Ryan Weispfenning, Vice President and Head of Medtronic Investor Relations, welcomes viewers to a fall morning in Minnesota for the Fiscal ‘24 Second Quarter Video Earnings Webcast. He introduces CEO Geoff Martha and CFO Karen Parkhill, who will discuss the company's second quarter results and outlook. The Executive VPs of the company's segments will also join for a Q&A session with sell-side analysts. The company has issued a press release and earnings presentation with additional details on their performance. Any forward-looking statements made during the program should be considered with caution, and all comparisons are on a year-over-year basis.

The company did not make any significant acquisitions in the last four quarters and references to revenue changes and share gains or losses are based on reported data. Non-GAAP financial measures can be found on the company's website. The EPS guidance does not include any non-GAAP adjustments. The CEO discusses the company's strong performance in the second quarter, with mid-single-digit revenue growth across multiple businesses and geographies. New product launches and recent regulatory approvals give the company confidence in continued growth. The company is also focusing on transformation and investing in innovative technologies for future growth.

The company is focused on creating long-term value for shareholders and has seen strong growth in its established market leader businesses, including Cranial & Spinal Technologies, Surgical, and Cardiac Rhythm Management. The company's AiBLE ecosystem is driving above-market growth in spine, and they remain the clear leader in intraoperative imaging and navigation. In surgical, there was broad-based strength with double-digit growth in hernia and electrosurgery, and mid-single-digit growth in advanced stapling and wound management.

Cardiac Rhythm experienced 4% growth, driven by strong performance in cardiovascular diagnostics and cardiac pacing. The micro-leadless pacemaker franchise grew 13% due to the successful launch of the next generation AV2 and VR2 devices. Conduction system pacing, using the 3830 lead, also saw strong double-digit growth. The recently approved Aurora EV-ICD system, which eliminates the need for leads in the heart or veins, is expected to be a game changer in the single chamber ICD space. This device is significantly smaller and lighter than competitors, as demonstrated by a model given to representatives to show customers. The company is excited about this new option for patients.

In the fifth paragraph, the advantages of our device will not only surpass the competition, but also expand the market. Our Synergistic businesses had a mid-single-digit growth in Q2, with standout performances in Aortic, coronary, cardiac surgery, and endoscopy. Our highest growth markets, such as cardiac ablation solutions, also had a 6% growth due to strong market procedural growth. We expect this business to be a significant growth driver in the future, as we lead the way in bringing pulse field ablation catheters to market. In Europe, we are in limited market release with our Sphere 9 catheter, which can perform both PFA and RF ablation and integrates seamlessly with our Affera mapping system. We are also expecting to complete the 12-month follow-up for the pivotal trial of Sphere 9 in the U.S. and prepare for FDA submission.

In Single Shot PFA, the company has received CE Mark for their PulseSelect catheter and it will be available early next year. They are the only company with approved catheters for both Single Shot and focal PFA. In the U.S., the FDA is reviewing their PulseSelect submission and they expect to be one of the first companies with a PFA catheter in the market. The company expects strong long-term growth in the EP ablation space with their PFA catheters, Affera Map/Nav system, Arctic front cryo solution, and differentiated flex cath cross-transceptal system. In the Structural Heart space, the TAVR market continues to grow and the company grew mid-single-digits in Q2, with growth in Europe and Japan. Their Evolut platform has shown superior valve performance compared to surgery in randomized trials and their Evolut low-risk trial showed a 26% reduction in death or disabling stroke at four years.

The company has seen success with their transcatheter valve, Evolut FX, which has shown better outcomes than surgery. They expect this data, along with the global rollout of Evolut FX, to drive TAVR growth above the market. In neurovascular, they have seen strong growth in flow diversion driven by their innovative Shield Technology. They have also increased their installed base of the Hugo robotic system, with positive adoption from surgeons. The company is continually developing their digital ecosystem, including the upcoming launch of Touch Surgery Livestream, and expects Hugo to be a significant growth driver in the future.

Medtronic's open console and modular design, along with their leading position in minimally invasive surgery and instrumentation, connected digital ecosystem and data enabled insights, and world-class surgical training program and partnerships, will help advance the low penetration of robotic surgery worldwide. Their MiniMed 780G system for diabetes is also seeing success, with high time and range and satisfied users. In Q2, their diabetes business grew 7%, driven by recurring revenue from CGM and consumable sales in international markets and strong sales in the U.S. following the launch of 780G. Medtronic expects diabetes to continue driving significant growth for the company.

