This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk20: Hello, everyone, and thank you for joining us today. Q2 was another good quarter for us as we executed and delivered mid-single-digit revenue growth. The underlying fundamentals of our business are strong, and our growth was broad-based across multiple businesses and geographies, with cardiovascular, neuroscience, and medical-surgical all growing mid-single digits and diabetes accelerating to high single-digit growth. Our new product launches are performing well and driving growth across many businesses. And we look ahead to the back half of our fiscal year. Those launches, combined with several recent regulatory approvals, give us confidence in our ability to continue delivering dependable growth. And at the same time, we're executing on our comprehensive transformation, including enhancing our global operations, quality, and supply chain. and we're decisively allocating capital into fast-growth medtech markets and fueling innovative technologies in areas like robotics, AI, and closed-loop systems that will drive our growth over the next decade. We're forging the path to durable growth as we execute on the actions needed to create long-term value for our shareholders. So now let's get into the details behind our Q2 results. We continue to look at our portfolio of businesses in three categories. Established market leader businesses, synergistic businesses, and highest growth businesses. Looking first at the established market leaders, we had very strong performances across cranial and spinal technologies, surgical, and cardiac rhythm management. Combined, they made up just under half of our revenue and grew 6% organic again this quarter. Starting with cranial and spinal technologies, continued adoption of our Able ecosystem is driving consistent above-market growth. In Q2, we grew 7%. Digitization is transforming the competitive landscape in spine, and we're leading the way with Able. With our global footprint of over 10,000 systems, over 10,000 systems. We're over four times greater than the nearest competitor. We are the first and only solution with integrated AI-based surgical planning with unit adaptive spine intelligence. Our Mazor robotic system is the first and only to offer bone cutting, a feature that was well received when we unveiled it at the North American Spine Society Conference in Los Angeles just last month. And we remain the clear leader in the intraoperative imaging and navigation space with our O-arm and stealth station technologies, both of which grew double digits in the quarter. As surgeons adopt ABLE and we continue to expand our sales teams and invest in future innovation, we expect to maintain our leadership and extend our share gains in spine. Now moving to surgical, we grew 6% here. There was broad-based strength across our surgical franchise. Hernia and electrosurgery both grew in the double digits on strong sales of our ProGrip and Dextile mesh and Valley Lab smoke evacuation systems. Advanced stapling and wound management both grew mid-single digits. Cardiac rhythm grew 4%. with high single-digit growth in cardiovascular diagnostics and cardiac pacing. In pacing, our Micra Leadless Pacemaker franchise grew 13%, driven by our U.S. launch of our next-generation Micra AV2 and VR2 devices. We're also seeing strong growth in conduction system pacing, an alternative to traditional single- or dual-chamber pacing. Our 3830 lead, the only approved lead for this novel form of pacing, grew strong double digits again this quarter. And late in the quarter, we received FDA approval for our Aurora EVICD system, a game changer for the single chamber ICD space. Now we're ramping up our training of implanting cardiologists on the Aurora technology. So Aurora delivers the benefits of a traditional ICD including similar size, longevity, and pacing features, but without the leads in the heart or veins. And these benefits can be realized with one device and only one implant procedure. And just to drive this point home on size, there's a big difference here versus the competitor's device. And I mean big. Here's an x-ray of an Aurora EVICD patient with the competitors right next to it just for comparison. So in addition to all the clinical benefits of our EVICD, you can see that it's meaningfully smaller and of course lighter than the competitors. And here's the model that we're giving our reps to explain the difference to customers. Now this is the size of the competitor's device. and we can actually pop out the Aurora to show how much smaller it actually is so so it's like a those nesting dolls except here I we just pop out we get start with big guy and we go right to the small guy so many pop this out so you see inside the model here's Aurora much smaller much lighter and speaking of weight We actually had to put a series of weights inside of here to get the bigger device to exactly replicate the weight of our competitors. So we're really excited about this as we've got a meaningfully better option for patients. Our advantages will not only displace the competitor's device, but will expand the population far beyond the existing savings. We think this can grow to become a billion-dollar-plus segment. Turning to our synergistic businesses, combined, they grew mid-single digits in Q2, and we had several standout performances. Aortic grew 9% on strong momentum in our Endurant AAA franchise following the 10-year real-world durability data presented at the Charring Cross Symposium earlier this year. Our coronary business grew 6% as we gained share in international markets on the continued rollout of our Onyx Frontier drug-eluting stent. Cardiac surgery grew 9%, driven by strength in perfusion and cannula, as well as the Nautilus ECMO oxygenator. Our endoscopy business grew 13%, driven by continued adoption of GI Genius. GI Genius uses the power of artificial intelligence to detect polyps in real time during a colonoscopy, integrating seamlessly into a GI doc's existing workflow. GI Genius results in a 50% reduction in missed polyps versus a standard colonoscopy, which plays an important role in the prevention of colon cancer. Turning to businesses in our highest growth markets, cardiac ablation solutions grew 6% on strong market procedural growth. Now, over the coming years, we expect this business to be a very meaningful growth driver for Medtronic. We are leading the way in bringing pulse field ablation catheters to market in both the focal and single shot segments.
spk12: Does saving over $350,000 in potential taxes sound good to you in retirement? I'm going to show you how quickly we can get that done. So this is the couple that came to see us, and they wanted to know, do I have enough? Can I retire? How do I pay less tax? After going through the situation, we hit the button. Turns out that they only have about a 65% probability of success. Our job is to get this number up way higher than 65% so we can get you retired. And most of the time that means overlaying a tax plan, creating a new income plan, changing how the investment portfolio is structured. And all of this together is what we call your retirement success plan. So when we look at the tax plan, if we continue down the conventional wisdom, it's an estimated $550,000 of taxes. But if we look at a recommended tax strategy to save that estimated $350,000, we get the taxes down to about 173 over the course of retirement. In addition to that, we have an estimated ending balance of about 2.5 versus 1.7. By implementing the tax plan, as well as adjusting when they plan on taking Social Security, as well as creating an actual income plan so they know when, where, and how much income to withdraw, as well as altering the portfolio to make sure the amount of risk in there and the expected growth is commensurate with their ability to stay in the markets. We do all that, and that's what we call the Retirement Success Plan. and that gets them up to a 99% probability of success. To get started with your very own customized retirement success plan, click the link in the description below to schedule a visit with one of our advisors that has a fiduciary responsibility to put your interests first.
spk11: Have you been keeping Rey's secret from the beginning? Did you know? No.
spk13: At the beginning, there was toying with like an Obi-Wan connection. And then it really went, there were like different versions.
