Medtronic plc

Good morning, and welcome to our fiscal 27 first quarter earnings webcast. I'm Ingrid Goldberg, head of Medtronic Investor Relations, and I'm joined by Geoff Martha, chairman and chief executive officer, and Thierry Pieton, chief financial officer. Geoff and Thierry will provide comments on the results of our first quarter, which ended on July 31st, 2026, and our outlook for the remainder of the fiscal year 27. After our prepared remarks, we'll take questions from the sell-side analysts that cover the company. Earlier this morning, we issued a press release discussing our quarterly results and several financial schedules. 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 our statements will be forward-looking and actual results may differ materially as explained in our SEC filings. We undertake no obligation to update any forward-looking statements. unless otherwise stated 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 first quarter revenue in the current and prior year reported as other as well as significant acquisitions divestitures or other significant district items as a reminder fiscal 27 is a 53-week fiscal year with the extra week occurring in the first fiscal month of the first quarter and is included in our q1 results References to sequential revenue changes compare the fourth quarter of fiscal 26 and are made on an as-reported basis. Unless otherwise stated, all references to share gains or losses are on a revenue and year-over-year 52-week basis, comparing our most recently completed fiscal quarter to our competitors most recently completed 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 the earnings during the fiscal year. With that, I'm now pleased to hand it over to you, Geoff.

Okay, thanks, Ingrid, and good morning, everyone. Thank you for joining us. Look, Q1 represents a strong start to fiscal 27. with revenue of $9.8 billion and adjusted EPS of $1.45, both well ahead of expectations. Organic revenue growth was 13.7%, reflecting strong underlying market demand and excellent execution across our businesses. Importantly, these results reinforce our confidence in the durability of our growth. Our three largest businesses, CRM, CST, and Surgical, all delivered strong results this quarter. Cardiac Ablation Solutions continues to perform exceptionally well, and we are making progress in Simplicity, AltaViva, and Robotics with Hugo. And at the same time, our recent acquisitions are contributing to reported growth and strengthening our portfolio for the long term. So we are executing, and this quarter's results are a clear proof point. Our strategic and operational focus is translating into stronger commercial performance and greater consistency. With healthy underlying markets, relentless execution, and multiple growth platforms all gaining scale Medtronic is increasingly well positioned to deliver on our fiscal 27 targets and our long-term revenue and earnings trajectory. So with that, let's get into the details of what drove the quarter. Starting with cardiac rhythm management, which delivered an outstanding quarter with global growth of 15%. Performance reflected strength across both high power and low power therapies with contributions from EVICD, MICRA, and conduction system pacing, including Omnia Secure. At more than $5.5 billion in annual revenue, CRM is one of our largest businesses and has been a longstanding source of strength for the company. As an example, Mycra, which launched more than a decade ago, continues to grow at a healthy double-digit rate, which underscores the lasting impact of meaningful innovation within CRM. and we're not standing still. We are further advancing innovation across pacing, defibrillation and diagnostics supported by a strong pipeline and excellent execution from our teams. Look CRM is a flagship business for Medtronic and we continue to view this business as a key source of innovation. One that will drive durable growth for years to come. Cranial and spinal technologies was another Q1 highlight, delivering 13% growth, including 14% in the US and 10% internationally. Our able ecosystem continues to resonate with customers as it connects technologies that have traditionally operated in silos. By bringing together AI-driven planning, imaging, navigation, robotics, implants, and outcomes data across the surgical journey, Able helps surgeons make more informed decisions, operate with greater precision, and learn from each and every case. And our recently launched Stealth Access platform also meaningfully outperformed this quarter. While we're still early in the launch, adoption is building and customer feedback has been very positive. With US spine robotics penetration still in the single digits, we see a significant opportunity to drive ecosystem pull through and extend our leadership position in spine and cranial technologies