind will that continue to be with VBP? And, you know, how does it impact your ability to grow mid-single digits in fiscal 24? You know, I heard, Jeff, you talk about durable growth a lot this morning. Should we be thinking more like four to five next year because of the, you know, VBP headwinds? Thanks for taking the question.
spk08: Yeah, thanks. Thanks, Larry. Good to hear from you. And thanks for the question. Obviously, China's a big one for us. And yeah, I'll turn it over to Karen to answer some of the kind of the details on the headwinds, what we're seeing here recently.
spk04: Yeah, so just, you know, it's hard for us to parse out this quarter the impact of procedures and VBP. So we're not doing that. But we have said on VBP that we expect to be 50% done with the impacts of VBP by the end of this fiscal year. And as we move into next fiscal year, we still do have some VBP to come, but we expect to be 80% done by the end of next fiscal year. So this quarter we had a VBP impact from stapling and cardiac ablation and a little bit in coils from neurovascular. And as we look ahead into next fiscal year, we still do have some stapling, provincial tenders coming, and we've got a little bit more neurovascular and some in some cardio businesses, including cardiac rhythm, structural heart, aortic, peripheral vascular. But again, we're the majority finished by the end of this fiscal year, and we've got a little bit more to go next fiscal year.
spk08: I mean, just to clarify one thing, I mean, we think that 80% of our portfolio, as we've taken a step back, could be impacted by VVP. And we're 50% of the way through, and the remaining 30 will get an FY24. We don't think the remaining 20 will be impacted, certain things that are nuanced or under the radar screen. And what we're doing here is taking out some of our selling and marketing costs in China to offset the lower prices because this business is now more contracted through these VBPs so that the government is living up to the volume commitments from those VBPs at these lower prices. The discounts have gotten lower as they've gone on. I think the Chinese government has realized that MedTech's not exactly like pharma and we have more selling expenses than maybe pharma does because I think they modeled a lot of this off of pharma based on my discussions with Chinese government officials. So that's good. And we're basically, we'll reset our business and grow from there. And so FY24 will be another year where China's a bit of a headwind. We factor that into our guidance. We're taking out expenses and we'll rebase our business and grow from there. So a lot of thought, a lot of conversations with the Chinese government, a lot of thought here. Look, we're comfortable with our strategy.
spk18: Thank you, Larry. Next question, please, Brad. The next question comes from Vijay Kumar at Evercore ISI. Vijay, please go ahead.
spk05: Hey, guys. Congrats on the printing. Thanks for taking my question. I had a two-part, and I'll ask them up front. When you look at Q4, what is changing sequentially here, Karen? Because when I look at 3Q, you did 4% organic despite med-serve declining, continued diabetes headwinds and China headwinds. So in Q4, what are these three pieces that, what are you assuming for those three buckets? And I think you mentioned a renal impact in Q4. Could you specify that? And Jeff, for you, I understand you're not given fiscal 24 guidance, but when you think about the incremental changes, right, what are the positive challenge and negative headwinds? Is China still declining in fiscal 24? What happens to diabetes? Is that on the plus side or minus side? Um, and any other, you know.
spk04: Yeah, let me take the 1st, part of your question in terms of our queue for revenue ramp. When we gave our 2nd, half guidance last quarter, we expected sequential improvement from the 3rd quarter into the 4th quarter. And obviously, we're still expecting sequential improvement. That's going to be driven by continued consistency of supply, which we expect, which has already improved across the portfolio and will continue to improve. We also have some recent product launches like Evolute FX and Hugo, which will continue to ramp. You may recall we have our Harmony Valve, which will return to market as well. And then we've also got some launches into new markets like diabetic neuropathy that will begin to take some hold. And we've got reduced headwinds from things like Vents and VBP in the quarter. You asked specifically about Reno Venture with Davida in the fourth quarter. So we simply noted that when we guided so that we didn't force you all to change your models mid-quarter. We just put it in now. Hope that helps.