spk15: And then it really went to that she was no one. I already know once the Daisy Ridley stands fine in this video, I'm just going to get a ton of hate in the comments and on Twitter. But let's just go for it. Let's talk about Daisy Ridley. She is a British actress who is best known for playing Rey Palpatine slash Skywalker. in the Disney Star Wars films, and I think it's pretty safe to say at this point that Rey has been a divisive character. Because sure, there are a lot of people who've seen Star Wars who look at the character Rey and say, yes, this is amazing, she's awesome and empowering, and it is so nice to finally have strong female representation in a Star Wars film, because heaven knows we've never had that before. But on the other hand, there are also a lot of Star Wars fans who look at Rey and see her as somewhat of an underdeveloped character who really was only included in the film for political reasons, and as a result of that, reads as a self-insert or Mary Sue. But regardless of what you think of the character Rey, I think it's important here to separate a character from the actor that is playing them, because we all know that ultimately Daisy Ridley is not the one who is writing the Star Wars scripts. And in the case of Daisy Ridley specifically, I will also say that even though her character has gotten a lot of hate in certain corners of the internet especially, I, for the most part, haven't really seen a lot of people hate Daisy Ridley herself. Because don't get me wrong, there are certain times online where both a character and the actor playing them will be getting a lot of flack. I'm specifically thinking here of Captain Marvel and Brie Larson. Or sometimes it's just the actor getting a lot of negativity. And here I'm thinking of Rachel Zegler. When it comes to Daisy Ridley, my impression at least is that even among people who don't like Rey, there's not a lot of bad things to be said about Daisy Ridley. Is she the most amazing actress? I mean, I wouldn't say so, but correct me if I'm wrong. It's not like there've been a lot of people calling Daisy Ridley insufferable or entitled or making fun of her acting abilities. And obviously it would never be fun just as an actor to have to play a role that is as divisive as Rey, even if people aren't coming after you specifically. But all I'm saying is that it could have been a lot worse for Daisy Ridley. And so with that in mind, and considering that the Star Wars movies she starred in did bring in billions and billions of dollars, you may have expected after that trilogy ended for Daisy Ridley to just be catapulted into A-list status. mean that kind of happened for jennifer lawrence after the hunger games films right maybe she's not the best example to use because at the end of the day i think the public kind of got tired of her and she ended up getting a lot of really negative backlash so the point i'm trying to make here is that the hunger game films really catapulted jennifer lawrence into hollywood and you would have expected or at least i did that a similar thing would have happened for daisy ridley after the star wars films ended but today what we're going to be talking about is how uh that hasn't really happened before we do that though i do want to say a big thank you to today's sponsor liver health formula in this modern age it is more important than ever to take care of your liver simply put your liver is a powerhouse with five key functions that greatly affect how you look and feel your liver health can affect things like weight management energy levels cholesterol hormone health and brain health but the problem is that right now there is a silent health epidemic If you were to add up all the residents of South Carolina, Indiana, Massachusetts, Arizona, Virginia, Florida, and Texas, you would still not get the 100 million Americans that have a sluggish fatty liver that makes people gain weight and experience chronic fatigue. And that's why I would try the product I recommend, Liver Health Formula, which is an all-natural supplement packed with clinically proven botanicals to help you recharge and protect your liver. And by going to my dedicated page, you will also get a free bottle of nano-powered omega-3. That is a total discount of 64%. You won't find this offer anywhere else, so order today at GetLiverHelp.com slash Lauren. Again, that is GetLiverHelp.com slash Lauren. Remember, a healthy liver is a happier you. Your liver is one of your major organs, so definitely don't sleep on taking the best care of it that you can. Now back to Daisy Ridley. You see, the article that actually inspired this video comes to us from Screen Rant with the headline, Daisy Ridley's new movie grosses less than $1 million, can't even crack box office top 10. Yeah, I mean, I'm guessing from that headline, a lot of you probably didn't even know that Daisy Ridley had a new film out in theaters right now, but she does. It's called The Marsh King's Daughter. It's a drama. And the premise is that her character, Helena, quote, must confront a buried past when her estranged father breaks out of prison. Two years before she was born, the Marsh King abducted her mother and she spent her childhood in captivity. Now convinced he will try to take her daughter, Helena sets out to outmaneuver the man who taught her everything she knows about surviving in the wilderness. Sounds like an interesting enough premise to me, and this is a film that was based on a novel, looks like a gritty psychological thriller. But for whatever reasons, which we will go into, it doesn't seem like this film is resonating with audiences. Which, hey, isn't a huge deal. Every actor, just like every person in general, has projects that work out and has some projects that don't work out. But what's interesting about Daisy Ridley's career specifically is that, sadly, it seems like this is just the latest flop in a string of unsuccessful movies for her. And before anyone calls me a hater, it's not just me who was, I would say, observed this pretty objective fact. In light of the Mars King's disappointing opening, even Screen Rant decided to put out this pretty cutting post. Daisy Ridley is returning to Star Wars for a new sequel, which isn't completely surprising given the lack of great success she's found so far. And now a lot of people Specifically, Daisy Ridley fans have gone after Screen Rant for this, admittedly, like, I mean, somewhat catty post. If you actually read the article that this post is promoting, I mean... They make some good points. Now, aside from Star Wars, Daisy Ridley, of course, has starred in some successful films, specifically Murder on the Orient Express. That made a ton of money. In addition to being critically well-received, you see, that film was released in 2017. And since her Star Wars trilogy ended, the actress's first blockbuster after her Star Wars success was Chaos Walking alongside Tom Holland. which easily should have been a success given the star power attached to the project, but the script ultimately let it down and left the story muddled and forgettable. Not to mention, the movie was also released during the pandemic and consequently failed to draw more than 13 million in the United States. From there, Ridley starred in Peter Rabbit 2, The Runaway, and The Marsh King's Daughter, both of which have fallen under the radar and didn't gather much attention upon their respective releases. That's not to say Ridley isn't good in these projects, but the actress has just been unable to find the right material to allow her to shine. It's for this reason that audiences weren't surprised when it was revealed that Ridley was returning to Star Wars for a new project. As a franchise that has been a proven success for the actress, it makes sense for a new Star Wars project to be Ridley's next move. Now, since this article was released, a lot of people have been calling the folks over at Screen Rant haters, which I really don't think is fair. I don't know if you all follow Screen Rant for like entertainment and pop culture news. But I mean, I don't even appreciate the term or the idea of the fandom menace, but even if you did, screen rant is not part of that. They're generally pretty favorable toward a lot of these big movies and big celebrities. I feel like even though Daisy Ridley herself probably wouldn't like to read this article, it's actually just... Pretty objective and true. Ridley's career hasn't exactly taken off or exploded post-Star Wars. I mean, other films she's been in include Sometimes I Think About Dying and The Inventor, which I've basically just found out about now from reading her Wikipedia page. And so that leads us to the question of why. Why has this happened to Daisy Ridley? And personally, I think a big part of things is really something that's not her fault at all. I'm talking about the fact that Disney's Star Wars trilogy just wasn't as beloved by audiences as they would like us to believe. I mean, yes, the film's made a ton of money. We're talking billions of dollars. But honestly, now that that trilogy is done, what has been the lasting cultural impact on the zeitgeist that films like Rise of Skywalker have left? I mean, really, not much. Really, compare the cultural impact of Disney's Star Wars trilogy to something like, I'm gonna compare it again, to the Hunger Games franchise. The Hunger Games franchise was everywhere. There were memes about it. It basically kicked off an entire obsession with YA dystopia that lasted years and spawned other successful franchises. Did Disney's Star Wars trilogy do anything even remotely comparable? no and so it's really not surprising that if people have largely forgotten about that franchise then they would have also largely forgotten about the