for years to come. Now moving to surgical, which delivered another strong quarter with 9% global growth. Surgical is our largest operating unit with over $6 billion in annual revenue. Here we're leveraging our decades of innovation and operating room partnerships to build a connected surgical ecosystem. And we're going to dive deeper on this in just a few minutes. In addition to these businesses, our next cycle of large growth opportunities are playing a more significant role in our performance. Cardiac Ablation Solutions delivered another quarter of excellent performance, further strengthening our position in one of the most attractive markets in medtech. In Q1, CAST delivered 88% worldwide growth, reflecting the team's execution and the strength of our platform. Sphere 9 momentum continued with a nine point increase in US share during the quarter. and I'm pleased to share that we achieved an important commitment this quarter ahead of the timeframe we promised, surpassing the 2 billion mark in trailing 12 month revenue. The broader EP space remains healthy, growing in the mid teens and we continue to expect CAS to grow up more than two and a half times the market rate this fiscal year. Our U.S. Zafira installed base again grew more than 35% sequentially in Q1, demonstrating that we remain in the early innings of this opportunity. And as we look ahead, our runway extends well beyond today's share gains as we build out a comprehensive EP platform. One that spans mapping, ice catheters, focal ablation software, and single shot innovation. positioning ourselves to serve electrophysiologists with more complete solutions and expand the number of patients who can benefit from advanced EP therapies. This quarter we expanded our offering with CE Mark for Sphere 9 for the treatment of ventricular arrhythmias, including ventricular tachycardia, opening the door to a patient population that is notoriously difficult to treat. and enrollment in our USVT pivotal trial is also underway. We're only at the beginning for CAS. With a differentiated platform, a growing installed base, expanding indications and a strong innovation pipeline, we are well positioned to treat more patients, to continue to gain share and further extend our leadership in this large and growing market. Now turning to simplicity, Q1 was another strong quarter and we are increasingly encouraged by this market's evolution. Real world outcomes, well, they just keep getting better as evidenced by the three year data we recently presented. And we are pleased to share that the Spiral Affirm clinical trial was accepted for a late breaker at TCT this fall. Look, the conversations with clinicians is increasingly shifting from awareness to access, and more hospitals are approaching us about establishing RDN programs. Here, our key focus areas are on expanding coverage and integrating RDN into the care pathway. Looking ahead for RDN, our trans-radial catheter remains on track to launch in the second half of this fiscal year. This is an important step forward as many interventional cardiology procedures are performed via radial axis today, making the therapy easier to integrate into existing workflows and potentially improving patient outcomes. These positive signals further reinforce our conviction that simplicity is one of the most compelling long-term growth opportunities in med tech. Now turning to pelvic health. The business delivered strong growth this quarter, increasing 15%, driven by significant progress from AltaViva, where procedures doubled sequentially. Demand for AltaViva is building, and while we are still early in our launch, AltaViva is gaining traction with physicians, as well as the 16 million US patients who still suffer from urge urinary incontinence. As we continue to expand training, Reimbursement Support, and Patient Awareness, we are really encouraged by the progress we are already seeing. And we are confident in AltaViva's ability to become a meaningful contributor to growth for years to come. Okay, back to surgical. We have a strong leadership position in surgery, built on decades of innovation, trusted technologies, and a longstanding partnerships with surgeons worldwide. As robotic-assisted surgery continues to expand, we believe our portfolio breadth, our global reach, and our operating room presence uniquely position us to help shape the future of surgery and extend the benefits of these technologies to more patients around the world. Robotic-assisted surgery, or RAS, is one of the most compelling growth opportunities in healthcare, with global penetration still in the single digits and only 1% in emerging markets. At the same time, RAS is in high demand, with procedure volumes up approximately 16% per year over the last decade. There is a significant runway here, and we expect robust expansion for many years to come. Now, we've