Medtronic plc

Good morning. I'm Ryan Weisfenning, Vice President and Head of Medtronic Investor Relations. And I appreciate that you're joining us for our fiscal 25 second quarter video earnings 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, Chairman and Chief Executive Officer, and Gary Corona, Interim Chief Financial Officer. Jeff and Gary will provide comments on the results of our second quarter, which ended on October 25th, 2024, and our outlook for the remainder of fiscal year 25. 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, divisional and geographic revenue summaries, and non-GAAP reconciliations. 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 our 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 statements. 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 second quarter revenue in the current and prior year reported as other. References to sequential revenue changes compared to the first quarter of fiscal 25 and are made on an as-reported basis. All references to share gains or losses are on a revenue and year-over-year basis and compare our second fiscal quarter against our competitor's third calendar quarter. 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.

Hello everyone and thanks for tuning in today. Our momentum is building as we keep executing on our commitments, delivering yet another quarter of strong results that came in ahead of expectations and another guidance raise. This makes it eight quarters in a row now of solid mid single digit organic revenue growth. And we translated that 5% organic top line growth into 8% EPS growth on a constant currency basis and we remain on track to deliver high single-digit EPS growth on a reported basis in the back half of the fiscal year. We know that innovation matters, and innovation is what really is driving our growth today across multiple areas. We're seeing strong performance from franchises like TAVR, PFA, leadless pacemakers, diabetes, spine, and neuromodulation, just to name a few. And we're confident that this diversified growth will keep going, especially with the strength of our pipeline in high-impact markets like hypertension, which is a big exciting opportunity for us. If you look at our recent performance, it's clear. The foundation of the company is much stronger. We've integrated a real performance mindset alongside our mission-driven culture, and it's making a difference. And as we continue to drive durable top-line growth, use our scale to deliver leveraged earnings, generate strong free cash flow, pursue smart tuck-in M&A, and grow our dividend, we're setting ourselves up to create strong long-term returns for our shareholders. Now let's turn to the details of our Q2 business results and discuss our performance. Looking first at our highest growth businesses, combined they grew 8% again this quarter and made up 20% of our revenue. Starting with Structural Heart, we grew high single digits on the strength of our TAVR franchise. In the U.S., we launched Evolute FX Plus, and we're seeing strong customer adoption. We also received CE Mark for FX Plus last month and began commercializing in Europe last week. FX Plus is important not only for the lifetime management benefit it offers, but also because it creates an additional opportunity for us to reiterate our positive smart trial results. Now, you'll recall that SMART demonstrated our superior valve performance in small annulus patients who are primarily women, and they make up about 40% of the TAVR segment. With this combination of FX+, low-risk data, and now SMART data, we expect to continue to grow at or above market in the quarters ahead. Next, in cardiac ablation solutions, our technology is helping to drive the rapid shift of the market to pulse field ablation. We've been significantly expanding our manufacturing capacity to meet this growing demand, and we're well positioned as the only company with both single shot and focal PFA catheters. We continue to drive our growth of our Pulse Select PFA single shot catheter. This is offsetting cryoablation declines and our rate of cryo-sequential decline significantly improved versus what we saw in Q1. With PFA this quarter, we nearly doubled the number of physicians using Pulse Select, and we more than doubled the total number of patients treated with this catheter in Q2. That said, our overall cast growth did not accelerate as expected this quarter due to a third-party component supplier interruption. They've now expanded capacity, allowing us to continue to ramp Pulse Select availability and activate new accounts. On top of Pulse Select, we were pleased to receive FDA approval late last month for our FARA mapping and ablation system and Sphere 9 focal catheter. This all-in-one catheter was designed from the ground up to perform high-density mapping as well as pulse field and RF ablations. Sphere 9 replaces competitors' mapping and RF catheters, allowing us to increase our revenue per case. We're ramping commercial availability now, having already entered some of the top U.S. centers by volume, and this will accelerate over the coming weeks and quarters to meet this significant demand. And we continue to rapidly hire mapping specialists in advance of entering new centers, giving us confidence in our ability to accelerate account activations. With the strong customer response to the breadth of our new PFA portfolio, we expect our overall CAS growth rate to accelerate through the back half of the fiscal year, including strong double-digit growth in Q3. And we expect to reach and then exceed market growth in this large and fast-growing $9 billion cardiac ablation space. Next, in surgical robotics, we continue to invest in our Hugo platform. building a strong foundation for future growth. In the U.S., we've completed capturing the necessary data for our urology submission and expect to file with the FDA in the first quarter of calendar 25. We're also seeing fast enrollment in our next two U.S. indication studies, hernia and gynecology. In digital, we commenced commercial rollout of our touch surgery live stream remote connectivity solution across the U.S. and Western Europe. as we continue to digitize operating rooms globally. And we're making progress bringing our advanced surgical technologies to Hugo. We expect ICG fluorescent imaging to be available in certain countries soon, followed by adding our market leading ligature vessel sealing technology to Hugo next calendar year. Next, in diabetes, we delivered another quarter of double digit growth, growing 11% despite more difficult comparisons from the 780G US launch last year. Our CGM sales grew over 20% in both the US and international markets, driven by the high CGM attachment rates to the 780G. In addition, our Simplera Sync Sensor, which is half the size and much easier to apply than our previous sensor, is gaining strong