spk08: Just to finish off, just to highlight one thing in Karen's turnaround of our surgical innovations business that was really hit hard, as you guys know, by the supply chain issues. You saw a nice sequential improvement from Q2 to Q3, and you'll see another improvement from Q3 to Q4. Karen mentioned supply chain issues subsiding. A big area where you'll see that manifested is FY24. Well, let's start with some of the known risks. You highlighted China VVP, and Karen and I already talked about that a bit. That'll still be an issue as we go from the 50% of our portfolio that's done in FY23 to another 30% that gives us 80% by the end of FY24. So that'll be a headwind. I don't know that we've said whether China's growing or shrinking, but it's definitely not growing at our historic double digit again next year. And look, there's still work to be done on supply chain. I mean, the supply chain out there is still a bit fragile, although every quarter it's getting better for us. But as you look at some of the momentum, you know, like you've seen from us from Q1 to Q2, Q2 to Q3, and then implicit in our guidance is a nice acceleration from Q3 to Q4. So we're excited about the, happy with the momentum. And as we look into, you know, FY24, some of the specific businesses, you mentioned diabetes, you know, we're optimistic we're going to get, you know, 780G on the market here in the U.S. and that'll have a nice impact on diabetes plus continued performance in Europe. So that should be, assuming that happens, that should help accelerate some of the growth in diabetes. Surgical robotics is doing really well. And as we move into FY24, we'll have a bit more scale and a bit more impact on our numbers. Cardiac ablation solutions, I'm sure we'll get some questions on our mapping and navigation system. as well as our various PFA catheters, you know, you'll start to, we'll start to feel some impact, you know, from them, you know, and continued strength, you know, across the neuroscience portfolio, I think, you know, highlighted, you know, the CST, our cranial and spinal technologies business, as well as, you know, you'll see continued strength in ENT, we'll anniversary the intersect acquisition at some point that goes organic. So those are some of the things that we look at in FY24. But there's some, I think, broad supply chain recovery, especially in SI, and then a couple of highlights, like I mentioned, CAS, surgical robotics, diabetes in the U.S.
spk18: Thank you, Vijay. Next question, please, Brad. The next question comes from Joanne Wench at Citi. Joanne, please go ahead.
spk29: Thank you very much, and good morning, and nice sequential growth there. I have two questions. One is specific to the spine business. It was particularly strong this quarter, and I'm just a little bit curious about what you're seeing is driving that and how you think about it going forward. And then the other one is a little bit more esoteric. I heard the word urgent or urgently a couple of times throughout the early presentation. What does urgently forging mean? Two sort of milestones that we can look forward to. Thank you.
spk08: Well, thanks, Joanne, for the question. Maybe I'll start with the second one. You know, look, there is... you know, the word urgent, there's a lot of major change that we've got going on across the business. And I think it's important, you know, for people to understand the depth and breadth of those changes. And, and you know, I know there's the desire to see things move quicker and yes, we're, you know, in some ways encouraged and we're encouraged by the progress, but we'd like to see it go faster as well. But the, the, the speed of the, of our progress of, you know, getting the top line growth and adjusting our cost base to, you know, to reflect the new reality with inflation and FX, you know, on a company our size, more time than, than they take it. So they take some time, but the actions that we're taking are, you know, we are moving quickly on these. And I think, That's the idea here is we're moving quickly on a number of things, whether it be the changes, all the investments and changes to our supply chain to the divestitures that we're working on to the, the integration of these acquisitions, like a fair and. and are moving our cast business forward. There's just a lot going on. And I get, it's just important to understand that we're moving very quickly on these things and the, and the results are starting and we're encouraged by that. You're starting to see the results. When it comes to spine, look, this quarter was strong. Last quarter was strong, too. It was just offset by some of the last couple quarters, offset a little bit by the China VBP. But if you look underneath it, we've been quoting that U.S. implant growth rates that have been in the double digits. I mean, that's very, very strong and something especially for somebody with our level of market share by far, you know, the number one market share player to be growing like that. What's driving that is the enabling technology ecosystem. It's something we've been working on aggressively since 2015. You know, you've got the robot, you've got navigation, you've got interoperable imaging, you've got powered instruments. Now you've got this AI-based surgical planning system that basically allows it's, you know, we're winning over the hearts and minds of physicians as they see where we're going. And actually a real commitment to changing spine surgery with this arsenal of technology. And we've integrated it and it's not, it's starting to help the workflow and move faster and more efficient. All of this coming together, that's what's driving it. And at the same time, we've been able to invest in implants so that the implants are still, you know, the latest and greatest. And I think, you know, Brett Wall and Skip Kill and the team have done a really good job. I don't know, Brett, if you want to make any further comments on that.
