Ryan Weispfenning, Vice President and Head of Medtronic Investor Relations, introduces the Fiscal '25 Second Quarter Video Earnings Webcast. During the webcast, CEO Geoff Martha and Interim CFO Gary Corona will discuss Medtronic's second-quarter results and fiscal year 2025 outlook. Executive VPs from the company's four segments will join for a Q&A session with sell-side analysts. The program, lasting about an hour, follows a press release sharing financial details and performance insights. Forward-looking statements will be made, with relevant risk factors disclosed in SEC filings. Revenue comparisons are made on an organic, year-over-year basis, with sequential comparisons to the first quarter reported as is.

The paragraph discusses Medtronic's recent financial performance and growth strategy. The company has reported strong quarterly results, exceeding expectations with consistent mid-single-digit organic revenue growth for eight consecutive quarters. This growth has translated into 8% EPS growth on a constant currency basis, with projections of high single-digit EPS growth for the fiscal year's second half. Medtronic attributes its success to innovation across various franchises, such as TAVR, leadless pacemakers, and neuromodulation, and sees significant opportunities in markets like hypertension. The company emphasizes a combination of performance focus and mission-driven culture as the foundation for its enhanced performance.

The company is focused on sustaining growth and shareholder returns through strategic measures like leveraging earnings, generating cash flow, pursuing mergers and acquisitions, and increasing dividends. In Q2, their high-growth businesses saw an 8% increase, accounting for 20% of revenue. The Structural Heart segment achieved high single-digit growth, driven by their TAVR franchise, particularly the Evolut FX+ launch in the U.S. and Europe. This product is noteworthy for its benefits in managing small annulus patients, primarily women, who represent 40% of the TAVR market segment. In Cardiac Ablation Solutions, the company is advancing pulse field ablation technology and expanding manufacturing to meet demand, positioning themselves uniquely with both single-shot and focal PFA catheters. Growth in PulseSelect PFA usage is compensating for declines in cryoablation, with a notable increase in physicians and patients using the catheter in Q2.

The company experienced slower than expected growth in its CAS division due to a third-party supplier issue, which has since been resolved, allowing for the expansion of its PulseSelect and the recently FDA-approved Affera mapping and ablation system, as well as the Sphere-9 focal catheter. These new products promise increased revenue and market penetration, with expectations of accelerated growth in the latter half of the fiscal year, particularly in the cardiac ablation market. In surgical robotics, the company is progressing with its Hugo platform, having completed necessary data capture for FDA submission for urology in the U.S., and is rapidly enrolling studies for hernia and gynecology. Additionally, it has launched its Touch Surgery digital solution in operating rooms in the U.S. and Western Europe, integrating advanced surgical technologies with the Hugo platform.

The paragraph discusses the company's growth and innovation in medical technology. It anticipates the availability of ICG fluorescent imaging in select countries and plans to integrate LigaSure vessel sealing with Hugo next year. In diabetes, the company achieved an 11% growth driven by strong CGM sales, particularly with the 780G system, which has high user satisfaction and attachment rates. The new Simplera Sync sensor is gaining international acceptance, and the InPen app has received FDA clearance, allowing for a limited U.S. release of the SMART MDI system. The company aims to lead in the AID and SMART MDI markets. Additionally, they are expanding manufacturing capacity and developing new technologies, including a partnership with Abbott. In hypertension, the Symplicity blood pressure procedure is highlighted as a future growth opportunity due to its proven efficacy and safety.

The paragraph discusses the recent approval of the outpatient transitional pass-through payment by CMS, effective January 1st, and the company's efforts to secure standardized coverage for a new hypertension therapy. With more than a billion people globally affected by hypertension, the therapy aims to offer a cost-effective public health solution. The paragraph also highlights the company's focus on established market leaders, which contribute significantly to revenue and profit. Specifically, in the Cranial & Spinal Technologies sector, they achieved 6% worldwide growth, driven by innovative technologies such as AI-driven planning software and robotics.

The paragraph discusses the company's strong performance and strategic partnerships across various healthcare sectors. AiBLE's global presence in spine care is driving competitive advantages, bolstered by a new partnership with Siemens Healthineers to enhance imaging technologies. Despite flat results due to challenging comparisons and market slowdowns, the Surgical segment showed promising sequential growth, particularly in advanced energy products like the LigaSure XP Maryland vessel sealer. Cardiac Rhythm Management maintained robust growth, with significant increases in both defibrillation and cardiac pacing therapies. Synergistic businesses, particularly Neuromodulation, experienced accelerated growth, driven by product lines such as Pain Stim and Brain Modulation, with the Inceptiv spinal cord stimulator seeing significant success in the U.S.

The paragraph discusses the innovations and growth experienced by Inceptiv and related product lines. Inceptiv is transforming chronic pain treatment by maintaining optimal therapy doses and offering superior MRI conditional access. Brain Modulation has experienced significant growth due to the Percept RC with BrainSense technology, impacting patients with movement disorders. Additionally, other areas like Cardiac Surgery and Acute Care & Monitoring have shown growth, driven by innovative products. The financial performance for Q2 was strong, with a revenue growth of 5% and adjusted EPS slightly above the midpoint of their guidance. Gary Corona is introduced to provide further financial insights.