acceptance in international markets. On the smart MDI front, We just secured FDA clearance for our InPen app, which paves the way for a limited U.S. release of our smart MDI system with our Simplera CGM. So we continue to add new patients with the 780G system. The majority are coming from MDI, and we're also seeing success from our competitive switch programs. patients are attracted to 7AG's highest time and range of any commercial AID system and achieving this control with less burden. In the DQ&A survey of over 1,500 AID users in the U.S., the 7AG had the highest user satisfaction of any AID system, including scoring 20 percentage points higher than the tandem Dexcom combination and 25 points higher than the insolent Dexcom combination. We're investing heavily in diabetes to expand manufacturing capacity and advance our robust technology pipeline, including our partnership with Abbott on an integrated sensor. These activities support our strategy to be number one in the fast-growing AID and smart MDI space, with a technology ecosystem that is focused on achieving better control with less burden. now turning to hypertension and the large future growth opportunity of our Simplicity blood pressure procedure. With a proven track record of long-term efficacy and safety and unique design, this innovative solution is poised to transform hypertension management. We're pleased that CMS earlier this month finalized the outpatient transitional pass-through payment, which will take effect on January 1st. With coding and sufficient Medicare payment Now in place, the key step for broader adoption is to establish standardized coverage. On this front, we continue to engage with CMS to facilitate access for patients to this important therapy. And we're working with private payers to advance coverage as well. Hypertension is a global health challenge and the leading cause of cardiovascular disease and premature death worldwide. In fact, it impacts more than 1 billion people globally, including nearly half of all U.S. adults. Despite the availability of numerous medications, only one in four adults with hypertension in the U.S. have it under control. And the direct costs to the U.S. healthcare system for hypertension are massive. somewhere between $100 and $200 billion a year. So our simplicity procedure can play a very important role in cost-effectively improving public health. Now looking at our established market leaders. Combined, they made up nearly half of our revenue and grew mid-single digits. In many cases, we've innovated on the technology and business models to reinvent these businesses over the past few years. and we continue to invest in them to ensure durable growth. They are a key part of our financial model, helping us to consistently deliver on the top line, and they contribute a disproportionate amount of profit and cash flow. In cranial and spinal technologies, we grew 6% worldwide, including 7% growth in U.S. core spine and biologics. In a market that rewards scale, we're continuing to win. This is driven by our leading Able ecosystem of differentiated spine implants and enabling technologies, including AI-driven pre-op planning software, imaging, robotics, navigation, and powered surgical instruments. Our large global Able installed base is changing the competitive dynamics in spine. And we continue to expand its features and its capabilities. At the NASS conference in September, we announced a new partnership with Siemens Healthineers to co-market and integrate their imaging technologies for spine care. We expect CST to continue to deliver sustained, above-market growth with able and its differentiated best-in-class solutions, attracting not only spine surgeons around the world, but also the best sales reps and distributors who continue to leave the competition to join our winning team. Next, in surgical, we had flat results. As I mentioned last quarter, we had difficult year-over-year comparisons given the supply recovery last year as well as the Korean market slowdown from the ongoing physician strikes. It's worth noting that on a sequential basis, surgical had strong, high single-digit growth both globally and in the U.S., We had outsized strength and advanced energy, driven by accelerated adoption of our Ligasure XP Maryland Vessel Sealer. Overall, we continue to expect surgical to return to more normalized growth starting next quarter as these comparisons ease. In cardiac rhythm management, we had another strong quarter, growing in the mid-single digits, including high single-digit growth in both defibrillation solutions and in cardiac pacing therapies. Our micro-leadless pacemaker franchise grew high teens with broad strength around the world. Now turning to our synergistic businesses, which collectively grew mid-single digits and represented over 30% of our revenue. The highlight again this quarter was neuromodulation, where growth accelerated to 12% and the business continues to grow well above the market. We're seeing broad-based growth across product lines, including pain stim and brain modulation. In pain stim, we grew 10%, including 12% growth in the U.S. on the continued launch of the Inceptive closed-loop spinal cord stimulator. The innovation in Inceptive is transforming the treatment of chronic pain for patients. It automatically keeps therapy at the optimal dose and allows patients to focus on everyday life, not on managing their chronic pain. In addition, it has the best full-body MRI conditional access on the market, and the competition really isn't even close. This is important given that over 80% of these patients need an MRI within five years, and nearly all of them need one within 10 years. In brain modulation, growth accelerated to 17%, the third quarter in a row of double-digit growth. This innovation-driven growth is built on the ongoing launch of our Percept-RC with BrainSense technology. Percept is having a huge impact for patients with movement disorders like Parkinson's, essential tremor, dystonia, and epilepsy. It not only delivers therapy to specific brain targets, but it is the only DBS system that captures and records brain signals. Now this equips physicians with valuable data and the insights needed to personalize the therapy. And just like in pain stim, our DBS devices have differentiated MRI advantages versus the competition. In addition to Neuromod, we also had strong performances in other synergistic businesses. Cardiac surgery grew 10%, with the broad strength coming from innovative products like our Avalis Ultra Surgical Valve, Peneture LAA Exclusion System, and Vital Flow ECMO System. Acute care and monitoring grew 3%, including 9% in Nelcor Pulse Oximetry. And pelvic health accelerated its growth to 5%. Now with that, let's go to Gary, who will give you a deeper look at our Q2 financial performances and our outlook. Gary, over to you.