spk15: Yeah, Jeff and Joanne, thanks for the question. This has been something we've been working on for a while. And the strategy is really coming together with this enabling technology that actually allows for better planning, better execution, better follow up and assuming and assuring that you actually get the result that you want in the procedure. That technology works. along with best-in-class implants and biologics, is providing this ecosystem that's terrific for the physician and actually institutions that want to use it. And actually the strategy is playing out like we've wanted it to do with the significant growth in the largest market, which is the U.S. And as Jeff mentioned, now we're on the second quarter of double-digit growth. both there in our core spine business in the U.S. And, you know, we like our strategy technology and how this is playing out for us.
spk16: Okay. Thanks, Joanne.
spk18: Next question, please, Brad. The next question comes from Matt Mixick at Barclays. Matt, please go ahead.
spk14: Hi, thanks so much for taking the question. I had two follow-ups, if I could, just quickly on diabetes and TAVR. So Jeff, your comments this morning, I don't know if it's just tone or my own impression, but it seemed like, you know, incrementally, perhaps more confident and committed to diabetes. And just, you know, I know where you're at with the morning letter, but maybe if you could you know, talk about whether, whether you're, we're incrementally more confident here than you were a few months ago. And, and maybe talk about what the reentry to that market looks like, assuming that you can get, assuming that you can get that, you know, the letter lifted and the product back to the market. And then just briefly on Taver, as you know, one of your major competitors in that market is, has talked a lot about staffing and trends in the U S just, Anything that you would add in terms of sequential improvements or changes in that market or whether you're continuing to see some of the staffing challenges that they've referred to but don't seem to be holding back your growth quite so significantly in the U.S.? Thanks.
spk08: Sure. Thanks for the questions, Matt. I'll start with the diabetes one. I'm not incrementally more committed because I've been committed since day one. I mean, there's no have not blink. on diabetes, so committed to the business. Yeah, is there more confidence? Yes, and that's because we're continuing to see the impact of our technology. When we have our full suite of technology outside the US, we're seeing strong growth, but it's not just the growth that's encouraging, it's the patient feedback, the clinical results that we're getting, time and range and other important metrics. from a clinical standpoint, but it's also the patient experience in terms of ease of use and things like that. And then on top of that, you know, we've got this pipeline of technology that we've, that's coming right behind it, you know, pipeline of sensors, we've submitted our Semplera sensor, you know, for approval, you know, and we've got more behind that. And and a lot of development programs that I have a view into. And then finally, the business is just executing better. And so all that together is giving me more confidence. I'll ask Q to make a comment. Q, if you want to add to that.
spk24: Yeah, I mean, as Jeff said, we continue to expand access for the 780G system and Guardian 4 sensor. It's in over 90 markets. And wherever we see 780G launch, we also see higher CGM attachment rates because physicians and patients recognize the value of automation. automated insulin delivery in driving outcomes. And we expect to see a similar trajectory when 780G is available in the U.S. market. And just to put a final point on what Jeff said about our next-generation products, we submitted our next-generation sensor, CGM, for CE Mark last year, and we have also done that on a standard basis to the FDA. And we continue to be very optimistic about the progress we're seeing in the market. The U.S. market needs new products. We all know that. But I think we're making forward movement on all aspects of the business.
spk08: Thanks, Q. And on the TAVR question, look, this is an area that we've been really focused on. Obviously, it's a market where the therapy has a huge impact on patient outcomes and And then financially for us, it's an important driver. And we've been really focused on this team and this new model, how they really focused on this team. And they've done a great job on a number of fronts in terms of training physicians and adding new reps, training new reps and adding them to field training physicians on the new techniques. But more recently here, launching uh you know our evoluta effects and the results we're getting there oh sean but i think the team has done a great job and we're starting to make up some some ground here uh with with the competition globally but in particular in the us and and sean uh maybe you can add some comments to this
spk19: Yeah, thanks, Jeff. We are seeing sort of mid-single-digit growth underlying for the U.S. market, and obviously we're moving faster than that at 12% growth because of the launch of FX, and I think also this recognition that our valve hemodynamics is really playing out for better durability of that valve over time, which is becoming more and more important. FX really levels the playing field on ease of use, which has been important, but also you can line the commissures up, which is great for coronary access. And as people are thinking about the lifetime of the valve, both durability and making sure those corners are easy to get back into matters a lot. And that combination has played out well for us. We do still see spotty procedure of most acutely this last quarter in Japan, as we said, there was a wave of COVID that impacted us. And also we're dependent on a particular vascular access sheath that was impacted by supply chain issues last quarter. That's been resolved. So the launch of FX in Japan, returning procedure volumes and no constraint from vascular sheath will help us to grow there. And of course, as Evolute FX rolls out around the world, we'll still perform well. You know, the fundamentals that market are still very, very strong. It's just all the. Multiple touch points to the health care system that are required to get a patient in for therapy and through that therapy. But we expect us to start to bathe and get better with time.