established our foundation in soft tissue robotics with Hugo, where we continue to make meaningful progress. By the end of the fiscal year, we expect Hugo to surpass 50,000 completed procedures, with procedure growth continuing at more than twice the market rate. We're also advancing our platform through new capabilities and new indications, including the expected US expansions into general surgery and gynecology. We are investing in building out a broader surgical ecosystem, just like in CST. An ecosystem that integrates robotics, advanced visualization, navigation, instrumentation, and digital technologies, including AI enabled capabilities like touch surgery. Today, touch surgery is used in more than 1500 operating rooms globally, supporting AI powered insights, collaboration and workflows. And with touch surgery aid unveiled at SRS, we are bringing 300 times more computing power into the operating room and creating a foundation for increasingly advanced AI capabilities over time. And now that brings us to Cornerstone Robotics. As announced this morning, we are further enhancing and expanding our robotic portfolio through a strategic investment and distribution agreement for Cornerstone's Sentier Surgical System in select markets outside the U.S. Sentier complements Hugo by extending our reach into select international markets and broadening the range of customer needs that we can address as robotic surgery continues to expand globally. So taken together, the platforms, Hugo, TouchSurgeryAid, Sentier, and our enhanced surgical instrumentation position Medtronic to build a differentiated global robotics portfolio, combining advanced robotics, AI, visualization, and instrumentation to push the field forward, improving surgical precision and workflow, and serve a broader range of customers and patients around the world. Look, Q1 performance is further evidence that our strategy is translating into stronger results. We are accelerating growth, advancing innovation, and focusing the portfolio and deploying capital with discipline. Overall, our progress this quarter reinforces our confidence in fiscal 27 and in our long-term revenue and earnings growth potential. With that, I'm going to turn it over to Thierry to walk through more detailed business results, our financials and our updated guidance.

So over to you Thierry. Hey, thanks, Geoff. And hello, everyone. I appreciate you joining today. Before we begin, I'd like to remind everyone this quarter benefited from the extra selling week, which we estimate contributed approximately $570 million or 670 basis points to total organic enterprise revenue growth. Excluding the impact of the extra week, we delivered our strongest quarterly performance in nearly eight years, excluding COVID comps. Revenue this quarter was $9.8 billion, up 13.7% on both a reported and organic basis. Geographically, we saw nearly 16% growth in the US and 12% internationally. Cardiovascular delivered 19% revenue growth this quarter, excluding 25% in the US and 14% internationally. Electrophysiology therapies, or EPT, which includes our CRM and CAS businesses, grew 29%, including 41% in the US and 18% internationally. Within EPT, Cardiac Ablation Solutions was again a significant contributor, delivering 88% growth, up 139% in the US. As Geoff outlined, while we are gaining share rapidly in CAS, this business is still in the early stages of its trajectory. In Q2, we expect to outpace the market by more than 3x, with growth rates moderating over the remainder of the fiscal year as we lap increasingly strong comps. Cardiac rhythm management was up 15% worldwide, including balanced performance between the US and international markets, gaining 80 basis points of global share. Conduction system pacing continues to gain momentum adding over 200 basis points to CRM in the first quarter. As CSP adoption expands across a growing patient population Medtronic remains the leader with CSP capable leads in both high and low power segments. Our broad portfolio and innovation pipeline position us to extend our leadership in this large franchise. Pivoting to interventional cardiology therapies, which includes structural heart and coronary and renal denervation. ICT grew 7% globally, driven mainly by 11% international growth. Structural heart grew low single digits, similarly to Q4. US procedure volume trends remain stable. Our internal programs in mitral and tricuspid replacement are on track and we're taking steps to broaden our opportunity over time through targeted external investments as evidenced by our strategic investment earlier this year in Anteris as well as Picardia announced this morning. Picardia is the first FDA cleared leaflet modification technology for TAVR procedures for patients at risk for coronary obstruction. one of the fastest growing segments in structural heart. Coronary and renal