Thanks, Jeff. We delivered a strong top-line performance again this quarter with revenue growth of 5%, 50 basis points above our guidance. On the bottom line, adjusted EPS was $1.26, a penny above the midpoint of our guidance. We continue to invest in our pipeline and behind our emerging growth drivers, while also delivering bottom line growth, which was up 8% on a constant currency basis. The EPS beat was driven by two cents from greater operating profit on the revenue beat, partially offset by one cent from tax. The sources of our revenue growth continue to be diversified, both by business and geography, which gives us confidence in its durability. From a segment perspective, we had double-digit growth in diabetes, high single-digit growth in neuroscience, and mid-single-digit growth in cardiovascular. The low single-digit growth in our medical-surgical portfolio was expected, given the comparisons in surgical that Jeff addressed. It's worth noting that MED's surge grew 7% sequentially, and we expect to return to more normalized year-over-year growth starting next quarter. From a geographic perspective, our international markets grew revenue high single digits, including mid-single-digit growth in Western Europe and Japan and low double-digit growth in emerging markets. Moving down the P&L, our adjusted gross margin was 65.2%, down 70 basis points, but in line with our expectations. The decline was entirely driven by foreign currency as our adjusted gross margin was up 40 basis points on a constant currency basis. Our adjusted operating margin was 24.3%, also in line with our expectations. The 90 basis point year-over-year decline was entirely driven by FX. On a constant currency basis, operating margins increased 100 basis points. The organization remains extremely focused on improving our margins. We're more than doubling our underlying productivity in the COGS line through centralizing operations, consolidating factories and suppliers, and driving the Medtronic performance system across our manufacturing network. We're also laser focused on pricing, discipline, and optimization, particularly behind our new innovation. At the same time, we're very early in a number of new product launches that aren't fully at scale, including Afera, Simplera, and Hugo, which can create a mixed headwind for us. That said, on the SG&A line, we're focused on growing at less than sales, like we did again this quarter, as we drive efficiency and productivity gains, particularly in our back office functions. Given all the levers we have, we have line of sight to improving our margins over time while continuing to prioritize and make significant investments in our organic pipeline and product launches. Now, regarding capital allocation, we continue to make choices and invest to drive future profitable growth while also returning capital to shareholders, primarily through our dividend and from time to time opportunistic share repurchases. As I mentioned last quarter, we've increased our focus on tuck-in M&A. We're also continuing to work to evaluate our portfolio. Overall, we view active portfolio management as an important lever to delivering on our long-term strategic and financial objectives. Now turning to guidance. Given our continued outperformance and positive momentum, we're raising our full-year revenue and EPS guidance. We now expect fiscal 25 organic revenue growth of 4.75 to 5%, an increase from the prior range of 4.5 to 5%. For Q3, we're expecting to deliver another quarter of mid-single-digit growth on the top line, and we'd have you model organic revenue growth of approximately 4.75%. Based on recent rates, FX would have an unfavorable impact to fiscal 25 in the range of $225 to $325 million, including $100 to $150 million in the third quarter. Moving down the P&L, we expect our third and fourth quarter gross margins to improve sequentially as currency becomes much less of an impact. We also continue to expect our full-year operating margins to expand as we balance driving efficiencies with investing behind our product launches and in our long-term pipeline. On the bottom line, we're raising our fiscal 25 non-GAAP diluted EPS guidance to a new range of 544 to 550, an increase from the prior range of 542 to 550. For the third quarter, we expect EPS of $1.35 to $1.37. The fiscal year 25 guidance range continues to include an unfavorable 5% impact from foreign currency, including an unfavorable 1% impact in Q3. Further details on our annual guidance can be found in the guidance slide in our presentation. So to conclude, we remain focused on restoring our earnings power, having just delivered another quarter of leveraged EPS growth on a constant currency basis. We continue to expect to report high single-digit adjusted EPS growth in the back half of our fiscal year, in line with our long-term commitment to deliver durable, mid-single-digit organic revenue growth with EPS leverage. Jeff, back to you. Thank you, Gary.