spk08: Yeah, I mean. Whether it be our structural heart business, or diabetes, and Joanne asked about spine. And she mentioned in the comment, what do you mean by urgent? What I like about the new operating model we have is these businesses, we've segmented them in the right way, where we have clarity, transparency, they're in markets. We're measuring them on, are you growing above? We have clarity on market growth. We're measuring them on, are you growing above or below the market? And comp is tied to that. So it creates this sense of urgency that we think is having an impact. It was kind of overwhelmed for a while by supply chain challenges, but as those mitigate, you're starting to see the impact of some of the changes we make.
spk14: Thanks again.
spk18: Thanks, Matt. Next question, please, Brett. The next question comes from Josh Jennings at Cowan & Company.
spk13: Josh, please go ahead. Good morning. Thanks for taking the questions. I WAS HOPING TO JUST ASK ABOUT THE JV, WE DON'T CARE JV AND THE PATIENT MONITORING AND RESPIRATORY SPIN, JUST HOW WE SHOULD BE THINKING ABOUT THE IMPACT TO, I GUESS, STAND ALONE MEDTRONIC EARNINGS IN 24 EITHER FROM EXECUTION OF THOSE TWO MOVES OR JUST ANY HEADWINDS IN TERMS OF THE EARNINGS POWER IN 24 DUE TO JUST THE INITIAL staging of getting to the finish line on both of those two moves?
spk04: Yeah, in terms of the impact on total Medtronic earnings power, you know, the separations are going to have minimal impact. So, and in terms of, you know, staging the moves so that, you know, we have minimal impact or disruption across the company, we have been very focused on that and have strong teams in place that are managing these separations really well. And we've purposely put those teams in place as part of our new operating model. You know, as we make these portfolio moves, we're focused on being best in class in how we do it.
spk13: Just a follow-up on the patient monitoring and respiratory spin. Is it possible that an unsolicited suitor could come into play and How should investors think about the kind of potential for a parallel path to open up where you're moving forward with the spin? But there could be potential suitors coming in to kick the tires on those two businesses. Thanks for taking the question.
spk04: Yeah, thanks, Josh. You know, we're focused on maximizing shareholder value with the separation. And, you know, we've announced the spin. We're moving forward with that. Should something come along that maximizes shareholder value, you know, we'll certainly listen to it.
spk16: Thanks, Josh.
spk18: Next question, please, Brad. The next question comes from Cecilia Furlong at Morgan Stanley. Cecilia, please go ahead.
spk02: Great. Good morning, and thank you for taking the questions. Just two-part question from me. First on Hugo and the Euro IDE in the U.S., if you could provide an update, just what you've seen early days in enrollment. And then separately, we've heard a lot about Italy impact. Just curious if you could frame how you're thinking about the potential impact to your business going forward. And thank you.
spk08: Thanks, Cecilia. Good to hear from you. On the first one, I'll let Bob White answer the question on the Hugo Urology IDE enrollment and overall progress, what we're seeing in the U.S., and then turn it over, Karen, for the question on Italy. So Bob?
spk09: Great. Thanks, Jeff. And Cecilia, thanks for the question. As you've noted, the trial enrollment is underway for Expand Euro. First patients have been enrolled and proceeding nicely on that. So we're pleased with our progress on that IDE specifically. And then just more broadly to Jeff's point, you know, last quarter we saw accelerated installations of Hugo entered new markets across EMEA. APAC and LATAM. And again, if you think about where we're at around the world with the geographic expansion and our CE mark allowing us to expand in the new markets. And then in CE markets, we've also added our general surgery indication on top of urology and gynecology. So now we cover about 80% of robotic procedures in those markets. Well, we've been pleased, and you asked a little bit about feedback. We're getting really good feedback. The system's been used now to successfully perform a range of urology, gynecological, general surgery procedures from kind of simple to complex. And we're seeing that Hugo is the flexible and versatile tool we designed it to be. So it's early innings in terms of, you know, again, this market's got tremendous growth opportunity. Only 5% of procedures are done early. globally that could be done robotically assisted. We remain very excited about the market and, you know, we're pleased with where we are today.
