Medtronic plc

and we look forward to bringing this unique catheter to the U.S. Beyond Cas, we're also making material progress with Simplicity Spiral for hypertension and AltaViva for urge urinary incontinence. Simplicity delivers a one-time, durable, minimally invasive treatment for hypertension and represents one of our largest growth drivers. Now, this is going to be a contributor for years to come, given the 18 million U.S. patients with uncontrolled hypertension. We're seeing strong patient outcomes in the field, and the RDN value proposition, it resonates with both physicians and patients. Now we've got strong and growing clinical data, a broad label, and expanding reimbursement all in hand. Look, we've built the foundation. Now we're focused on growing this new segment and transforming the hypertension treatment paradigm. We've recently activated our direct-to-consumer Go Beyond campaign in key markets around the U.S., which is resulting in a 50 times increase in website visits versus the prior quarter. So a lot of interest coming in from patients. Building a new market, it does take time. That is something Medtronic knows how to do exceptionally well. And in parallel to building out this new market, we're innovating for the long term. first with our trans-radial catheter, which is on track to launch in the second half of fiscal year 27, and with our spiral Gemini trial evaluating multi-organ ablation to further boost efficacy. Now, similarly, we are scaling AltaViva, our tibial neurostimulation device. AltaViva is a simple yet transformational option for treating urinary incontinence. which is a condition that affects 16 million people in the US. AltaViva is a very small device that requires no imaging, no sedation, activates the same day, is MRI ready, and offers up to 15 years of battery life, the longest in its category. Again, we are receiving great early interest and feedback from both physicians and patients. and we are training doctors. We're educating and supporting hospital staff and investing in omnichannel consumer activation. Look, it's early days for both of these launches, and we are focused on disciplined execution to convert early traction into procedures. Now, pivoting to Hugo. This quarter, our Hugo robot received FDA clearance for urologic surgical procedures, enabling us to begin our purposeful U.S. launch. And today, I'm excited to share that we've already completed our first installations and initial cases. As noted in our release this morning, last week we completed our first cases at Cleveland Clinic, where surgeons echoed the strong feedback we continuously receive on Hugo's differentiation across multiple areas. This includes its flexibility, portability, open console, and of course, our trusted instrumentation. Hugo is especially compelling when paired with our TouchSurgery digital ecosystem, an AI-powered data connectivity and analytics technology that is unique to Medtronic. This quarter, TouchSurgery installations increased over 20% sequentially and have now surpassed 1,000 systems globally. Further, we continue to evolve our Hugo system with the fourth-generation software release and continuous system improvements. We are planning to expand into additional indications in the U.S., like hernia, part of our broader general surgery indication, where this system really shines. Customers value, I mean, they really value having a partner that spans the full continuum of surgical care. And Medtronic is the only company that has approved offerings across open, laparoscopic, and robotic-assisted surgeries. which matters as hospitals build and expand their surgical practices. Now, we are thrilled with these four generational growth drivers, but our innovation pipeline is far broader, and we are committed to driving sustained innovation across our portfolio and advancing these steady caves of new technologies across high-need, high-growth categories where we are well-positioned, like MMA, carotid stenting, thrombectomy, coronary DCB, cardiac rhythm management, spine surgery, as well as many others. And to that point, I am extremely excited to highlight a major milestone in our neuroscience business. Just last week, we secured FDA clearance for our Stealth Access surgical system for spinal procedures. Stealth Access is a new transformative platform that unifies AI power planning, robotics, and navigation into one seamless system, elevated by the entire ABLE ecosystem. Stealth access was designed around navigation, which is paramount to surgeons' workflow in the OR. Today, navigation, which we pioneered and we lead, drives 70% of U.S. spine procedures, and really, it just dictates the workflow in the spine OR. So stealth is really two things. It's about taking share as a new platform with improved functionality, and it brings down barriers for physicians to step into robotics without disrupting their workflow. Now, building on our 10,000-unit installed base, we are expanding and opening this segment and extending our leadership. And we're not stopping at spine. We anticipate pursuing future cranial and ENT indications for stealth access. This is an important driver for our CST business and an exciting step forward to improve precision, predictability, and personalization of care. And we're executing our M&A strategy as well with the CathWorks acquisition and CRDN, And we continue to build out our venture and minority investment portfolio with the interis investment and structural heart. Both transactions underscore our long-term strategy to digitize, enable, and build effective and efficient ecosystems within our core markets. So before I turn it over to Thierry to walk through the details of our business performance, our financials, and the guidance, I would like to close with the following remarks. At Medtronic, we are translating the breadth and the depth of innovation across the portfolio into durable growth. We have businesses at different stages of their growth journey, but the cadence of innovation across our portfolio suggests a steadily improving growth outlook for Total Medtronic. We have businesses that are executing exceptionally well today in our position to be meaningful contributors for a very long time. This includes CAS with its strong PFA pipeline, CST with self-access, and, of course, CRM, a large and steady growth engine with meaningful innovation in defibrillation and leadless and in conduction system pacing. We have businesses where the pipeline is now just activating, where we have clear line of sight to meaningful, tangible opportunities that will enhance growth. From CRDN with the ramp of simplicity, pelvic health with AltaViva, peripheral vascular health with NeuroGuard and Liberant, and neurovascular with innovation like Artees, NeuroGuard, and expanding indication for Onyx into MMAE. And surgical, where the launch of Hugo in the U.S. is just beginning. These are all real drivers with tangible reasons for improvement and the potential to impact growth in the coming quarters and years. We also have areas where there is work to do and we have defined plans underway, like in Structural Heart, where we're taking specific actions to fill out the portfolio and improve the trajectory. So with strong contributors delivering today, businesses on the cusp of step change improvement, and segments where we're taking deliberate actions to strengthen long-term competitiveness, we are confident in our ability to deliver durably. So with that, I'll turn it over to Thierry to walk through the details of our business performance. So over to you, Thierry.