The company expects the majority of the intensive insulin management market to shift towards smart dosing, and they are well positioned to take advantage of this trend with their complete ecosystem of diabetes technology. In the second quarter, the company saw overall revenue growth of 5%, with strong growth in all three portfolios and across different regions. They have also made changes to ensure sustainable mid-single-digit growth in the future.

In the second quarter, the company saw growth in various regions such as the Middle East, Africa, South Asia, Southeast Asia, and Latin America. China's growth was lower than expected due to delays in planned initiatives. Despite a decline in gross and operating margins, they were still ahead of expectations. This was largely due to currency fluctuations and inflation. The company is implementing cost efficiencies and saw an improvement in SG&A expenses. They also benefited from higher interest rates on investments but had a higher tax rate and lower benefit from stock-based compensation. The company plans to prioritize investments in innovation and returning capital to shareholders, potentially through share repurchases. They have raised their full-year guidance for organic revenue growth to 4.75%.

The company projects an unfavorable impact on revenue due to currency fluctuations, but expects a positive trend in the third and fourth quarters due to product launches. They anticipate growth in various areas, including diabetes, medical surgical, neuroscience, and cardiovascular. Margins have been affected by currency and inflation, but the company is focused on driving efficiencies and improving margins. They have raised their fiscal '24 non-GAAP diluted EPS guidance.

In the second half of the year, the company expects some unfavorable impacts from foreign currency and taxes, but is pleased with its momentum and pipeline. For the third quarter, they anticipate EPS of $1.25 to $1.27, with a 6% unfavorable impact from foreign currency. The speaker expresses gratitude to their employees and discusses the potential impact of GLP-1s on the company's markets, but ultimately believes it will not significantly affect their growth outlook. They believe bariatric surgery will remain the preferred method for addressing obesity.

The company believes that current challenges in the bariatric and diabetes markets will stabilize in the next few quarters and return to growth by 2025. They expect growth in their Type II diabetes business, but not enough to significantly impact their overall growth outlook through 2030. The company has seen progress in mitigating challenges and delivering mid-single-digit revenue growth. They have recently had several product approvals and expansions, including the approval of Ardian which opens up a large market opportunity.

The company is focused on taking advantage of the large market for hypertension treatments and generating revenue. They are also implementing changes to improve efficiency and growth, such as a new operating model and leadership. The company is aiming to translate their revenue growth into earnings and create value for shareholders. The Q&A session will be recorded.

The article discusses a session where several executives from a company are joined by a group of analysts. The executives include the EVP and Presidents of various portfolios within the company. The first question is asked by an analyst about the company's growth in the second half of the year and the potential impact of headwinds and tailwinds. The executives mention that most of the headwinds are mitigated and the markets are stable, with procedures back to normal growth and staffing issues under control. They also mention that pricing has been stable and they are working through the China VBP. The analyst also asks about the company's long-term plan and potential dilution from the monitoring business.

The company has gone through many changes and challenges, but they are largely behind them. They have improved their global operations and supply chain and are seeing positive results. They have a strong innovation pipeline and are confident in their growth acceleration for the second half of the year and beyond. They are not ready to give specifics for FY '25 but are focused on delivering mid-single-digit revenue growth.

The company's new full-year guide for this fiscal year is 4.75%, with the strength of numerous product approvals driving back half growth. There are some potential headwinds, such as inflation, currency, and global tax reform, but the company is focused on driving offsets and has made progress on cost control and pricing. The company remains committed to driving mid-single-digit top-line growth, leverage down the P&L, strong free cash conversion, and a growing dividend, resulting in a double-digit total shareholder return. The company's progress towards these goals has been strong, with mid-single-digit top-line growth and a strong pipeline giving confidence in its durability.

In response to a question about the company's outlook for FY '24, Karen Parkhill mentions the focus on driving leverage down the P&L, which could result in faster EPS growth than revenue growth. Geoff Martha also mentions the potential for GLP-1s, a class of drugs with a large opportunity and potential benefits for patients.

The speaker states that despite the temporary impact of bariatric surgery market, the drugs will not affect the company's growth outlook in the long-term. They have done a lot of research and analysis on the drug Select and have found that it will have a negligible effect on cardiovascular procedure volumes. The Chief Medical Officer, Dr. Laura Mauri, adds that the results of the Select trial did not change their overall impression and that the number needed to treat was higher compared to other treatments in guidelines.