spk04: And Cecilia, on the Italy question, there is a law in Italy that requires companies that sell medical devices to make payments to the Italian government if those device expenditures exceed maximum ceilings. The law was put in place in 2015 and applies to expenditures from that year onward. You've heard from some of our other competitors on this. The law is obviously applicable to the whole industry, and we filed an appeal along with many other companies in our industry on this. In the third quarter, for the first time, actual claims were issued to Medtronic and our peers for the years 15 to 18. And so we did revise our existing accrual. We already had an accrual, and we did add to it in the third quarter. That accrual is a reduction of revenue. For us, it wasn't too significant, but we do have a reserve on our books.
spk18: Thanks, Cecilia. Let's take the next question, please, Brad. The next question comes from Shagan Singh, RBC. Shagan, please go ahead.
spk06: Great. Thank you for taking the question. Karen, one for you. Could you just elaborate on the components of the EPS impact on growth next year? You know, you called out inflation, FX, interest and taxes. You know, perhaps you can talk about how large the impact is this year and what the flow through could be next year. And then I have a follow up.
spk04: Yeah, thanks, Shagun. So obviously we've said we've got tons of moving pieces on next fiscal year, so we're not ready to give, you know, real guidance. And so to quantify the impact from EPS growth is difficult. But what I would say on currency, you know, we talked about the fact that that is a headwind. I mentioned that in the commentary. And just at recent rates, currency is about a 5% headwind to next fiscal year. So we did quantify that. We also said that inflation impacts are about a mid single digit impact for us next fiscal year. So those are two that we've quantified. In terms of interest and tax, those are more minor headwinds than inflation and currency. but still headwinds that we need to face. And then obviously we've got investment that we intend to make to drive the long-term growth of this company. And where we see, you know, important investments, we're going to make them. And we've said that we think that we're going to drive R&D growth, at least in line with revenue. And, you know, when we have important investments to make in some years that may grow even more than revenue. So hopefully that helps.
spk06: That's helpful. Thank you. And I was just wondering if you could talk a little bit about the Pulse AF data readout at ACC. You know, how meaningful do you think it could be? And just maybe broadly talk about the PFA opportunity and how your platform is differentiated. Thank you so much.
spk08: Sure. Yeah, thanks for the question. We're definitely excited about the data that's coming out of ACC and the PFA opportunity. You know, I think Sean's best position to answer your question, Sean.
spk19: Yeah, thanks, Shigun. So we have a trial coming out on the 6th, which will be the very first IDE trial done on the rigors of an FDA trial or a study in this field. So it's really the first data set. And it is two patient populations in the single trials, both paroxysmal patients as well as persistent patients. And the endpoints are a primary safety endpoint, primary efficacy endpoint. And, you know, the rigorous trial design here under the auspices of an IDE trial mean that you have very frequent monitoring of the patients and you get a true kind of look at the way this anatomical solution performs. I say anatomical solution because we have really two things in this bag of AF treatments. One is one where you isolate the pulmonary veins, and then the Afera system allows you to also do point-by-point ablation with a highly differentiated catheter. That system is an automatic mapping system that allows you to kind of map a blade and then validate what you've done. And we'll put all of our catheters onto that ecosystem over time, including this anatomical catheter, the diamond temp, as well as cryo catheters. So, you know, we'll have a full array of all energies, cryo. radiofrequency as well as pulsed field ablation to treat a myriad of arrhythmias that occur across the entire space. So it really does put us on with the newest technology early in the phase of that, highly differentiated on both the mapping system as well as the therapeutic catheter side. And there's a lot of excitement among physicians for what we're bringing to the field.
spk16: Thanks, Jagan. Brad, we've got time for two more questions, please. All right.
spk18: The next question comes from Travis Steed at B of A. Travis, please go ahead.
spk11: Hi, thanks for taking the question. Karen, I did want to ask on the Q4 margin step up. Q3 was a little bit light on margins from FX and currency. Just curious if there's anything other than improving revenue to drive the Q4 margin step up. And then I know you're not going to get much on FY24, but curious if you could kind of frame the opportunity and the cost side. I don't know if there's enough to offset the mid-single-digit inflation or partly offset that or more than offset. Just a little bit of color on the cost-saving side would be helpful. Thank you.