Hey, thanks, Jeff. And hi, everyone. I appreciate all of you joining today. Let's start with our cardiovascular portfolio, where this quarter we delivered 11% year-over-year revenue growth, with 13% growth in the US. This represents the strongest growth we've seen in cardiovascular in the last 10 years, excluding COVID comps. CAS grew 80% year-over-year, with PFA accounting for 80% of that revenue. Beyond CAS, the remainder of the cardiovascular portfolio delivered combined mid-single-digit growth. Cardiac rhythm management also had a strong quarter. CRM continued to contribute 15% of our total revenue, and it grew a healthy 5%. This was primarily driven by continued double-digit growth in MICRA, mid-teens growth in 3830 CSP LEAD, and over 70% growth in Aurora EVICD. In peripheral vascular health, we posted high single-digit growth driven by broad strength across our endovenous portfolio. We look forward to the continued launch of NeuroGuard IEP carotid stents and the full market release of our Liberant mechanical thrombectomy system. In structural heart, Q3 was a little softer, as expected, and grew low single digits. We had a stronger quarter internationally and continued to gain share in Europe. This was partially offset in the U.S., where we annualized our EvolutFX Plus launch and saw some competitive pressure. I'll now pivot to our neuroscience portfolio, which grew 3%. Growth was a little below our expectations this quarter, But neuroscience is also where we have one of our broadest pipelines and some of our most exciting opportunities. Importantly, we expect that pipeline to begin impacting growth in the fourth quarter. Cranial and spinal technologies continues to be a powerful engine for Medtronic. This large business delivered mid-single-digit growth including 8% growth from strong pull-through in core spine. We're excited to offer customers our new navigation and robotics platform, Stealth Access, which Jeff just mentioned. With FDA clearance achieved, we expect to see Stealth Access contribute neurosurgery and CST overall as soon as the fourth quarter. Specialty therapies delivered flat results in the third quarter. This is an area where we expect improved performance in the coming quarters, given the series of new product developments. Neurovascular has been challenged over the last quarters due to China VBP and to the recall of Vantage, both of which are now mostly behind us. We also have line of sight to a higher level of growth from the contribution of Onyx's expanded indication. The NeuroGuard carotid stent launch will also contribute, as it's being commercialized by both our neurovascular and peripheral vascular businesses. In pelvic health, we saw a slightly softer sacral nerve stimulation market environment, but look forward to seeing the increased contribution from Altaviva. In neuromodulation, we grew 4%, driven by the continued rollout of our differentiated fully closed-loop technologies, inceptive STS, and BrainSense ADVS. Next, our MedSearch portfolio grew 3% ahead of expectations. First, endoscopy and ACM had strong quarters. Endoscopy revenue grew 10%, led by mid-teens growth in RSF-Ageo portfolio, driven by Next Powder and strong market adoption of EndoFlip 300. Acute care and monitoring saw a 7% growth, led by strength in blood oxygen management and airway access. And finally, our surgical business grew by 1%. We saw strength in energy, in wound management and hernia, with expected softness and stapling. The next phase of growth for this business is the rollout of Hugo, and we're thrilled to see our first installations and first cases so swiftly after the U.S. launch. Wrapping up our business performance is MiniMed, our diabetes business, which delivered 15% reported and over 8% organic growth. Performance was led by double-digit strength in international markets, but we also saw acceleration in the U.S., with strong sequential lift driven by Simplera Sync and Instinct, which both just launched in December. Our diabetes business continues its strong innovation cycle, supported by multiple recent regulatory and pipeline milestones. In addition to introducing Instinct and Simplera to the market, we secured several FDA clearances that further expand 780's indications. We also announced that 780G system is now available through pharmacy with agreements that cover the majority of commercially insured lives in the U.S. And we submitted MediMedFlex to the U.S. FDA and began the U.S. pivotal study for Vivera, our third-generation fully closed-loop algorithm, which we believe will help maintain our leadership in delivering industry-leading outcomes. Finally, our MiniMed Fit Patch Pump remains on track, and we intend to submit it to