Now before we go to analyst questions, I want to close with a few thoughts. We're delivering durable, mid-single-digit revenue growth, which we've been doing consistently now for two years. This is the direct result of all the changes we've made to the company over the past few years, from the resiliency of our operations and supply chain, to our performance incentive plans, to our culture and our people. We've also been investing to position ourselves in high growth markets, and this has led to a wave of recent product approvals across many of our businesses. Look, it's exciting, and it creates a tailwind that this company hasn't had in a while. We've been working hard to put ourselves in a position to win with revenue growth tailwinds on top of a strong foundation. And now it's up to us It's just up to us to execute and deliver on these opportunities. And then as we go down the P&L, the significant work that we've been implementing to drive cost savings and earnings power will start to show up in our reported results in the back half of this fiscal year. And when our organization delivers strong earnings, we translate this into strong free cash flow. This creates a virtuous cycle with incremental firepower for investment and returning capital to our shareholders. When you combine all of this with the work that we've been doing with portfolio management, we expect to deliver significant long-term value for our shareholders. Finally, I want to thank all of our employees around the world. I know many of you are watching today, and it's because of your efforts and those that came before you that Medtronic has accomplished so much in the 75 years since this company was founded your work directly benefits the lives of over 78 million people this year that's an incredible accomplishment and when i think about the work you're doing to create our future the innovations that you're inventing engineering manufacturing and and preparing to sell this work has the potential to alleviate pain restore health and extend life for hundreds of millions of people and create tremendous value for many other stakeholders. Thank you for everything that you do. 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?

For the cell site 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. For today's session, Jeff, Gary, and Ryan are joined by Q Dallara, EVP and President of Diabetes, Mike Marinaro, EVP and President of the Medical Surgical Portfolio, Sean Salmon, EVP and President of the Cardiovascular Portfolio, and Brett Wall, EVP and President of the Neuroscience Portfolio. We'll pause for a few seconds to assemble the queue.

All right.

We'll take the first question from Larry Beagleson at Wells Fargo. Larry, please go ahead.