spk04: Yeah, thanks, Travis. So on Q4 margins, That will be revenue growth obviously helps. So we'll start there. But we also will be driving cost reduction starting, you know, starting last quarter and even more into the fourth quarter that will help as well. And then Q4 typically is our highest margin quarter. So, you know, we're focused on that step up and it's typical for us. On the cost opportunity for FY24, again, we're not going to size it right now, but we've said that we are focused on driving a significant cost reduction to help partially offset the impacts that we've got from the various headwinds and the investment that we need to make.
spk16: Great. Thank you. Thanks, Travis. And we'll take our final question, please, Brad.
spk18: Our final question comes from Rick Wise at Stiefel Nicholas. Rick, please go ahead.
spk20: Good morning. Thanks, Ryan. Maybe I'll just, in interest of time here, just focus back on one topic, Hugo. Jeff, it seems like you're seeing a good ramp in Europe. But maybe you could quickly update us on supply chain. Is that resolved, resolving, almost resolved? What's your thought about that process and your ability to meet the demand? Last quarter, you talked about backlog. Maybe you could give us more color there. And specifically, just a little more detailed color about supply. once Hugo's in place, the kind of adoption and maybe pull through of instrumentation you're seeing just to, so we have a real, a better sense of exactly where you are with Hugo. Thank you so much.
spk08: Yeah. Great to hear from you, Rick. Thanks for the question. I'll turn it over to Bob for some of the details there, but I'd say just on Hugo, you know, what the evolution of the, is the feedback that we're getting, right? I mean, we felt confident in the design. And as we got closer to launch, you know, I was spending more time with physicians that were involved with the design that, you know, they don't work for Medtronic, but they were involved and they were very bullish on it and happy with the way the product turned out. Now we're getting feedback from physicians that are, you know, that are converting, you know, from the competition or, you know, have both and they're high volume users and they have a high bar for robotic surgery. And that feedback's been great. really, really strong. And that is, you know, I think is very encouraging. And that word is spreading, you know, as I talk to U.S. physicians that don't have access to it yet because they're not part of the trial and they have a pretty detailed understanding of the robot and its features and its capabilities. And so we're getting, and so thus it's driving really strong adoption. I'll let Bob talk about any kind of constraints or supply chain and any other details on adoption now.
spk09: Yeah, thanks, Jeff. And Rick, thanks for the question. A couple of other points, I think, Rick, that would be helpful for you is, you know, we're now starting to fulfill repeat orders by customers, which is nice. So, customers have not just bought one, they're coming back to buy additional ones. And the other thing is we're seeing a mix, really, of both early robotic adopters and experienced accounts, which is nice because, you know, we built Hugo with a differentiated, but built with physicians' needs in mind. We're excited what we see there. And with respect to the supply chain, as it relates to Hugo, a good pickup that is behind us. So we had, I talked in previous quarters about hardening our supply chain and working through those manufacturing processes. That's all in the rear view mirror for us. And then as Jeff and Karen had mentioned more broadly for our surgical business, we've seen our supply chains improve dramatically through the year. And you see that in the sequential quarter-on-quarter growth in that business. So hopefully that's helpful. Thanks.
spk20: Encouraging to hear it.
spk08: Thank you. I think on the pull-through, for that pull-through to have an impact, it's going to take a little bit of time. It's a big surgical innovations business we have, you know. six billion dollars or so. But I will point to the spine business. And Joanne asked the question earlier, two quarters in a row of double digit implant growth in the U.S., which is 80 percent of the market. That is largely driven by pull through of a of an ecosystem of technology that's hard to match, that takes a lot of expertise, a lot of balance sheet and a lot of time. And we've spent a lot of time on this robot and we've invested a lot into it. And it's not just the robot. It is visualization. It is the digital platform. And we're confident that that ecosystem will be a differentiator for Medtronic and pull through instrumentation and be a durable growth driver for the company. And that's why we stuck with it. you know, for the last too many years to admit to to get it to this point. And we feel like we have something to build from.
spk20: Appreciate that, Jeff. Thank you.
spk16: Thank you, Rick. Jeff, please go ahead with your closing remarks.
spk08: All right. Well, thanks for the questions. Some great questions this morning. I really appreciate your support and continued interest in the company. And we hope you'll join us for our Q4 earnings broadcast, which we anticipate holding on Thursday, May 25th.
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