the US FDA by this fall. The planned separation of MiniMed is perfectly on track. Our preferred path continues to be a two-step IPO and split. We continue to expect the separation to be complete by the end of calendar year 26. Now, turning to the financials, this quarter, revenue of $9 billion grew 8.7% reported and 6% organic, a 50 basis point acceleration from prior quarter and 50 basis points above our guidance. Geographically, this performance was balanced, led by high single-digit growth in Western Europe with mid-single-digit growth across the U.S. and Japan. U.S. growth was 6% year over year, the strongest performance we've delivered since fiscal year 2019, excluding COVID comps. In China, we delivered low single-digit growth while navigating ongoing but manageable volume-based procurement in a few businesses. Excluding VBP, our growth rate in China was mid-single-digit. Our adjusted gross margin was 64.9% ahead of expectations. As I've done in the last several quarters, let me walk you through the rough breakout of the components. We realized 30 basis points of benefit from pricing. Net of inflation cost down was negative 20 basis points, as the third quarter is typically our lowest quarter for generating cost efficiency savings, and we had some prior year non-recurring items. Mix was negative 100 basis points, mostly driven by CAS and diabetes. As discussed in prior disclosures, with CAS in the early stages of launch, this business is currently impacted by the mix of lower margin capital to higher margin catheters, and diabetes is in its early manufacturing ramp-up of Simplera. Over time, as you know, we expect this mix dynamic to improve, as we scale CAS and separate the diabetes business. Tariffs impacted the business $93 million, or 110 basis points, in line with forecast. And finally, foreign exchange provided an approximate 40 basis points tailwind. Adjusted R&D was 8% of revenue and increased 7.4%. On an organic basis, this outpaced revenue by 50 basis points. Adjusted SG&A was 32.3% of revenue, which is 30 basis points lower than the third quarter of last year. We continue to fuel our PFA launch and develop and build the markets for Simplicity, AltaViva, and Hugo, but at the same time, we deliver disciplined leverage in G&A. Our adjusted operating profit was $2.2 billion, resulting in an adjusted operating margin of 24.1% ahead of expectations again. Our adjusted tax rate was 17.3%, about 100 basis points higher than forecast, largely due to jurisdictional mix of profits. All in all, adjusted EPS was $1.36, three cents above the midpoints of our guidance range. Now turning to guidance. On the top line, we're reiterating fiscal 26 organic revenue growth guidance of approximately 5.5%. In the fourth quarter, we expect revenue growth similar to Q3, so around 6% off a stronger Q4 25 comp. Moving down the P&L, we expect our fiscal 26 gross margin to increase slightly X tariffs. Pricing, FX, and COGS efficiency programs are expected to more than offset the negative impacts of business mix, primarily from CAS and diabetes. We anticipate a tariff impact to COGS of approximately $185 million, including $75 million in the fourth quarter. Including tariffs, we expect fiscal 26 gross margin decrease of roughly 30 basis points. We expect fiscal 26 adjusted operating profit to grow approximately 5% or 7% excluding tariffs. Our fiscal 26 operating margin is expected to be roughly flat excluding tariffs and down about 50 basis points including the tariff impact. In totality, we expect these results to deliver gross margin and operating margin leverage, X tariffs in the second half of the fiscal year 26, as we stated last quarter. Turning to EPS, this quarter we saw a beat of 3 cents. This was largely due to slightly better than expected revenue in the quarter, mainly from CRM and ACM. This was partially offset by the aforementioned tax pressure that we saw in the quarter. As we expect CRM and ACM to normalize and the tax pressure to carry into Q4, we are maintaining our fiscal 26 EPS guidance in the range of $5.62 to $5.66. Look, we're excited about the quarter, and we think Q4 is going to be another robust quarter and that we will sustain our growth at a higher level and into the next year. We're making progress on margin expansion, and the negative mixed effect from CAS and diabetes are going to get better. We're going to continue to invest in growth areas like R&D, sales and marketing, and M&A to capitalize on the opportunities ahead of us. and we will also continue to drive efficiency in functional areas. All told, we are committed to our guidance, and we maintain our expectation for high single-digit EPS growth in fiscal year 27. Back to you, Jeff.