actors who starred in that franchise again i want to stress here none of that is daisy ridley's fault even if you want to say well she wasn't super memorable in the role of ray i mean you've seen what the script was could you have done better i mean I mean, it just is what it is, right? She's an actress, not a magician. That then brings us to something that she does have more control over and something that I think she honestly could improve upon, and that's choosing her roles. Obviously, if you're an actor, I know that a lot of people who star in these big franchises, once those franchises are over, they basically try their hardest to essentially take roles that are the exact opposite of that franchise because they don't want to end up pigeonholed or typecast into one specific role. And so if you're hoping for career longevity, it can make sense to, hey, if you've just starred in all these action films, do an about phase and then maybe go for something darker, grittier, basically anything that can show people that, hey, you have range and you're not just this one thing. And looking at Daisy Ridley's filmography, not just post Star Wars, but while she was also still filming, those movies. The type of roles she's gone with, I think this was her strategy. Chaos Walking, yes, that was still science fiction, but it was a lot darker than anything she'd ever done with Star Wars. Filmophilia, apparently that was a historical romantic drama film. So again, very different from Star Wars. Sometimes I think about dying, that's a romantic dramedy. The March King's Daughter, that's being described as a psychological thriller. She's really trying to show her range here, which can be smart. But real talk here, if you are Daisy Ridley, your fan base realistically... are girls between the ages of 15 to 25, maybe 30 on the upper end that saw Star Wars and loved you. I'm not saying that Daisy Ridley shouldn't have been trying to explore different worlds, but if I were her, and obviously I'm just an internet nobody, I would never expect in a million years that she would actually watch this video, much less take this advice to heart. But post Star Wars, I probably would have chosen different types of projects, yes, but ones that would have still appealed to my core demographic of fans. I'm talking about rom-coms, maybe murder mysteries, things like The Orient Express. I think that was a smart move for her. Looking at her filmography, it seems like she's either been doing kids movies, like Peter Rabbit, or films that would appeal to a much older demographic, like Ophelia or The March King's Daughter. Ultimately, I do think Daisy Ridley is a fine enough actress, and in terms of just the way she looks, which I know it's not really fair that actors get judged upon, but hey, it is what it is, I do find she's beautiful. And I'll also point out that considering how competitive acting is, some might even call it a success to be in a film at all as an actor, let alone have a starring role in one, which obviously Daisy Ridley is still doing a I guess I wanted to make this video and kind of talk about Daisy Ridley's career because in my opinion, she is someone who I think can absolutely exist and thrive outside of Star Wars. But with the film she's been doing lately and her now announced return to Star Wars, it just doesn't look like that's actually what's ended up happening. That's basically all I have to say for now though. And as always, I would love to hear your thoughts in the comments. What do you think of Daisy Ridley as an actress? And have you enjoyed her non-Star Wars films? Let me know down below. If you enjoyed this video, please be sure to like, share, and subscribe. Until next time.
spk20: In focal PFA, we continue to ramp manufacturing of the Sphere 9 catheter and remain in limited market release in Europe. Sphere 9 can perform both PFA and RF ablation and drives high-density mapping all from the same catheter. And it integrates seamlessly with our differentiated Afera mapping system. In the U.S., we expect to complete the 12-month follow-up in the pivotal trial for Sphere 9 in the coming weeks, and then we'll prepare for FDA submission. In single-shot PFA, we just received CE Mark for our Pulse Select catheter, and it will be commercially available early next calendar year. We are now the only company with approved catheters for both single-shot and focal PFA. And in the U.S., the FDA is reviewing our Pulse Select submission, and we expect to be one of the first companies with a PFA catheter in the U.S. market. Now, with our PFA catheters and the Afera MAP-NAV system, combined with our leading Arctic Front cryo solution and differentiated FlexCath cross-transceptal system, we expect to drive strong long-term growth in the fast-growing $8 billion EP ablation space. Now, turning to structural heart, overall, the TAVR space continues to grow in the high single, low double-digit range. In Q2, we grew mid-single digits, which was below the market. Now, we declined slightly in the U.S., comping difficult prior comparisons when we initially launched EvoluteFX and customers purchased for stock. yet we grew 4% sequentially, evidence of the strength of our product. In Europe, we grew high single digits and received CE mark for EvoluteFX at the end of the quarter. And in Japan, we continued to win share and grew in the mid-30s on the continued adoption of EvoluteFX and expanded ESRD indication. Our Evolute platform has now shown superior valve performance compared to surgery in randomized trials that extend to 5 to 10 years after initial procedure. And last month, our landmark EVOLUTE low-risk trial was presented at TCT and published in JAK. The trial randomized patients to EVOLUTE or best-in-class surgery. As you can see in this chart, EVOLUTE, which is the blue line, had a lower rate of death or disabling stroke, and the difference continues to diverge each year, going from a 2% difference at two years to 2.9% at 3 years and growing to a 3.4% difference at 4 years. This resulted in a 26% reduction in death or disabling stroke with Evolut at 4 years. And no other transcatheter valve has shown better valve performance and outcomes compared to surgery. Valve design matters, and this differentiates us competitively. Physicians understand this data. This is compelling to them, and it's compelling to patients. So as we look ahead, we expect the combination of this data, coupled with the global rollout of EvolutFX, to drive our TAVR growth above market. In neurovascular, we grew high single digits when you exclude sales in China, where the coils market is subject to volume-based procurement. We continue to see very strong growth in flow diversion, which was up low 20s globally. This is being driven by our innovative shield technology for treating brain aneurysms, which is available on both the Pipeline Flex and Pipeline Vantage flow diverters. In robotic surgical technologies, we increased our installed base as we continue the international launch of our differentiated Hugo robotic system. In the U.S., our Expand Euro pivotal trial continues to enroll and is on plan. And we're happy to announce that we have FDA approval to start our U.S. hernia indication pivotal trial for Hugo. Adoption of Hugo is positive, with surgeons appreciating features that are core to the system, including touch surgery enterprise digital technology. This AI-powered video solution, currently available for both robotic and laparoscopic surgery, creates a new paradigm for case review and performance improvement. We've already deployed it in over 20 countries, and we're continually developing our connected digital ecosystem, and we're excited about the upcoming launch of TouchSurgery Livestream to enable live streaming and sharing of procedures securely and seamlessly. We expect Qgo, equipped with advanced digital capabilities, to be a meaningful growth driver for us in the years ahead. We believe surgeon preference with our open console and modular design, our leading position in minimally invasive surgery and instrumentation, our connected digital ecosystem and data-enabled insights along with our world-class surgical training program and partnerships, will meaningfully advance the low penetration of robotic surgery around the world. And in diabetes, our customer base is expanding sequentially as users around the world purchase the MiniMed 780G system. 780G is the only AID system to make correction boluses every five minutes, offer flexible glucose targets as low as 100, and feature meal detection technology. This combination is resulting in high time and range. Users are achieving or exceeding their glycemic targets, and importantly, realizing the relief that comes from burden reduction in their diabetes management. In Q2, our diabetes business grew 7%, its highest growth in 10 quarters, or five years when you exclude the COVID comp in Q4 of FY21. In international markets, we continue to see robust mid-teens growth driven by the recurring revenue from CGM and consumable sales to customers that have adopted our AID technology. And in the U.S., this was our first full quarter of the 780G launch, and we're meeting or exceeding our launch goals. our US pump sales increased over 30% sequentially. The number of unique 780G prescribers has increased over 20% since last quarter, with many returning to Medtronic as they learn about the differentiated outcomes users are getting with 780G. And we also continue to see very high CGM attachment rates in our 780G installed base, meaningfully above the rates prior to launch. All of these leading indicators give us confidence that we'll see a significant ramp in our CGM and consumable sales in the US and return to year-over-year growth in the back half of this fiscal year.