denervation grew 13% globally. Our coronary business was up low double digits with CathWorks, our AI and advanced computational science platform for angio-based FFR contributing nearly 300 basis points of organic growth. In Ardian, we continue to make progress in the first quarter. positive trends across access, market development and adoption reinforce our confidence in this very large opportunity. Cardiovascular surgery, which includes our cardiac surgery and aortic businesses grew 8% globally and peripheral vascular health was up 11%. Now moving to neuroscience. The portfolio grew 9% worldwide, driven by 11% in the US and 7% internationally. Cranial and spinal technologies delivered 13% growth worldwide. Performance was driven by continued strength in core spine, up 14%, and neurosurgery up 15% along with strong contribution from Stealth Access following its first full quarter since commercial launch. Specialty therapies was up 7% including 10% in the US and 4% internationally. Within specialty, neurovascular grew 4% globally, driven by 9% in hemorrhagic and continued strength across flow diversion, intracellular embolization, carotid stenting, and access devices. In August, Onyx 12 received US FDA approval for MMA embolization to treat subdural hematomas. All three onyx viscosities are now approved for a one-minute shake time versus the conventional 20 minutes. This quarter, we completed our acquisition of Scientea, which represents an important advancement in navigation, enabling neurointerventionalists to reach areas of the brain that have historically been extremely difficult to access. Pelvic Health delivered 15% growth globally, In S&M Medtronic continues to outpace peers and AltaViva's performance is now more than offsetting S&M market softness. We're pleased with the continued progress in AltaViva as physician training expands, reimbursement progresses and physician experience builds. We expect pelvic health to become a stronger and stronger contributor to neuroscience in fiscal year 27 and beyond. The ENT grew 7% worldwide driven by low double-digit growth in the US. Neuromodulation was at 3% globally driven by ongoing SCS market softness and replacement headwinds in DBS. Our neuromodulation position has been strengthened by the acquisition of SPI therapeutics in peripheral nerve stimulation and through our distribution agreement with Merit Medical, which expands our presence in BVNA. Both segments are growing over 20% annually. Together, these strategic actions increase our exposure to attractive high growth markets and reinforce our broader pain portfolio. Now turning to medical surgical, which had a strong quarter and delivered 10% growth globally with balanced performance in the US and internationally. Surgical revenue increased 9% with similar performance across the US and international markets. We saw strength in advanced energy and wound management, driven by shared gains from our ligature vessel sealing and V-lock barbed sutures. As Geoff mentioned, we're pleased with our launch of Hugo, which had an increase in contribution in the quarter. Endoscopy grew high single digits, driven by further momentum of endoflip 300 system and of pill camp. Acute care and monitoring was up 14% globally, including high teens growth in the US. Results were driven by mid 40s growth in McGrath video laryngoscopy, high 30s in microstream capnography, and high single digits in Nalcorg pulse oximetry. This performance was a positive tailwind in the quarter. However, we expect ACM to normalize as we move through 2027. Finally, the diabetes business delivered 15% growth driven by US acceleration and robust growth internationally. Our strategic intent for the separation of MiniMed is unchanged. Create two focus companies that will allow both MiniMed and Medtronic to execute more effectively, pursue their distinct capital allocation strategies, and align with the investor basis that best match their respective financial profiles. Before we shift to the P&L and guidance, I wanted to spend a moment on what we're seeing in terms of procedure volumes. The Q1 was a very strong quarter for Medtronic underpinned by healthy underlying procedure volumes across nearly all of our end markets and geographies. Importantly, this strength was broad based and not concentrated in any one therapy or region. We continue to see resilient demand across chronic disease, high acuity conditions, and life-saving interventions, areas where Medtronic is particularly well positioned, given our differentiated innovation and strong clinical evidence. While we continue to monitor the broader environment closely as usual, the underlying demand backdrop remains constructive and reinforces our confidence in the durability of our growth. Overall, we're pleased with Q1 performance as well as the widespread contribution to revenue from many operating