Okay, thanks, Thierry. Now, before we go to Q&A, let me close with a few final thoughts. So we're encouraged by the progress across the business, as Thierry just said, and we remain committed to stronger, durable revenue and earnings growth. Our PFA trajectory is strong, and we're progressing on multiple billion-dollar opportunities. We're reinforcing our future pipeline, and we're committed to organic and inorganic investment to further bolster the portfolio. Bottom line, we are delivering. Now, to our Medtronic colleagues around the world, thank you for your unwavering commitment to our mission and to the patients we serve. You're delivering for customers and for patients, and you're turning our strategy into performance. So, thank you. With that, let's turn to Q&A. So, first, Ingrid, welcome to your first earnings call. And now, can you please provide the instructions and cue up the analysts?

Thank you, Jeff. For sell-side analysts that would like to ask a question, please select Participants button and click Raise Hand. If you're using the mobile app, please press More and then select Raise Hand. Your lines are currently on mute, and when called upon, you'll receive a request to unmute your line. You must respond to this before asking your question. Finally, please be advised this Q&A session is being recorded. We'll now pause to assemble the queue. We'll take our first question from Travis Steed at Bank of America. Travis, please go ahead.

Hi, everybody. Thanks for taking the question. I guess first I'll start on just the comments on accelerating revenue growth next year and growing earnings high single digits. When you think about CADs, obviously – can you hear me okay? Can you hear me okay?

There we go. Yeah.

Okay, I just wanted to ask about the accelerating revenue growth for next year. And also the commitment to grow earnings inside single digits. I guess when you think about the overall portfolio, obviously CAS is starting to hit tougher comps. And, you know, this quarter, you know, surgical is only growing 1%. So just trying to think about how you get that business accelerating with Hugo and just like the commitment to be able to deliver on the commitments that you've kind of laid out for FY27.

Well, thanks, Travis, for the question. I'll give it a start and then hand it over to Thierry. I mean, look, on the top line, obviously, as you mentioned, we had a really strong quarter with Cass. You know, we still, you know, we think that growth is going to continue and become a larger part of the company, obviously. We're well positioned there. And then we, you know, our other big growth drivers, particularly Simplicity for hypertension and AltaViva for overactive bladder, we see them beginning to kick in here even in Q4. And then you've got a number of other businesses here that are going to, you know, start growing faster than they have been here recently. You know, one is CST with the Stealth Access. I'm sure we'll get some questions on that. But I do think this is kind of underappreciated, quite frankly, you know, by the street. This is, you know, not just a new robot. It's not just an extension of Mazor. It's a whole new platform. that, you know, that has a lot of benefits to it. And I think that's going to create growth for the short and long term for CST. And then neurovascular is going to kick up as well. Neurovascular has got a number of new products, like the Onyx, you know, indication for MMAE, as well as our carotid stenting product and NeuroGuard. And then it's anniversaries, BBP and a few other things. So you're going to see a kick up in neurovascular as well. So I think we feel good about the growth continuing here, not just in Q4, but out into FY27.

And on the EPS side, so, you know, as I mentioned in the comments, the algorithm is here, right? So we have the accelerated growth. Things are getting better at the gross margin level, in particular in the second half, as we'll see the mixed effect from Cas getting better and the separation of diabetes will continue to drive the leverage on the functional areas, in particular in GNA. And we'll continue to invest in R&D and in M&A. So we're reiterating the high single digit EPS growth guidance for 27. We do have a couple, you know, meaningful puts and takes in the number next year. And as we're getting more visibility, we'll keep you posted on what the impacts are. But to name a few, so we'll have the carryover from the tariffs element going into next year. You know, this year we had about two and a half quarters of tariffs, and that will carry over into the full year. I think the way to think about that is about $75 million per quarter. So, on a full year basis, it means around 300 million of headwind versus the 185 we had in what we're having in 26. We'll have a little bit of help from the fact that there's 53 weeks in fiscal year 27 as opposed to 52 usually. And then, you know, the diabetes deal, we fully expect the deal to be accretive, but between the moment we do the IPO and the moment we do the split, You should expect some dilution to the tune of one to two cents per month. The reason behind that is that most of the stock, the Medtronic stock retirement that we will do that drives the accretion happens only upon the full separation. And so we'll see the accretion later, but initially we've got a little bit of pressure coming from that. And we've also embedded in the guidance four to five cents of dilution coming from M&A activity. So we've already announced CathWorks and Antares, and so we've embedded that in the guidance. So, it's all in as we get more visibility to the timing of diabetes and the closing of the M&A deals. We'll give you more specifics on the different impacts in the Q4 release. But as you can see, we're committed to the growth acceleration. We're committed to the investment with M&A and with R&D. And we're committed to the guidance.

Yeah, and just on that – Go ahead, Travis. Excluding the selling day? Yeah, there's that extra selling week next year. Is the growth acceleration excluding that extra selling day?

So that will be part of it. That will be part of it. And, again, we'll give you the details of the impacts as we go into the Q4 announcements.

When I think about growth acceleration, you mentioned CAS in Q3. I mean, beyond CAS, you saw our CRM business and our peripheral vascular health business both step up in Q3. You know, Q4, like I said, and beyond, think about CST and neurovascular starting to accelerate. And then as you get into FY27, that's when the Ardian and AltaViva, you know, really kick in, and also Hugo. So we feel good about that acceleration.

Great. Thank you.

All right, our next question comes from Vijay Kumar at Evercore. Please go ahead, Vijay.

Thank you, Ingrid, and welcome to your inaugural earnings call here. Jeff, congrats on a nice sprint. You know, I had one product question and one clarification on the guidance. On the product, you mentioned RDN, you know, R2B, but those will be growth accelerators in fiscal year 26. How should we, you know, monitor the progress? Are there any goalposts? that we can look forward to in tracking the launch curves for RDN and AltaViva.