spk17: A Dior holiday story.
spk20: We've been driving this turnaround. And as we look ahead, we expect diabetes to drive even more meaningful growth for us. We expect the majority of the intensive insulin management space to move to smart dosing through either AID systems or smart MDI. And we're well-positioned to take advantage of this trend as we're the only company investing in a complete ecosystem of differentiated technology for people living with diabetes, including next-generation durable pumps, smart pens, patch pumps, sensors, and algorithms. So with that, let's go to Karen for a deeper look at our Q2 financial performance and our fiscal 24 guidance raise. Karen?
spk19: Thanks, Jeff. Looking at our financials, overall it was another good quarter. Our revenue grew 5%, ahead of expectations. An adjusted EPS was $1.25, 7 cents above the midpoint of our guidance range, with about 3 cents from stronger-than-expected revenue, 3 cents from better gross margin, and approximately 1 cent coming below the operating profit line. As Jeff mentioned, we remain focused on delivering durable growth. Based on the changes we've made, including our operating model, incentives, and capital allocation, we've positioned the company to deliver sustainable, mid-single-digit growth on the top line. And you are seeing that play out for four quarters in a row now. Looking at our second quarter revenue growth, you can see the diversification coming through, which is important to driving long-term durability. As Jeff stated, our three portfolios grew mid-single digits, and diabetes accelerated to high single-digit growth. The broad-based growth also came through on a geographic basis. Western Europe grew high single digits, with strength across many cardiovascular businesses, diabetes, neurovascular, and pelvic health. And Japan grew mid-single digits and was also driven by strong results in many cardiovascular businesses, as well as surgical and neurovascular. Emerging markets grew 9% or 13% when excluding Russia, given the sanctions. We had low 20s growth in the Middle East and Africa, high teens growth in South Asia, mid-teens growth in Southeast Asia, and low double-digit growth in Latin America. China grew high single digits, as some of the VBP that we expected was delayed until later in the fiscal year. While our adjusted gross and operating margins declined in the quarter, both were ahead of expectations. With gross margin, about a third of the year-over-year change was due to currency, and the remainder was driven by inflation. And our adjusted op margin decline was entirely driven by currency. On a constant currency basis, it increased 40 basis points. We're executing to implement efficiencies in our expense structure, and you can see this in the 90 basis point improvement in SG&A. Below the operating margin line, we benefited from higher global interest rates on our investments, and this was partially offset by a higher-than-expected tax rate, mainly due to jurisdictional mix of profits, as well as a lower benefit from stock-based compensation. Turning to capital allocation, we continue to prioritize investments in innovation to fuel and sustain our long-term growth. We're disproportionately investing in some of the fastest growth markets in MedTech. And we have a long-standing track record of returning capital to our shareholders, primarily through our strong and growing dividend. And to the extent that we don't find high growth, high return, tuck-in M&A, we would expect to return additional capital to our shareholders by retiring shares. Now turning to our guidance. Given our second quarter outperformance and continued strength in our underlying fundamentals, we're raising our full-year guidance today on both the top and the bottom line. We expect fiscal 24 organic revenue growth of 4.75%, an increase from the prior 4.5%. For the third quarter, we're expecting organic revenue growth to be in the range of 4 to 4.5%. And while the impact of currency is fluid, based on recent rates, foreign currency would have an unfavorable impact on full-year revenue of $100 to $200 million, including an unfavorable impact of $0 to $50 million in the third quarter. On a comp-adjusted basis, our third quarter guidance represents acceleration from the second quarter, and we expect this trend to continue into the fourth quarter as we're ramping a number of recent product launches in the back half of the year. In diabetes, we're projecting the U.S. to return to growth in the second half of the year on the continued adoption of 780G and the associated CGM and consumable sales. In medical-surgical, we have the continued rollout of the Hugo Surgical Robot and GI Genius. In neuroscience, there's our ABLE ecosystem and spine, our Inceptive closed-loop pain stem device in Europe, and we're awaiting FDA approval for both Inceptive and our PerceptRC DBS device. In cardiovascular, we're ramping our TAVR and PFA launches in Europe, starting the rollout of EVICD in the US and Europe, and we are now starting our RDN sales in the US. This all gives us confidence in the continued durability of our top-line growth.
spk13: Vaping pulled me away from the people I love, blurring out everything that brought me joy.
spk19: Moving down the P&L, our margins this year continue to reflect the impact of currency and inflation. And some of the volume-based procurement tenders in China that were expected in the first half have shifted to later in the year. That said, we're focused on continuing to drive efficiencies in our expense base. And we've got our global operations and supply chains centralized to take advantage of our scale. As you know, stabilizing our margins and then improving from there remains a top priority. On the bottom line, we're raising our fiscal 24 non-GAAP diluted EPS guidance to a new range of 513 to 519, an increase from the prior range of 508 to 516. While we expect FX and tax to be a few pennies more unfavorable in the second half, We are pleased with the momentum we have demonstrated and our pipeline from here. For the third quarter, we expect EPS of $1.25 to $1.27. And on foreign currency, based on recent rates, we're seeing an unfavorable impact of 6% on full-year EPS, including an unfavorable 5% impact in the third quarter. Before sending it back to Jeff, in the spirit of Thanksgiving, I want to extend my gratitude to our 95,000 employees around the world who come to work every day to deliver on our mission. You all play important roles in alleviating pain, restoring health, and extending life for two patients every second, which makes this world a far better place. Back to you, Jeff.