units. Now moving down the P&L. Our adjusted gross margin was 65.2% up 10 basis points year over year. Now let me walk you through the elements that shape gross margin this quarter. We've maintained our discipline on pricing which provided 30 basis point benefits to the quarter. Net of inflation, cost down contributed 50 basis points this quarter, driven primarily by COGS efficiency programs and strong execution across our portfolios, global operations and supply chain teams. In Q1, we rationalized more than 9,000 SKUs, further streamlining our product portfolio to focus on the areas with the greatest customer impact while enhancing supply chain performance and delivering cost efficiencies across the enterprise. Mix was unfavorable by 50 basis points, largely reflective of the diabetes and cast businesses. Consistent with prior quarters, while the near-term cast capital mix continues to impact our gross margin, it's reflective of our strong commercial performance and growing install base, which is expanding our foundation for future pull-through of higher margin catheter sales over the long term. The tariff-related impact was a slight headwind, as tariffs paid were largely offset by related refunds. And finally, the impact from foreign exchange was roughly neutral. Adjusted SG&A was 32.4% of revenue and increased 14% year-over-year. We continue to make investments to accelerate the commercialization of our growth opportunities while also integrating several recent acquisitions. Adjusted R&D was 7.9% of revenue in Q1 and increased 6% year over year. Here, we are focused on driving sustainable growth through investment in innovation, complemented by targeted inorganic opportunities. This discipline is reflected in acquisitions like SPR Therapeutics and Scientia, both of which operate in markets with CAGRs exceeding 20%. These businesses are demonstrating strong early traction, and while not reflected in our organic growth today, they're expected to contribute over 150 million to inorganic growth in fiscal year 27. Our adjusted operating profit was $2.3 billion and increased 15% year-over-year. This resulted in an adjusted operating margin of 23.7%, up 10 basis points from the prior year, while we continued to invest behind our highest priority growth opportunities. Our adjusted tax rate was 17.2%, slightly better than expected. The benefit was mostly timing and we expect this to be offset later in the year. All in, our adjusted EPS was $1.45, six cents above the midpoint of our guidance range and of street expectations. Now turning to our guidance, as a reminder, our four year guidance includes the diabetes business through fiscal year end. On the top line, we're pleased with a strong performance in the first quarter and are raising our fiscal year 27 organic revenue growth guidance to 7.25% to 7.75%, which represents a 50 basis points increase from our prior guidance. In the second quarter, we're expecting roughly 6% organic revenue growth. Based on recent effects rates, we expect foreign exchange to be a roughly 50 to 150 million headwind for the full year, with approximate 25 to 75 million headwinds in 2Q. Moving down the P&L and starting with gross margin, we continue to expect pricing and COGS efficiency programs to offset the current impact of business mix, which is primarily from diabetes and CAS. This headwind is expected to reduce following the completion of the minimum ed separation which we intend to close prior to fiscal year end. We continue to make targeted investments that are focused on our highest priority growth opportunities and are intended to strengthen the durability of our long-term revenue profile. Taken together, We expect fiscal year 27 operating profit to grow approximately 10% with operating margin expanding approximately 50 basis points year over year. Moving to EPS, given the strength in the first quarter, we're also raising our fiscal 27 guidance range to $5.94 to $6. For the second quarter, we expect EPS in the range of $1.32 to $1.34 which includes a roughly neutral impact from foreign exchange at recent rates. To close, we are well positioned for a strong year. I'm encouraged by the strength of our first quarter performance and the continued progress we made against our strategic priorities. At the same time, our operational focus has begun translating into our financial results. Portfolio simplification, SKU rationalization, cost out and broader supply chain initiatives are beginning to deliver structural efficiencies down the P&L and we see further opportunity ahead. We're pairing that discipline with targeted organic and inorganic investment to accelerate innovation and support commercialization and expand our growth platforms. Look, we are laser focused on translating stronger growth and enhanced efficiency into durable earnings leverage. With that, back to you, Geoff.