Good morning. Thanks for taking the question. Congrats on a nice quarter here. You know, I heard you guys talk about the hypertension opportunity a few times on this call. I think we saw a video before the call highlighting renal denervation. So I wanted to to ask Sean about that. Sean, you have the TPT for already beginning in January. How much of a benefit are you expecting from that? And when are you anticipating the national coverage decision? And are you planning to use the new T-SET process for that? And Sean, I think it's been a while since we've heard you talk about just kind of your overall thoughts on the reload denervation opportunity. Thanks for taking the question.

Okay, thanks. I appreciate the question. We continue to make really great progress on the reimbursement front. As you mentioned, the TPT or the outpatient coverage for devices and what that really addresses is a portion of the patients in Medicare, roughly half of the Medicare patient population, those on fee-for-service would now be covered with this transitional pass-through payment. which is certainly going to be an accelerator for the therapy. But as you noted, getting broader coverage will get us out of the prior authorization loop, allowing you to just build to the codes that have already been established. So making that headway is important. We also have to go further with the private payer universe. That does take longer. You go pair by pair, state by state. In terms of the efforts on coverage what we're doing is going for coverage with evidence development there are numerous pathways for that and we'll be giving an update on that in the in the future but i've got no incremental update today all right thank you thanks barry uh we'll take the next question please brad the next question comes from robbie marcus at jp morgan robbie please go ahead

You there, Robbie? Okay, you can come back.

We'll go come back. The next question comes from Travis Steed at Bank of America. Travis, please go ahead.

Hey, thanks for taking the question. I guess I wanted to just talk about your kind of your ability to grow earnings high single digits, you know, longer term, despite, you know, maybe some potential for you've got maybe a stronger dollar tariff potential. It sounds like some of the initial affair RDN launches could be negative on margins initially, but is there enough upside on some of those programs to offset potential headwinds? Is there a potential cushion on some of the CODS productivity? I just kind of want to know your flexibility and your commitment to continue to grow earnings despite some of those potential headwinds that investors have been starting to worry about.

Yeah, Travis, thanks for the question. And yeah, we are definitely committed to the earnings. I'll let Gary walk you through some of the specifics of your questions.

Thanks, Jeff. You know, we're pleased to raise our guidance on both revenue and EPS for the year as we continue to move and build momentum. There's a lot to be excited about, and we're focused on driving durable both revenue growth as well as restoring the earnings power of the company. On the margin front, you know, what I want you to hear from us is there's no change to our margin expectations. In Q3, we expect margins of 25.6%, up 30 basis points year over year. Full year, we expect operating margins to be 25.7%, up year over year by 10 basis points. Gross margins will be up sequentially in both Q3 and Q4, and that'll deliver our guidance. On the SG&A front, we'll drive leverage through a focus on our highest priorities, leveraging what we talked about before, automation and digitization. We'll make some structural changes, and we have strong discipline on our discretionary expenses to help drive that margin expansion. You know, you mentioned the early launches, and we're committed to investing behind those both commercially and in R&D. So taken together, that mid-single-digit revenue growth will deliver upwards of 10% EPS on a constant currency basis. You mentioned the foreign exchange. That'll be a five-point headwind in line with what we've talked about before, and that'll get us to the 544 to 550 guidance that we gave today. So overall, we feel good. And worth mentioning, we want to set guidance up that sets us up for success.

Great. Thanks a lot. Thanks, Travis. Next question, please, Brad.

Yeah, Robbie, we'll go back to you if you're on. Otherwise, we'll move on.

Yes. Can you hear me this time? Okay.

Yep. Thanks, Robbie.

Great. Sorry about that. Forgot to unmute before. So thanks for taking the question. I wanted to ask kind of as a counter to Travis's question, some of the products you mentioned that were important growth drivers on sales, but early in their life cycle on margin expansion. You know, renal denervation, both Pulse Select, which had the supplier issue this quarter and the upcoming or ongoing Sphere 9, a thorough launch, and Hugo Robotic and renal denervation. Maybe you could just talk about, especially over the next six to 12 months, as some of these products start to launch and progressively launch, how you're thinking about the cadence of growth for them, and then also the margin implications as we think about some of these lower margin products, maybe adding some of the most incremental growth. Thanks a lot.