You know, it's a good question. I think we'll start to lay out more concrete goalposts as we go forward. Right now we've been talking a lot about, you know, the leading indicators that we're seeing with both, and we're seeing, you know, really strong leading indicators. Like with AltaViva, we talked about, you know, training 500-plus physicians. You have strong demand training 500-plus physicians. And like I said last quarter, I mean, this is over the weekend, often traveling. It just shows the commitment here. And then things like in renal denervation, I'd say it's things like, you know, the opening of new accounts. Like this quarter we opened 200, you know, over 200 new accounts. Our physician finder is up to 150 physicians. And remember, that's a low number. It's a hard – it's a high bar to get in. You have to do five cases and plus opt-in. So there's a lot more physicians doing cases today. And we'll continue to track, like, the covered lives. Like, for Ardian, we're already up to, like, 100 million covered lives, which is about one-third of the – of the population here in the U.S. So those are all leading indicators, and we'll start putting more, you know, other, as you put goalposts out there, as this starts to mature a little bit, both of these launches. I don't know if you have anything to add to that, Terry. Nope.

Great. Just one clarification on the extra week, Jeff. You know, we're looking at exit rates of 6% organic, right? And let's assume next year is north of 6%. The extra week is almost two points of growth. So are we looking at, you know, base organic excluding extra weeks somewhere in the 5%-ish range or any thoughts on how to think about extra week contribution?

So maybe I'll take that one now, and thanks for the question. Look, first, it's a little bit less than two points of full growth, and, again, we'll give you the specific calculations as we close the year. But the way to think of it is that there's going to be growth acceleration excluding the extra week, right? So it should be upside. So we should have, you know, better growth than we have in fiscal year 26 in 27, and the extra week should be on top of that. Thank you so much.

Is that clear, Vijay?

Crystal clear, yes. Thank you.

Great. And our next question comes from Larry Beagleson at Wells Fargo. Larry, you are live.

Good morning. Thanks for taking the question. Jeff, I wanted to ask about CAS. And your growth continued to accelerate this quarter to 80% worldwide, which implies the worldwide EP market grew about 20% in calendar year Q4. So my question is, how are you thinking about the EP market growth in calendar year 26 and And your cash growth, you know, going forward now that you're lapping the Affair U.S. launch, I think to achieve the trailing 12-month, you know, $2 billion goal, it looks like your cash growth has to kind of sustain about 80% the next two quarters. Is that directionally accurate? Thanks for taking the question.

Well, first I'd say, you know, we agree with you on the market growth in our, you know, fiscal Q3 or Q4 here of around 20%. And we think the market will continue to be like that in the near term. And for our fiscal 27, we think it's going to be at least high teens. And then thereafter, a strong double-digit market. So we see the market growth continuing. And then, you know, we believe we're really well positioned with our portfolio of catheters, you know, that we have, as well as mapping. In terms of our business growth, we do see it sustaining here in Q4, and we haven't provided guidance beyond that. But, again, I'd like to say I think we're very well positioned here. When you look at the four players in PFA, I think we've got two that are really their value proposition right now is setting around mapping, and we feel like we're very well positioned against them. We still think the catheter carries the day, and we have integrated mapping. And then when you look at our competitor that's really their value proposition centers around catheters, we believe we have a better portfolio of catheters. Our Sphere 9 is, like I said in the commentary, proven to be quite versatile. And I know initially... Our competitor here did a pretty good job of putting on a narrative that Sphere 9 was more of a niche. And I think as that's gotten out there, that's proven not to be true as it's being used across persistent and paroxysmal. It's new cases, redos. It's simple versus complex. It's being used across the board. And then we've got Sphere 360, you know, got CE marked, and it's a single-shot catheter. And, again, you know, that's probably the one catheter that's got more excitement than Sphere 9. And we started the U.S. trial. And then, of course, we're going to have mapping upgrades, you know, on a regular basis. So feeling pretty good about our position today as well as tomorrow. And, like I said, the underlying market's really strong.

All right. Thanks so much, Jeff.

Thank you, Larry. Our next question comes from Patrick Wood at Morgan Stanley. Patrick, please go ahead.

Perfect. Thank you so much for taking the question. I'll keep it to one just given there's so much going on. Obviously, the cash works and the interest deals, I know you were close to cash works for a long time. How do we think about capital allocation M&A? There's a lot of other companies doing very large deals in this space. I'm just trying to work out You know, directionally, do you guys feel still more that it's kind of bolt-on M&A, technology tuck-ins, that kind of things, relative to larger deals? And how do you think about capital allocation going forward? Thanks.

Well, thanks for the question, Patrick. And, like, as we've stated, we're very committed to accelerating M&A, and you're starting to see that with CathWorks and Interis. And, again, it's very, you know, focused, tied to our strategy venture investments, right? that might lead to ultimately to M&A and then M&A. And we are focused on more like what we would define as tuck in deals. They can get up to several billion dollars, but tuck in or a close adjacency to our existing business And a number of them, though. I mean, that's the other thing. I think it's a fairly meaningful amount of capital among several different tuck-in venture and tuck-in opportunities across our portfolio. Again, prioritizing maybe the higher growth areas. And in some cases, maybe having multiple shots on goal, like we did with Pulse Shield Ablation, right? We had an organic program. We went out and got a FARA. You may see us do that again in some of these high-growth, really must-win, you know, markets. But that's how I would say it. Tuck in across many of our different segments and subsegments, as well as venture.