spk20: Okay. Thank you, Karen. Now, I know GLP-1s have been on your mind, as the promise of these drugs has certainly had an outsized impact on MedTech stocks, including ours, over the past four months. So I thought it would be helpful to share with you our view on their potential impact on our markets. Now, GLP-1s are clearly an exciting class of drugs for patients, and the select data presented at AHA suggests the potential for a large market. That said, the key takeaway from our analysis is that outside of a modest impact on the bariatric surgery market, which we believe will be temporary, we don't see these drugs impacting Medtronic's growth outlook, even long-term. This expectation is based on our extensive science-based work Like many of you, we've modeled potential uptake and impact based on epidemiology, based on what we've seen historically with other drugs, and based on the relative risk reductions and adherence rates seen in SELECT. So given the SELECT results showed smaller impacts on the more obese patients, we believe that bariatric surgery will remain the gold standard for addressing obesity. We also know that many of the patients that try these drugs do not stay on them for more than a year, likely due to durability, side effects, or affordability, which creates opportunities for new patients to consider surgery. For these reasons, we believe the current headwinds on U.S. bariatric procedures will stabilize over the next several quarters and return to growth by calendar year 2025. And this is modest and manageable within our broader diversified surgical business. Now with diabetes, our customers are primarily type 1, with only 10% of our installed base in type 2 insulin-dependent patients. We do expect growth in our Type 2 business going forward, but Type 2 pump penetration rates are so low that even using aggressive GLP-1 modeling assumptions, we don't see any meaningful change in our diabetes growth outlook through 2030. Now, we'd be happy to discuss this in more detail in Q&A, including our view on the SELECT trial and its potential implications for MedTech. Now, before we go to the analyst questions, I'd like to close with a few brief concluding thoughts on our progress. You're seeing in our results that many of the challenges that have held back our growth have largely been mitigated, whether that's diabetes, China, or the issues in our supply chain. And we've established a track record of delivering durable mid-single-digit revenue growth, which we expect to continue in the back half of the fiscal year. We have some really compelling product approvals that drive our growth not only in the back half, but for years to come. There's been a number of things that have happened recently, big things. In the last four weeks in particular, with our TAVR data that gives us just such an advantage in the marketplace, new product approvals like EVICD, geographic and indication expansions. And last Friday, we got already an approval. This opens up a multi-billion dollar market opportunity for us. And with over 1 billion people worldwide with hypertension, the opportunity is massive. In fact, just 1% penetration of the target market represents over 1 billion of revenue. So we're focused on executing to deliver the top line. And at the same time, we're taking action to run our businesses more efficiently to counter the impacts that inflation and currency are having on our margins. And we've been implementing an extensive transformation to improve the durability of our growth. We've changed our operating model, brought in extensive new leadership, increased capital allocation to our highest growth opportunities, and are implementing a culture based on execution, speed, and playing to win. And now we're positioning the company to take advantage of our scale in areas of operations and supply chain, core technology, and how we go to market with large customers around the globe. You're already seeing results from this today. And as we go forward, our focus is on translating the durable revenue growth that we've established into durable earnings power. This is a winning formula for creating value for shareholders. And we are laser focused on making that happen. Now with that, let's move to Q&A where we're going to try to get to as many analysts as possible. So we ask that 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?
spk06: For the sell-side analyst 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. For today's session, Jeff, Karen, and Ryan are joined by Q Dallara, EVP and President of Diabetes, Mike Marinaro, EVP and President of the Surgical and Endoscopy Businesses, 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.
spk09: We'll take the first question from Robbie Marcus at J.P.
spk07: Morgan. Robbie, please go ahead.
spk16: Oh, great. Good morning, everyone, and thank you for taking the question. Maybe I'll ask both of them up front. The first, Jeff, you talked about how most of the headwinds are largely mitigated. I look at the guidance implied in the second half of the year. It's a point of growth or so below the first half. So maybe just talk about how we should mitigate. think about the lower growth in the second half versus the first half and the reasons for that. And then part B, if I look to 2025 or fiscal year 25, the street has you pretty close to your long range plan of 5% plus on the top and 8% plus on the bottom. Is that the right way to think about next year? Are there any you know, headwinds or tailwinds we should be thinking about here, like potential dilution from the monitoring business. Just want to try and get street numbers correct as we head into year end. Thanks so much.
spk20: Sure. Well, let me kick it off, and thanks for the questions, Robbie. I'll kick it off and then hand it over to Karen. In terms of the headwinds being mitigated, what I'd say is the markets are pretty stable, especially relative to what we've seen over the last couple of years with procedures, I think, back to normal growth. And the staffing issues that were hurting the procedural growth are I think, you know, more or less under control. Pricing has been stable. We can talk China later. We're working through the China DVP, but that's largely behind us. Still a little bit more to go, but largely behind us. And then our own internal, you know, the changes to our global operations and supply chain, that was a big one for us and has been a big one. And, you know, we're seeing our teams, you know, perform much better. And like I said, we're turning that. into a strength for us, a strategic long-term strength and, and our supplies in a, in a much better situation. So that that's, you know, and then, and of course our, our pipeline is, is coming in and, and I'm sure we'll get into that in the call here with a lot of, uh, new approvals, plus the, the prior approvals of where we're starting to, to launch and, and they're having meaningful, meaningful uptake. So that there's where the optimism is in terms of, uh, how to think about the back half versus the first half and then getting into FY25. I'll turn that over to Karen.
spk19: Yeah, thanks, Jeff and Robbie. So just on the back half, Robbie, our comps do get a little tougher, as you know, but we've got a really strong innovation pipeline that we talked about, and that's driving growth acceleration, actually, from the first half to the second half. You know, we've got our diabetes business returning to growth in the second half. We talked about our extensive pipeline, EVICD, PFA, Hugo, EvolutFX, and now the RDN approval. And so we're confident in this growth acceleration, and we're confident that that's going to continue, you know, beyond the back half of next year. You know, we think about FY25, you know, it's still early. We have two quarters left in this fiscal year and we're, you know, laser focused on delivering the rest of this year. We're also at the beginning of our planning process, so we're not ready to give specifics. But I do know that all of you are working on your calendar year models for our competitors. So happy to give you some perspective based on what we know today and what we're thinking about. And I'll start with revenue because we've been focused on consistently delivering that mid single digit revenue growth and you've seen us do that for four quarters now our new full year guide for this fiscal year is four and three quarters and as i mentioned we've got the strength of those numerous product approvals in big markets that are launching around the world to help drive our back half growth and obviously we're confident that strength will continue into next year and beyond on margins and down the p l there are some puts and takes You know, we've got inflation stabilizing a bit, but it's still higher than historical. But again, it's stabilizing. You know, currency is dynamic. And as you know, the U.S. dollar has been strong. So we're likely facing a headwind from FX, but we'll see how that shakes out. Global tax reform will likely be a headwind, but as always, we're focused on driving offsets everywhere that we can. Jeff talked about it. We've made progress on cost of goods sold and cost out, starting with centralizing our global ops team. We have work to do, but those teams now have tangible programs in place to drive that work. And we'll continue to drive pricing as an important lever. We've built a new muscle on pricing, and our focus is to keep it strong. We've been working hard on controlling expenses, and that includes maintaining discipline on our largest driver of our expense, which is our headcount. So I hope that gives you some color on just the puts and takes. But to summarize, I'll remind you what hasn't changed, and that's our long-range commitment of driving durable mid-single-digit top growth, of driving leverage down the P&L, of driving a strong free cash conversion and a growing dividend, which all combined ultimately delivers a double-digit total shareholder return. You know, what has changed, though, is our progress toward that commitment. You know, you've already seen us at mid-single-digit top line. We've talked about the strong pipeline that gives us confidence in its durability. And obviously, we've talked about the programs we have in place, whether it's in headcount management, COGS cost down, pricing discipline. And they're all levers to help us offset the headwinds and, over time, establish that same durability on the bottom line.