Yeah, thanks, Robbie. Thanks for the question. Yeah, I mean, look, on the margin side, obviously, you're asking a question around mix. That's a piece of it. But in addition to that, the pricing continues to be an opportunity for us. I think that's been a positive here over the last couple quarters, and I think there's more upside for us there in pricing. And our cost down programs have kicked in and are helping as well. So those are, I think, both tailwinds for us. So on the mixed side, it is a bit of a mixed bag. And Gary gave you some details, but some of the programs like Hugo and Afera that involve capital can be lower, especially earlier in the cycle as you're ramping them up. But then we have some others like Ardian and Neuromod which are our neuromods out there now having a pretty big positive impact on price or on our margins and our mix. And Ardian would do the same. I don't know how you want to add to that, Gary.

Yeah, not much to add, Jeff. I would just say, first of all, all of the... All of this is contemplated in our guidance and for 25 we're expecting gross margins to be flat on a constant currency with foreign exchange driving about a half a point of headwind. I talked about the sequential improvement that we expect in both Q3 and Q4 and our focus on stabilizing and improving from there. Jeff talked about some of the headwinds, but I also say we're really laser focused on cost reduction on price, especially behind our innovation across the board to fund the investment to ensure commercial success of these critical launches.

Thank you very much.

Thanks, Robbie. Next question, please, Brad. The next question comes from Vijay Kumar at Evercore ISI. Vijay, please go ahead.

Hey, guys. Thanks for taking my question, and congratulations on a steady execution here. Jeff, maybe I wanted to focus on ablation here. You mentioned flattish growth in the quarter due to some disruption. What was the issue? When was it resolved? What gives us the confidence of strong double-digit growth in third quarter? Is that some revenue catch-up from second quarter? When do you think Cryo could bottom out? Is that in third quarter? I thought it was interesting you mentioned the revenue per case in Afera. Is that a 3x increase versus Cryo? Thank you.

Yeah, so, you know, as I said in the commentary, Cass, our ablation business, didn't accelerate as we expected this quarter because of this third-party component supplier that experienced... an interruption in their supply to us. That supplier is back on track. That issue is resolved. They've expanded their capacity as well, which is allowing us to ramp the Pulse Select supply and activate new accounts. Pulse Select is doing well. I mean, it's in a good spot from a supply perspective going forward. We literally sold everything. every unit we had in Q2. And as I mentioned, we did double the, you know, or close to double the physicians using Pulse Select. And, you know, we'll now have a confidence to open more accounts, so that should continue. And then we more than doubled, you know, the number of procedures, number of patients treated. And as for cryo, the declines actually got better sequentially. uh in into cry wasn't the issue or you know uh q2 versus i'm sorry q1 versus uh q2 the because in q2 those declines uh got better than q1 uh and so it really was the supply issue that's that's been resolved um so you know we now we have we expect pulse select to continue to ramp we have this and now we have sphere nine uh and and that's and that gives us all this combined you know, the supply issue being resolved and what we're seeing on Pulse Select demand and Afera demand, that gives us the confidence in the strong double-digit growth in Q3. So this is an important area for us. It's an area of focus. And we feel like we're well-positioned with both, you know, the single shot and the only player with single shot and focal going forward.

And sorry, the revenue per case on Afera, is that 3X versus Cryo?

Sean, do you want to handle that one, the revenue per case on Afera?

Yeah, so Vijay, when you do Cryo, it's really just the balloon catheter that you're using. And when you're doing Cryo, thermal base with RF or non thermal with PFA, there's additional components that can be used, including like a mapping catheter, the patches that you use for for navigation system. So the case the case revenue goes up and there's also, you know, the use of other other technologies like crossing needles that we sell as well. So the the revenue per case does go up. I don't think it's three X quite, but it's certainly more and The correlators that choose with the sphere nine catheter, since you don't need a dedicated mapping catheter, it actually saves money per case for the hospital. So it's, you know, the value proposition of having one catheter that can do the entire job with a single stick across transeptal is really appealing to physicians. Thank you guys.

Better workflow. better workflow for them. And even though as excited as hospitals are about PFA, they are still conscious on the price. And so the fact that if you could save them the catheters, like Sean just mentioned, that helps.

Thanks, Vijay. We'll go to the next question, please, Brad.

The next question comes from Shagan Singh at RBC Capital Markets. Shagan, please go ahead.