Appreciate it. Thanks for taking the question, guys.

Great. So Robbie Marcus from J.B.

Morgan will be our next question. Please go ahead, Robbie. Great. Can you hear me okay? Yep.

Great. Good morning. Thank you for taking the questions. Two for me. Maybe I'll ask them just as one. Jeff or maybe Thierry, as you think about the fiscal 27 guidance, and especially I imagine you'll have Hugo and renal denervation and tibial spend to support those launches and continued investment in CAS, you know, how do you think about getting to the high single-digit EPS growth? If you could give us some high-level drivers there. And then second part, the street's sitting at 8.5%. EPS growth, I know traditionally you do something like 6.5 to 9.4 is high single. Do you think the street at 8.5 is at a good midpoint of the range to start here? Thanks a lot.

Hi, Robbie. Thanks for the question. So, again, on EPS, you know, the high-level drivers, we talked about, you know, the accelerated growth, and obviously that's going to help from a leverage standpoint. If you look at the gross margin line, what you've seen so far is operational improvements in pricing and cost-out that have been offset by the mixed effects on gas. diabetes, and as I've stated a couple of times already, those are going to get better. So the CAS improvement comes from the mix shifting towards more catheters and less capital equipment, which will help from a margin perspective. And then on the diabetes side, it comes from the separation, right? So diabetes has a lower gross margin rate than the rest of the business, and so once that business goes away, it will give us a natural lift from a gross margin perspective. If you start looking at overhead, look, we're going to continue to lean into R&D and sales and marketing to develop the franchises that you mentioned. So we're putting resources in RDN. We're putting resources in CAS. We're hiring the mappers that are necessary. We're doing the direct-to-consumer marketing, in particular on Renewal Innovation and AltaViva. And we'll continue to do that, but net-net, the SG&A line will provide leverage because we, as we're having this quarter, for example, a Q3, you know what you see is the leverage that we get on the gna line more than offsets the resources that we're putting from our sales and marketing perspective so look that will provide some uh some improvements on operating margin and then uh below the line um you know we'll continue to have a little bit of a headwind on the interest line because we're refinancing debt that was contracted almost at 0% four or five years ago, with debt that's now at sort of 3.5%, 4%. And we'll continue to have some pressure on tax, but the tax line is kind of getting to where it's going to stabilize now. And then look, you know, I mentioned we have a few puts and takes where we need to understand the timing between now and your end. One is the timing of the diabetes separation. And as I said, you know, between the IPO and the split, we get about one to two cents of dilution from the fact that we're losing 20% of the profit of diabetes, but we don't have the benefit from the share count reduction yet. You know, that share count reduction is calculated on a 12-month rolling average, so you'll see that gradually get better. And then we'll have some dilution coming from M&A. So the guidance is all in at high single-digit EPS growth. Now, the second part of your question on the 8.5%, it feels like some of the latter items that I mentioned, so the sort of temporary dilution that we get from diabetes and some of the M&A dilution is maybe not fully embedded in what the street sees right now. And as we get more visibility, we'll help clarify that.

Thank you very much.

Our next question comes from Matt Taylor at Jefferies. Matt, please go ahead.

Hi. Thanks for taking the question this morning. I wanted to follow up on the question around capital allocation and TAVR. I guess it was interesting to see the investment in tariffs. I was wondering if you could comment about why you didn't just buy the whole company versus invest. We also saw over the weekend the results of a longer-term follow-up for Corval published in Jack. And similar to the Edwards trials, there was some late catch-up in mortality. I was wondering if you could comment on that in the tab around.

Sure. I think, you know, on your first call on terrorists, I mean, it's just we feel – The structural hard space is one of the spaces we help pioneer. We have a really strong position, great reputation, but we want to expand in that. We've got some organic programs. Obviously, we have our Evolute platform. We've got Mitral and Tricuspid replacement programs, but we still think there's an opportunity here to expand. In the case of TAVR, the balloon expandable is the larger piece of the market, and this is an opportunity to get into that market. Again, we may have multiple shots on goal here, but I think Interis is a good one to invest in and partner with, and we'll see where we go from here there. And then in terms of the Jack article, you know, I would say here that, you know, look, this is – I just want to emphasize that this is – you know, an old valve that's no longer commercially available. And it's an old procedural technique that, you know, that we've, you know, provided guidance. And basically all that communication did is reiterate the guidance that we provided back in 2020. And so that's, you know, that's what's happening there. And, you know, like I said, we're collaborating with our physicians to make sure they understand all of this and, you know, moving forward from here. So that's, I don't know if you have anything to add there. but bullish on the structural hard space. And I would, you know, the terrorist investment and, you know, who knows, maybe more following that.

All right. Thanks for the call, Jeff.

All right. Our next question comes from Matt Mixick at Barclays. Matt, please go ahead.