spk09: Thank you. Thanks, Robbie. We'll take the next question, please, Brad.
spk07: The next question comes from Travis Steed at Bank of America. Travis, please go ahead. Hey, everybody. Congrats on a good quarter.
spk18: Karen, just to sum up all those comments on FY24, I heard the leverage down the P&L comment. It sounds like, you know, based on what we know today, unless there's some kind of major surprise, there's still a good ability for there to be enough offsets to drive EPS growth faster than revenue growth. Just want to kind of make sure that's clear. That's a fair comment. And then, Jeff, I did want to follow up on your thoughts on GLP-1s post the SLEC trial. Curious if there's any color you'd add on the SLEC trial and the cardio endpoints and diabetes prevention that maybe we didn't mention in the prepared remarks.
spk19: Yeah, Travis, thanks for the question. Clearly, you know, next year and beyond, we're focused on driving that leverage down the P&L that I talked about. And obviously, when you drive leverage, it's, you know, your bottom line is faster than your top liner. But, you know, at this stage, it's still early. We're at the beginning of our planning process. And, you know, we're going to give you, you know, more on FY25 as we, you know, are ready to guide.
spk20: Hey, Travis, good to hear from you. On GLP-1, so first of all, I just want to make it clear that we see that it's an exciting class of drugs with a large opportunity. And I'm sure just like you, I talk to many patients that are benefiting from these drugs from a weight perspective, from a mental health perspective. It's pretty amazing. That being said, we've done a lot of work. And outside of the near term, temporary impact on bariatric surgery market, we don't see these drugs impacting our growth outlook, even in the long term. And on the bariatric piece, as we mentioned, it's a small part of our retina, low single digits, and the rate of decline is stabilized there. And I think we see that coming back here in the coming year even. So we did do a lot of work here, and I'm going to It was, like I said, science-based and looking at epidemiology and really digging into Select. And what we do have on the call here, our chief medical officer, Dr. Laura Morey, and I thought I'd maybe kind of call her in here, bring in a relief pitcher here on that question to talk a little bit more about Select and kind of what we're seeing out of that. So Laura, can you chime in here?
spk13: Sure. Thanks, Jeff. Yeah, Travis, the select trial results, you know, that were presented at AHA gave us a lot more detail beyond the top line that we heard about back in August to really look at the endpoints and look at the drug adherence, understand the details of the trial results. And, you know, as you know, these were obese patients. with a history of cardiovascular disease. And as Jeff said, this is a very important advance for this patient population, but the results didn't change our overall impression that there will be a negligible effect on the growth of cardiovascular procedure volumes. And that's based on a couple of things that we saw in the detailed results. First, the number needed to treat was much higher, and that means it's setting a higher bar for treatment compared with other things that are used in guidelines. And then we saw that there was a lack of effect on cardiovascular death. And that's something that if it had been present would have spurred more adoption. And the lack of that is important because it will not spur the wide adoption and coverage that we might have been looking at if that had been positive. And then, you know, the only effect on the composite endpoint was nonfatal MI, not stroke or cardiovascular death, as I mentioned. And, you know, as you know, the discontinuation rates were in nearly a third of patients due to the nausea and GI side effects. And clearly, we know from practice that rates of adherence are even lower, and that results in lower treatment effects. And then there were a couple of interesting findings in the trial. As Jeff mentioned earlier, the higher BMI population didn't seem to have as much benefit, and there was no significant treatment effect in the North American subgroup, which is certainly something that I think we'll want to understand better going forward. So using a range of assumptions, we updated our models across the major cardiovascular procedures, and the inputs to that were looking at U.S. procedure volume across different procedure areas, using data on the prevalence of obesity for each of these procedure populations, and then a range of penetration and adherence assumptions, all the way up to including You know, what we've seen over time with statins, which is, you know, are really well tolerated and and just freely available and part of guidelines for the past 30 years. And then we also input the obviously the risk reduction seen in each of the endpoints from the select trial or literature. based on weight loss to look at treatment effects and the bottom line is that the reduction to tam growth over the next 10 to 30 years is really negligible on on the cardiovascular procedure outlook I think it's really important to also note what this analysis doesn't include, and that's that there will probably be offsets in the markets that are really under-penetrated or new, like PFA or RDN, because of the rapid growth in those areas. And then there's, in fact, potential upside for patients and procedure growth because of the potentially longer survival or lower BMI that makes a greater funnel of patients eligible for cardiovascular procedures. So I'll pass it back to Jeff. I know there was a question as well about the effect on hemoglobin A1C.
spk20: Thank you, Laura. And while we're on the topic, maybe on that one, I mean, Q, any comments on diabetes? Relative to GOP ones?
spk00: Yes, I mean, like Laura mentioned, we spent quite a bit of time studying this and I think there's some evidence from Select that would say there may be a slowdown in the pre-diabetic population towards insulin dependency and maybe some in type 2 will come off insulin, but we believe this number to be very small and more than offset by the fact that there is low penetration of type 2 using AID and the fact that when you look at the funnel of 3 to 4 million who require basal insulin with 25 million non-insulin type 2s, as well as the over 100 million pre-diabetic population, It doesn't change our point of view on the long-term size of the market as well as the growth rates. And as Jeff mentioned at the beginning, the majority of our business, more than 90%, is in type 1. And so, you know, we remain pretty, you know, optimistic about the growth and market profile in diabetes.
spk20: All right, thanks, Q. I mean, so, I mean, Travis and others, I mean, as you can see, you know, beyond the fact that the areas that we get questions on, type 2 intensive, hypertension, AFib, obesity, besides the fact these are just woefully underpenetrated from a med tech perspective, we've done all the analysis that, you know, Laura and Q just gave you the tip of the iceberg of, and that's why you know we're we're we feel strongly that we don't see these drugs impacting medtronic's growth um you know medium or long term um so i hope that answers your question and then some yeah super thorough answer thanks a lot thanks travis next question please brad we'll take the next question from larry beagleson at wells fargo securities larry please go ahead
spk02: Good morning. Thanks for taking the question. Just two product questions for me. One for Sean on RDN. Congratulations. Sean, can you talk about the ASD, you know, the reimbursement pathway and the ramp? And for Brett, you know, the slides talked about completing the six-month primary endpoint on the pivotal Titan II ITNS trial. Does FDA want 12-month data? Could you talk about the form factor here and how you see ITNS? being positioned relative to sacral neuromodulation. Thank you.