The lack of effect on cardiovascular death in the Select trial will not lead to widespread adoption and coverage of the treatment. The trial only showed a positive effect on non-fatal MI, not stroke or cardiovascular death. Discontinuation rates were high due to side effects, leading to lower treatment effects. The trial also showed no significant treatment effect in the North American subgroup and less benefit in the higher BMI population. Using different assumptions, the models were updated to project the impact on the growth of cardiovascular procedures, and the overall effect was found to be negligible.

The paragraph discusses potential offsets in the markets of PFA and Ardian due to their rapid growth, as well as potential upside for patients and procedure growth in cardiovascular procedures. The speaker also addresses a question about the effect of GLP-1 on diabetes, stating that there may be a slowdown in insulin dependency for some patients, but this is offset by the low penetration of Type II diabetes using AID. They remain optimistic about the growth and market profile in diabetes, with the majority of their business being in Type I.

Geoff Martha, CEO of Medtronic, answers a question about the company's growth prospects in certain areas of the medical technology market. He mentions that they have done extensive analysis and do not see any impact from drugs on the company's growth. The next question is directed to Sean Salmon, who is congratulated on the approval of the Ardian product. The team at Medtronic and past leaders have been involved in this long journey. Sean will talk about the ASP, reimbursement pathway, and ramp. The next question is for Brett Wall, who discusses the completion of the six-month primary endpoint on the pivotal TITAN 2, IT&S trial. He also talks about the form factor and how IT&S will be positioned relative to sacral neuromodulation.

The speaker discusses the significant reduction in blood pressure seen in patients using the new therapy, which has been a game changer and has received positive feedback from physicians and patients. They also mention an upcoming patient testimonial and the potential for significant opportunities for both patients and the company. The speaker then addresses reimbursement, stating that it will be a key factor in the success of the therapy and that they have been working on it alongside regulatory approval. They mention a 50:50 split between Medicare and private insurance and positive responses from private payers, particularly regarding the long-term data available for the therapy.

The company is focused on the Medicare population and is utilizing alternative pathways for temporary add-on payments in both the inpatient and outpatient settings. They will also use the T-Set pathway for transitional coverage for emerging therapies. CMS is considering other refinements to covers with evidence development programs, and the company is confident in their reimbursement efforts. The TITAN 2 study is a six-month follow-up, but patients will be followed for 24 months for additional data.

The speaker discusses recent product approvals, including the EV-ICD, PFA, and RDN, and how they will contribute to the company's ongoing growth. They believe these products are differentiated and will have a high impact in large and growing markets. The company is committed to making this growth durable.

The speaker discusses the company's recent challenges and efforts to improve their fundamentals. They believe that their recent approvals in high-growth markets will provide durability and reliability for future growth. The speaker also mentions the progress of a clinical trial for a new product and the increasing installation and procedure volume in Europe. They do not provide specific numbers but state that the program is on track and proceeding according to plan.

The company is excited about the recent hernia IDE approval, which will allow them to enter the general surgery market more quickly than expected. They have a strong presence in hernia repair and see potential for growth in the United States. They are currently focused on building experience in Europe and developing new instruments for the U.S. market. There is no specific timeline for approval yet, but the company is confident in their progress. They also briefly mention updates on their patient monitoring respiratory interventions spin.

The speaker discusses the company's focus on maximizing shareholder value and mentions that there are no big updates. A question is asked about the potential for more aggressive M&A activity given the company's size and strong balance sheet. The speaker acknowledges the possibility but reiterates the company's focus on tuck-in acquisitions and their current pipeline of organic programs.

The speaker states that they are not focused on any major deals at the moment and will not be signaling any interest in them. They then take one more question and discuss the seasonality and trends in the medtech industry, with a specific question about August and September. The speaker responds by saying that they saw strength throughout the second quarter and are on track with their expectations. The last question is about competition and the speaker states that they are not concerned and believe their product offering is strong.

The speaker was asked about their technology offering compared to competitors and if there is any specific information about October and November. The response was that they are optimistic about their program and see differentiation from competitors due to an open console, modular design, and flexibility in location. They also mentioned that there is a growing interest in robotics in surgery, and Medtronic is well positioned in this field. The speaker also mentioned their goal to change the dynamics of the spine market and expand beyond just robotics, including interoperative imaging, navigation, and AI-based planning.

The speaker discusses the impact of AI-driven digital platforms, such as Touch Surgery Enterprise, on the competitive dynamics in the medical industry, specifically in the spine market. They mention the recent merger of NuVasive and Globus and express confidence in their ability to compete with Intuitive in the surgical space. The speaker concludes by thanking listeners and wishing them a happy Thanksgiving.

This summary was generated with AI and may contain some inaccuracies.