Great. Thanks so much for taking the question. And congrats on the Antares investment, by the way. So on CAS, I'll just ask one question. You mentioned, you know, generator sales or kind of a headwind to gross margins at this point, you know, the mix is maybe shifting a little more towards capital. You could give us a sense of when that starts to normalize. And then also in terms of the runway, I think we understand that hiring mappers is maybe the, you know, the – bottleneck here, if you want to put it that way. You know, you need more people to open more centers to get more catheter use. Any sense of where you are in that continuum through the academic centers or into the general, you know, centers in the U.S. and some sense of the pace that you're able to maintain for hiring centers? Helpful caller. Appreciate you taking the question.

Thanks, Matt. You know, on the last part of it, where are we? I still think we're kind of relatively early in our launch here. We still have a long runway to go, which is good, in penetrating some of these high-volume academic centers as well as getting out beyond that. And to your point, the mappers, hiring mappers has been critical. It's not, you know, the topic, if you will, but it is a important topic here. We've been able to stay ahead of it, but it is the thing that we're probably the most focused on right now is continuing to hire mappers. You know, and a lot of these mappers tend to be pretty dedicated to this space, and they're seeing where the direction of travel is, or to use a Minnesota term, where the puck's going. And so that helps a lot as well. So that's how I would, you know, comment on there. And what was the first part of the question?

The first part was on the dilution that comes from the capital equipment and when does the mix turn around. So first what I want to say is CAS is a fantastic business from an operating margin perspective, right? So it is slightly dilutive because of this mix issue at the GM level, but it's driving significant, you know, profitability at the total business level at the operating margin level. You know, when it's going to turn around between capital equipment and catheters, you know, I want to say it's almost a good problem to have, so I hope it turns around as late as possible, because as we're building the install base, it's always going to be good news going forward. That being said, I think you'll start to see an inflection in the second half of next year. The mix is, you know, is starting to improve. with the catheter sales increasing. And look, year over year, CASA is going to drive gross margin improvement as early as 27. So look, it's a great business to be in, and it's all good news going forward.

Great. Thank you.

Our next question comes from Chris Pasquale at Nefron. Chris, go ahead.

Thanks. I wanted to ask about Hugo. Jeff, you talked about the impact of simplicity and UltaViva really beginning to kick in as soon as next quarter. I don't think you included Hugo in that group, so we'd love to hear how you're thinking about the timeline for Hugo to really begin to move the needle within the surgical business and any qualitative comments you can make about the system pipeline right now.

Well, first of all, look, super excited about where we are with Hugo. Big quarter for us this past quarter, getting the FDA approval. We just announced this morning we completed our first cases in the U.S. in February, earlier this month in Cleveland Clinic. We got more scheduled this week, got other centers. And all the leading indicators of Hugo – and, oh, by the way, on those cases, we got great feedback in terms of how the system is performing and its future opportunity in the U.S. market – The leading indicators are all positive in terms of, you know, the smooth case rate, procedure growth globally, and utilization. They can both continue to be really strong. We watch those every week. I know the business watches it every day. I see them every week. And we're seeing, you know, a pretty meaningful step up in installations around the world, especially as the U.S. kicks in. And so, look, we expect to step up in Q4. Now, the surgical business is a big business, has some puts and takes. So you may not move the needle on the surgical business quite yet. But underneath the covers there, QGO is growing and growing pretty fast now. And eventually you'll start to see this move that big $6 billion business. But we like where we sit. Really excited about getting in the U.S. market and the reception that we're getting and the orders that we have.

Great. Thanks, Jeff.

Okay. Next question comes from Danielle Antofi at UBS. Danielle, you are live.

Good morning, everyone. Thank you so much for taking the question. Jeff, I was hoping you could talk a little bit more about how we should think about renal denervation simplicity and the market development that you're talking about. You know, we've talked to some referring physicians who've been involved in renal denervation since the very beginning, and she sounds like she's getting a lot of calls from folks. I'm just curious, what goes into actually developing this market, building out, helping centers build out referral networks, et cetera? And if you could give any color on actual numbers to date, you know, even directionally. Thanks so much.