spk20: Well, Larry, it's Jeff. Good to hear from you, and thanks for the question. Before I turn it over to Sean on RDN, I do want to just say, look, congratulate the team here in the cardiovascular space at Medtronic and leaders past. I mean, this has been involved. This has been a long journey, and we are really, really excited uh excited about the approval um you know we have a lot of data here in our rcts you know we consistently saw a mean nine to ten millimeters mercury absolute office blood pressure drops at the initial primary end points uh in this case of three and six months and actually more in the real world setting and uh and additional drops over time from these primary assessments so you know this is a game changer and and look as compelling as the data is and as much as we have uh it doesn't even tell the whole story i mean you talk to physicians out there that have involved in our trials uh and and the excitement is palpable and patients uh we have a number of patients been on this for years and talking to them and how it's changed their life. And we're actually having a patient come in and talk to the entire company here in a couple of weeks. It's very exciting. And so a big opportunity for patients and a real big opportunity for us too. And so getting into some of the specifics, you asked about reimbursement. I'll turn that over to Sean and then we can go to to Brett to talk about, I believe you're asking about the tibial opportunity. But why don't we start with Sean?
spk04: Thanks for the question. As you know, the ramp is going to be highly gated by reimbursement, and we've been working that in parallel with the regulatory approval all along. We see the payer split to be roughly 50-50 between Medicare and commercial payers of private insurance. And we've been, of course, pursuing both local and national coverage determinations from Medicare. And that's an important input into the private payer decisions that will happen state by state and payer by payer. We've been in contact with those private payers, the largest ones, certainly. And the response so far has been very open and willing to engage with us to understand our data. And what's particularly of interest to them is the long-term data, which is atypical for a new therapy like this to have thousands of patients out three years from the therapy. So that's encouraging. Of course, you know, the Medicare population is the most important for us, and to your question, there are these alternative pathways that have been established by Medicare for temporary add-on payments, both in the inpatient setting with NTAP or the new technology add-on payment, as well as in that outpatient setting for transitional pass-through payments or TPP. And given that the Simplicity Spiral System is a breakthrough device designation, We will avail ourselves to those pathways or for approval over that 2 and 3 year period as we work to establish more permanent reimbursement for like a national coverage determination. On that front, you know, there is this T set pathway or the transitional coverage for emerging therapies that we're going to fail ourselves to. It's not finalized yet. We look forward to that ruling coming out. We've seen the commentary has been largely very, very positive along the way and in line with what we had been suggesting both to CMS and the Biden administration as well as other stakeholders along the way. And, of course, CMS is also considering other refinements to coverage with evidence development programs. that we've used successfully as we've established many, many therapies, as you know, including TAVR, MICRA, ICD, CRT devices over time, and we'll avail ourselves to those as well. So rest assured, we're working hard on reimbursement. It's really critical for the ramp of this technology, and we're getting a good reception so far.
spk20: Okay. Thanks, Sean. Brett, do you want to answer part two here?
spk10: Yeah, absolutely. Larry, good to hear your voice. Thanks for the question. The Titan II study was a six-month follow-up with the actual study design, and we will follow those patients for 24 months. So we'll be following those patients and have additional data as well. The form factor is about 2.8 cubic centimeters, really about the size of roughly half a stick of gum, and it fits in the ankle. Same place for everyone. This opens up a significant patient population there's over four million people in the united states that have discontinued their dual drug therapy or failed two drugs and they are now receiving continence devices at home adult continence products as opposed to seeking additional therapy this is a 15-minute procedure we now have established category 3 reimbursement And we'll be utilizing that to further develop out the reimbursement profile. This particular product and technology opens up a substantial population that is not seeking help or seeking therapy right now. We're in a modular submission. We'll be submitting the data here shortly. And this is an exciting new technology that opens up this field and will contribute to its ongoing growth.
spk09: Okay, thanks, Brett.
spk07: Yeah, thanks, Brett, and thanks, Larry. And a reminder to the analyst to stick to one question and one related follow-up if needed. We'll take the next question, please, Brad. The next question comes from Vijay Kumar at Evercore ISI. Vijay, please go ahead.
spk03: Fantastic. Hi, Jeff. Thanks for taking the question. I had two product-related questions here. First one, just at a high level, right? You had three pretty meaningful product approvals in the past few months between EVICD, PFA, and your RDN approval, right? You're already doing mid-singles with all of these incremental growth drivers coming in. Is that now a mid-singles plus? I'm just curious how you think about this new product opportunities.
spk20: Well, well, thanks for the question, Vijay. And good to hear from you. And thanks for pointing out the robust nature of the approvals. And these are really, we believe, and as you saw in the commentary, unquestionably differentiated you know, products and in large markets and growing markets that we have a high confidence in. And this gets to our commitment to make this growth durable. And, you know, as we've seen over the last couple of years, whether it be market conditions or internal things, which I am, we are working so hard to make sure these internal boogeymen just disappear through changing our fundamentals. This is these this breadth of approvals in these high growth markets, I believe, you know, will help me for the first time sleep well, because it gives you the durability that we're talking about in that revenue number, which is so important. Everything flows from there. So at this point, you know, before, you know, before we start talking about plus, you know, I just want to make sure that we are very durable and reliable. mid single digit growers and, you know, different types of environments, good and less good. And then we can flow from there about leverage on the P&L and things like that. So that's, you know, that's my overview on those three or on the pipeline in general.
spk03: And maybe my related product question here, perhaps from Mike on robotics here. You mentioned installed base went up in Europe. Any sense on what the size of that installed base is in this US clinical trial? You said it's on plan, but any sense on when this trial might end, perhaps timing for an FDA approval?
spk11: Thanks for the question, Vijay. First, we are continuing forward with our installs, have added to the install base. We're not quoting numbers of installations at this time, but we are increasing on a quarter-on-quarter basis. Our procedure volume is picking up on a quarter-on-quarter basis. As we work through availability of our instruments and then getting the system into the U.S., we'll really start to see acceleration. Of our program, Jeff commented, and you just noted that the expand Euro study is on track and we're very excited and speaking with our investigators there, and they're enthusiastic about the product and the program. And so that continues forward. We're not. Going to give timelines of U.S. approval for that, but I will tell you it's proceeding according to plan. And then as Jeff noted, we're very excited about the hernia IDE approval, which allows us to take a big step into general surgery more quickly than we had anticipated and to start to engage the general surgeons with Hugo here in the United States in a segment Where we are very active today, of course, we have a large business and sales channel in the area of hernia repair. There's a real hunger for capacity and a growing volume there in hernia in the United States. And so now running these IDEs in parallel will allow us to start to really pick up momentum as we contemplate the entry into the U.S. market. So we are on plan, not giving specific dates for approval yet, but also very excited about the opportunity to move into general surgery and in with a general surgeon with this hernia IDE approval.
