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spk00: Good morning. I'm Ryan Weisfenning, Vice President and Head of Medtronic Investor Relations. I appreciate that you're joining us today for our fiscal 2024 first quarter video earnings webcast. We're broadcasting to you today from our operational headquarters here in Minnesota, where summer's in full force. 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 first quarter, which ended on July 28th, 2023, and 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 first quarter revenue in the current and prior year reported as other, which stems from prior business separations. References to sequential revenue changes compared to the fourth 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 second calendar quarter of 2023 compared to the second calendar quarter of 2022, 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.
spk01: Hello, everyone, and thank you for joining us today. We are pleased with the strong start of our fiscal year. We executed and delivered another quarter of mid-single-digit organic revenue growth. Our solid results were broad-based, with each of our four segments delivering 6% growth, driven by execution, innovation, and much-improved underlying fundamentals in our markets and supply chain. We also continue to make great strides on our comprehensive transformation. which is designed to get at the root of what has held back our growth. We're executing large-scale functional improvements to global operations, supply chain, and quality. And we're also decisively allocating capital, particularly to our programs and fast secular growth markets, as well as focusing our R&D investments on technology megatrends like robotics and artificial intelligence that will drive growth in our industry over the next decade. And at the same time, we remain focused on our ongoing portfolio management efforts. And taken together, we expect this continued focus on executing our transformation will ensure durable top and bottom line growth and create value for our shareholders. So let's turn now to the details of our Q1 results. We had another strong quarter of growth from our largest businesses, cranial and spinal, surgical, and cardiac rhythm. These businesses have durable, established leadership positions. And combined, they made up just under half of our revenue and grew 6% organic. Starting with cranial and spinal technologies, we had another great quarter, growing 6% globally and 8% in the U.S., driven by our market-leading ABLE ecosystem. We're seeing growth in both neurosurgery capital equipment and the associated pull-through of our best-in-class spinal implants and biologics as surgeons continue to adopt ABLE. Neurosurgery grew 5%, including double-digit growth in Missouri robotics and high single-digit growth in stealth station navigation. And spine and biologics grew 7% globally and 9% in the U.S. These results demonstrate our successful strategy of offering surgeons a differentiated and innovative ecosystem, including our AI-enabled surgical planning platform, and patient-specific customized implants, along with imaging, navigation, and robotic technologies. Now, moving to surgical, we grew 7%. Supply continued to improve, and this drove high single-digit growth in advanced surgical technologies. And we had particular strength in advanced energy as we continued the rollout of our Ligasure XP and Cordless Sonocision 7. Cardiac rhythm grew 5% with mid-single-digit growth in defibrillation solutions, diagnostics, and cardiac pacing. And now within pacing, we had strong mid-teens growth in our Micra leadless pacemaker franchise. And we launched our next-generation Micra devices, AV2 and VR2, in the U.S. These tiny 0.8cc devices have a battery life of 16 and 17 years respectively, 40% longer than our previous generation, and well beyond average battery life of competing products. We're also seeing EPs rapidly adopt conduction system pacing as an alternative to traditional single or dual chamber pacing. Our 3830 lead is the only one approved for conduction system pacing in the U.S., and it grew 45% in the quarter. Looking ahead, we're preparing to launch the Aurora EV ICD later this year. Aurora is a game changer for the ICD space. It delivers the benefits of a traditional ICD, including the same size, longevity, and pacing features, but without leads in the heart or veins. Turning to our synergistic businesses, there were several notable performances this quarter. Cardiac surgery grew 8% again this quarter, with strength and perfusion and cannula. Our aortic and ENT businesses both grew double digits, driven in part by improved product availability. Peripheral vascular grew mid-single digits, with low double-digit growth in drug-coated balloons and high single-digit growth in superficial vein therapy. Neuromodulation grew mid-single digits in both pain stim and brain modulation, driven by new implants of Intellis with DTM and Percept PC with BrainSense. And just last week, we received CE Mark approval for our next-generation spinal cord stimulator, Inceptive. which will be available in Europe in the coming months. Inceptive incorporates closed-loop therapy with eCAPS, the result of decades of Medtronic R&D to unlock the ability to listen and respond to signals along the spinal cord. Both our largest and synergistic businesses had really strong quarters. And our businesses that compete in high secular growth medtech markets, they did as well. All combined, these businesses made up 20% of our revenue and grew in the high single digits in Q1. We continue to disproportionately invest in these businesses, and we expect them to become a larger part of our revenue mix and be large contributors to our durable growth in the future. Starting with structural heart, transcatheter valves grew 11% globally, including 12% growth in the U.S. and 21% growth in Japan. We continue to see improvements in the TAVR space and adoption of our differentiated EvoluteFX valve. EvoluteFX combines enhanced and predictable valve deployment with industry-leading durability. And next Monday, we're looking forward to the presentation of the Notion 10-year data at ESC, which will look at the durability of the core valve and evolute valves compared to surgery over a decade. In neurovascular, we grew mid-single digits when you exclude China, where the market is subject to volume-based procurement. Global growth was fueled by continued strength and flow diversion. We're seeing strong adoption of our shield technology for treating aneurysms, which is available on our Pipeline Flex and Pipeline Vantage flow diverters. And cardiac ablation solutions grew 5%. And as you know, pulse field ablation has become one of the most anticipated technologies in medtech. And we will be leading the way in bringing PFA catheters to market for both focal and single shot segments. We're continuing the limited market release in Europe for our FARA mapping and ablation system, including our Sphere 9 focal catheter. Sphere 9 can perform both PFA and RF ablation and delivers high-density mapping, all from the same catheter. Turning to our single-shot PFA catheter, Pulse Select, we filed for approval with US FDA and expect to be one of the first companies with a PFA catheter in the U.S. market. With our PFA catheters and the Afera MAP-NAV system, combined with our leading Arctic Front CROW solution and differentiated AccuCross transeptal access system, we're poised to become a more meaningful player in the fast-growing $8 billion EP ablation space. In robotic surgical technologies, we increased our installed base as we continue the international rollout of our differentiated Hugo robotic system. And we've activated new sites in our Expand Euro-US Pivotal trial, which continues to progress the plan. We expect Hugo to be a meaningful growth driver for us in the years ahead, given its differentiated value proposition, our leading position in minimally invasive surgery, and the low penetration of robotic surgery around the world. And in diabetes, we had a good quarter as we continue to see very strong demand for the MiniMed 780G AID system in markets around the world. 780G is a true second-generation AID system and is the only one with five-minute adjustments and auto corrections and meal detection technology. We're getting great feedback that users are feeling a difference within one to two days. And our real-world evidence indicates that 90% of users are achieving or exceeding their glycemic targets when using our recommended settings, as well as getting burden reduction in their diabetes management. And this differentiated value proposition is showing up in our results. Non-U.S. developed markets grew 18%, our highest growth in four years, driven by both 780G adoption and increased CGM attachment rates. And in the U.S., we're seeing great results and momentum from the 780G launch. First, the launch drove low 30s growth in our U.S. durable pump sales. Second, we're seeing our prescriber base rapidly expand. Since we last talked to you at ADA in late June, we've had a 30% increase in
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