Sorry about that. Sure. Thanks, Danielle. I mean, I appreciate that question. I mean, you know, first of all, in terms of physicians getting a lot of calls, That is really starting to kick in. Just to give you, again, I appreciate that it's a leading indicator, but it's pretty powerful. So on our direct-to-consumer website around simplicity, I'm just double-checking, last quarter we had maybe 50,000, or Q2 rather, we had about 50,000 visits. In Q3, we had 2.5 million visits. So the consumer demand is really spiking here, and we're just getting started. Like I said earlier, we opened up over 200 accounts. The position finder is up. Reimbursement is strong. We're getting that strong consumer demand. And most importantly, we're getting terrific results. patient results, patient outcomes, right, with the blood pressure coming down meaningfully, it's staying, and it's really resonating with patients. And that, in and of itself, is getting doctors excited. And so what we're doing is we've been hiring a lot of people in terms of market development. And there's several different roles here, right? One is building that referral pathway from the general practitioners and the hypertensive specialists into the hospital, into that procedural list, We've got a lot of people around health economics, around coding and billing as well, helping the hospitals. So it's a number of roles like that, right, health economics, coding, billing, as well as some of the other roles I said in terms of the market development, building those referral pathways. And that's really where things are right now. I'd say all the market, like the initial foundational elements have all been, like, The chips have turned over green, right? The FDA approval is breakthrough approval, and it's broad. The CMS reimbursement, it's a good number, and it's broad. You know, the commercial payers are, you know, falling in line. And, you know, the competitive dynamics are way better than we thought. Initially here we're doing – I saw different analysts, you know, over the last couple of years, predictions on the mix between us and the other competitor on the market. We're doing way better than any of those models. And so now we've just got to build this market. It's all those things we said, Danielle. But, again, where we're really excited, where you feel the energy, is it all starts with those patient outcomes and how this is resonating with consumers. So the other thing we're going to do over time, besides building the referral pathway, working with hospitals, is building the brand around simplicity, right? So all the $50,000 to $2.5 million I talked about in site visits, that's all about lead development. lead generation. We'd also like to build the brand of simplicity and make it synonymous with hypertension management. So that's going to be an investment that Thierry talked about for FY27. So a lot of exciting, a lot of excitement right now in RDN. And it'll start to, you know, the numbers will be more meaningful in FY27 for us, the actual revenue, the lagging indicators. And again, it'll be, it's very profitable right out of the gate for us.

Thank you so much. All right, and as we reach the top of the hour here, our last question is going to come from Joanne in Winship City. And before we move to Joanne, please, of course, e-mail us for any of those we did not reach today. Sorry and thank you, and we'll look forward to talking to you soon. But, Joanne, please go ahead.

Thank you so much, and good morning. I'm going to ask the stealth access question and what you can share with us about the product and why you're so excited about it. Thank you.

Well, thanks, Joanne, for that question. You know, first of all, like I said, I do think this is – has been – is meaningfully underappreciated in the – not so much maybe in the clinical community from spine surgeons, but maybe in the investment community. Because, look, this robot does two things. First of all, it's not an extension of Mazor. It's a new platform with a ton of new functionality that's going to be very value-added. But the other thing that's really important here is – how it fits into the workflow. So today, 70%, I mentioned in the commentary, 70% of procedures in the U.S. are navigated. That's like navigation in ORM, which we invented and we lead by far. And, you know, today robotics doesn't work well with that workflow. So that's why robotic penetration is a lot smaller than the 70% that we're seeing with navigation. The Stealth Access fits right into that workflow. So it's one seamless system from the initial imaging to the AI-based surgical planning right into the case, navigation, imaging, and now robotics. One seamless workflow that, trust me, surgeons really have been waiting for. So you've got a better robot with more functionality. And then you've got a much, much, much better workflow that, as you know, is super important to physicians and health systems. And this is just effectively lowering the barriers to step into robotics for spine surgery. And it's going to grow the market, I believe. And we are definitely going to continue to take share. And this really, you know, this really works. which lengthens or extends our lead, in my opinion, from our primary competitor in this space. The competitive dynamics have dramatically changed over the last couple of years. We're enabling technology, and our ABLE suite is key to winning. And this, like I said, extends our lead over our competitor. And so super excited about that. But in closing here, I'd say beyond some of the big – generational growth drivers we mentioned. We talked a lot about CAS and RDN, a little bit about AltaViva and Hugo. I would add to that robotics piece, I would add, you know, self-access. But we've got a breadth of innovation right now in Medtronic, which is why we're getting the excitement here. You know, whether, you know, you saw from this quarter, like I mentioned, from CRM and Purple Vascular Health, which we didn't get any questions on, their growth has meaningfully improved here from a number of new products like carotid and thrombectomy. We talked about CST accelerating. Neurovascular is accelerating with new products that they've got, you know. you know, between the NeuroGuard carotid, you know, product as well as, you know, MMME, MMAE. That's a mouthful. And then you've got these, like I said, these bigger growth drivers like Ardian and AltaViva that are at the very, very – and Hugo that are at the very early stages. So you're starting to see the breadth kick in, which is beautiful to see. I know that in this business, innovation is key, and we've got a depth of innovation with these big generational growth drivers, but we also have the breadth. And as Thierry walked through, I think it was Robbie's question, we're pulling different levers to make sure that we're investing appropriately in these organically, whether it's increasing R&D, funding direct-to-consumer, hiring a ton of mappers, and if you're a mapper out there, you know, hit our website up, you know, and then kicking in the M&A, right? So, you know, we're really shifting our stance, moving into more of an offensive footing here, and it's based on just the momentum that we have and the momentum we see coming.

All right. Thank you, everyone, and I'll turn to Jeff for some closing remarks.

I thought that was the close. Okay. Thank you. Thank you all for joining today and all of your questions. And, you know, appreciate your support and continued interest in Medtronic. And we hope that you'll join us for our Q4 and our four-year fiscal 26 earnings broadcast, where we're going to update you on the continued progress that we just talked about against our short and long-term strategies. With that, have a great rest of your day. Thank you.