spk20: Thanks, guys. Thanks, Mike. I mean, I know... There's a lot of interest in this. And look, I just emphasize Mike's comments. Step one was to have a robot that has the capabilities and strong physician acceptance. And we feel strongly that we have that. And now we're building up our experience, you know, primarily in Europe and of operating the robot out in the wild. And then really, as Mike mentioned, building out that instrument portfolio, and executing on the U.S. trial so that we can launch in the U.S. That'll be, between the U.S. and some new instruments, that'll really drive a lot of growth here. So anyway, more to come on that. But thanks for the question, Vijay.
spk07: Yeah, thanks, Vijay. Next question, please, Brad.
spk09: The next question comes from Kristen Stewart at CL King. Kristen, please go ahead.
spk14: Thanks for taking my question. I was just wondering if you could provide any updates on the patient monitoring respiratory interventions then.
spk19: Yeah, thanks, Kristen, for the question. You know, we're continuing to work on the separation of that, and, you know, our focus through all of it is to maximize shareholder value.
spk09: You know, no big updates. Perfect. Thanks very much. Thanks, Kristen. Next question. The next question comes from Matt O'Brien at Piper Sandler. Matt, please go ahead. Good morning. Can you hear me okay? Hey, can you guys hear me? Yeah, we can hear you, Matt. Oh, good. Thank you.
spk08: So just one question, Jeff, for you specifically. You're a $30-plus billion revenue company, but you've talked about more tuck-in acquisitions historically. Just given your size, given the strength in terms of new product flow, I'm just wondering if now is the time to be more aggressive from an M&A perspective, just given the pullback that we've seen at some of these on the public company side of things, just to be able to do a bigger deal to really solidify know your growth algorithm algorithm going forward is now the time to you know to be more aggressive are you more amenable to doing bigger deals now just given strong balance she's kind of you know got the operating model together etc thank you
spk20: Yeah, thanks for the question, Matt. And, yeah, clearly I think you're seeing asset prices come down, and it's a tough operating environment. I think they're going to continue to come down in the mid-cap space in particular and below. But, you know, and we definitely have the capabilities, as you pointed out, to do bigger deals. All that being said, our focus still is on tuck-ins. And we've got a lot of big organic, you know, or now organic programs between, you know, we just, you know, RDN, the robot, PFA, diabetes. I mean, the list goes on. There's a lot of big organic programs. pipeline going up against these high growth markets that we're really focused on. And then I would augment that, you know, with the appropriate tuck-ins. So I'm not going to, I don't think we're really focused on, and we're not going to signal that we're focused on any kind of bigger deals at this point.
spk09: Okay, thanks, Matt. I think we have time.
spk07: I know we're running a little bit long, but let's take two more questions, please, Brett. The next question comes from Rich Newiter at Trist. Rich, please go ahead.
spk05: Hi, thanks for taking the questions. Just on, you know, we saw just more broadly in MedTech a little bit of seasonality or a weaker, I think, third quarter for a number of your competitors play out. Just wondering if you could comment on the trend throughout the quarter. You know, was August, you know, unseasonally kind of weaker than what you would have thought? And what's been the normal pickup? Is it stronger than expected into the into the 4Q quarter? especially if you can talk about kind of exit trends from September into October. Thank you.
spk20: Sure. Thanks for the question, Rich. I'm going to ask Karen to answer that one.
spk19: Yeah. Thanks, Rich. I would say we saw strength throughout the second quarter, no matter what month you looked at. And I think that's driven in part by just the strength of our product offering. When we look at the first few weeks of this quarter and how that's been trending, it's been trending well. We're tracking to the expectations that we set in our guidance at this stage.
spk09: Thank you. Thanks, Rich. And we'll take the last question, please, Brett. My question comes from Shagan at REC Capital Markets. Shagan, please go ahead.
spk01: Great. Thank you so much for taking the question. Just, I guess, a follow up on Hugo. One of your competitors recently showcased their surgical robot that had an invisible design and twin motion capabilities. I'm just wondering what your thoughts are on the competitive landscape. Do you see it as a rising tide or just how do you think about your technology offering versus competition? And then I was just wondering if it's possible to get any more specific color on how October and November is shaping out. Thank you for taking the questions.
spk20: Well, I'll ask – thanks for the question. I'm going to ask Mike to take the Hugo question, and I'll follow up on that one.
spk11: Good. Thanks, Shagan. So we were very interested to see the latest developments from our competitor here relative to – to their program, and I'll say that they were about as expected. You know, no surprises there. We continue to be very excited and optimistic about the differentiation of our program with an open console, with a modular design. with the ability to have flexibility in terms of location or site of care, which is highly differentiated from what we heard there in their discussions as well as what we see in the market today. And so we see that differentiation continue and the reasons that our customers like Hugo, to continue to be differentiated reasons. More broadly speaking, though, the good news is that there continues to be just real interest in expanding the penetration of robotics across multiple fields in surgery. And we're seeing continued increase in procedural volumes on a quarter-on-quarter basis. And so it's good news for the field as that interest grows. So we're well-positioned, and the field continues to expand, which is a good story for Medtronic.
spk20: Yeah, and just to build on that, I mean, you know, we talk about we call it robotics, but I would argue it's broader than that. And this isn't the first time we're out to change the dynamics of an entire market. That's what we're doing in the spine market right now. And it goes beyond robotics. It gets into interoperative imaging or visualization, you know. uh navigation you know pre-surgical ai-based planning uh and and like with in mike's world here with hugo we've got touch surgery enterprise which is a leading uh a digital platform with with uh ai driven digital platform and and like you like you're seeing in spine that's played out over the last couple years it's changing the competitive dynamics what's important in the marketplace for physicians and even patients. And, uh, you're seeing the impact is what you're seeing in the, in the spine market as many competitors. It takes a lot of expertise. It takes a lot of capital, uh, to make this happen. And you're seeing competitors fall by the wayside. Uh, and, and, and, and, and it has been a big one here recently with invasive and Globus coming together and we'll see how that plays out. But, you know, I, I believe, um, We've demonstrated an ability to do this, and this is the kind of experience. And I know we're up against a big competitor in intuitive and the surgical space, but we believe we've got a lot to offer here, and we are going to drive a change in how people think about the space and the competitive dynamics. And we're really confident and excited about that. So with that, I think we'll bring the call to a close. Thanks for sticking with us a little longer. And I really appreciate the questions and the support and continued interest in Medtronic. And we look forward to updating you on continued progress on our Q3 earnings broadcast, which we anticipate holding on Tuesday, February 20th. With that, thanks for joining us today. And for those in the U.S., I'd like to wish you and your families a very happy Thanksgiving this week and enjoy the holiday and stay safe. Thank you.
Disclaimer