The company is investing in growth while achieving an 8% increase in bottom line growth on a constant currency basis. Earnings per share increased slightly due to higher operating profits, despite a small tax offset. Revenue growth is diverse across businesses and geographies, with significant growth in diabetes, notable growth in neuroscience, and cardiovascular sectors, and expected normalized growth in medical surgical. International markets showed strong revenue growth. The adjusted gross margin declined slightly due to foreign currency effects but increased on a constant currency basis. Similarly, the operating margin decline was FX-driven, with an increase on a constant currency basis. The company is focused on improving margins through operational efficiencies, productivity enhancements, and disciplined pricing.

The company is in the early stages of scaling new product launches, which may currently impact performance. However, it is focusing on improving efficiency, particularly in back office functions, to enhance margins while continuing investments in its product pipeline and launches. The company is also actively managing its portfolio, increasing focus on tuck-in mergers and acquisitions, and returning capital to shareholders through dividends and share repurchases. As a result of its strong performance, the company is raising its full year revenue and earnings per share guidance and expects mid-single-digit revenue growth for Q3. Although foreign exchange rates are expected to negatively impact fiscal '25 results, gross margins are projected to improve in the latter half of the year.

The company is increasing its fiscal year 2025 non-GAAP diluted EPS guidance to a range of $5.44 to $5.50, up from $5.42 to $5.50, and expects third-quarter EPS to be $1.35 to $1.37. The guidance assumes a 5% negative impact from foreign currency for the year and a 1% impact for the third quarter. Despite these challenges, they reported consistent EPS growth and expect high single-digit adjusted EPS growth for the latter half of the fiscal year. Geoff Martha highlights the company's focus on sustaining mid-single-digit revenue growth, driven by operational improvements, incentive plans, culture, investments in high-growth markets, and new product approvals, which have created positive momentum.

The paragraph outlines the company's strategy to execute and deliver on opportunities, leading to cost savings and improved earnings, which will enhance free cash flow and enable further investments and shareholder returns. The company emphasizes its commitment to long-term shareholder value through portfolio management and acknowledges the efforts of its employees over the past 75 years in positively impacting millions of lives. The paragraph concludes by opening the floor for a Q&A session, asking analysts to limit their questions and directing additional inquiries to the Investor Relations team.

In the article's paragraph, Brad Welnick moderates a session where executives, including Sean Salmon, discuss various portfolios. Larry Biegelsen from Wells Fargo asks Sean about the benefits and expectations for the Renal Denervation procedure, particularly regarding the TPT (Transitional Pass-Through) for Ardian beginning in January. Sean explains that they are progressing well on reimbursement, highlighting that the TPT will cover Medicare patients on fee-for-service, which should accelerate therapy adoption. He emphasizes the importance of broader coverage to streamline billing and notes that gaining approval from private insurers is a longer, state-by-state process.

The paragraph discusses a company's efforts to maintain and grow earnings amid potential challenges, such as a strong dollar and initial negative impacts on margins from product launches. Travis Steed from Bank of America inquires about the company's ability to grow earnings despite these headwinds. Geoff Martha reaffirms their commitment to earnings growth, and Gary Corona elaborates that they have raised their revenue and EPS guidance for the year. The company focuses on restoring earnings power, with no change in margin expectations, projecting an increase in operating margins for both Q3 and the full year.

The paragraph discusses the company's financial outlook and strategic priorities. It highlights expected sequential increases in gross margins for Q3 and Q4, driven by a focus on automation, digitization, structural changes, and disciplined discretionary spending. This approach is aimed at achieving mid-single-digit revenue growth and an over 10% increase in EPS on a constant currency basis, despite a five-point foreign exchange headwind. The company remains committed to investing in early product launches, both commercially and in R&D. Guidance has been set between $5.44 to $5.50, reflecting confidence in these strategies. Additionally, Robbie Marcus inquires about the growth and margin implications of various new product launches over the next six to twelve months, particularly in lower-margin areas such as renal denervation and robotics.

In the paragraph, Geoff and Gary discuss the company's current financial status and future expectations. Geoff highlights positive factors like the opportunity for pricing improvements and successful cost-reduction programs that are boosting margins. While certain programs like Hugo and Affera may initially impact margins due to capital involvement, others like Neuromod and Ardian show a positive impact. Gary adds that these elements are reflected in their guidance, with flat gross margins expected for 2025, factoring in foreign exchange as a slight headwind. The focus remains on cost reduction and price improvement to support the commercialization of key innovative launches. Vijay Kumar from Evercore ISI is about to ask a question about ablation.

The paragraph discusses the challenges faced by the company's ablation business due to a disruption from a third-party component supplier, which slowed expected growth in the quarter. This supply issue has been resolved, with the supplier expanding capacity to support the ramp-up of the PulseSelect product and activate new accounts. The company has nearly doubled the number of physicians using PulseSelect and more than doubled the number of procedures and patients treated. The cryo-related declines have improved sequentially from Q1 to Q2, so it wasn't a significant issue between those quarters. With the supply issues resolved and product demand rising, coupled with the introduction of Sphere-9, the company is confident about achieving strong double-digit growth in the third quarter. They are focused on being well-positioned with both single-shot and focal solutions.

The paragraph features a discussion between Vijay Kumar, Geoff Martha, and Sean Salmon regarding the revenue per case for MedTech's Affera system compared to cryo procedures. Sean explains that using thermal RF or non-thermal PFA generates more case revenue due to additional components like mapping catheters and navigation system patches, though not necessarily three times more. He highlights cost savings for hospitals with the Sphere-9 catheter, which combines functions to improve workflow and reduce costs despite hospitals' sensitivity to pricing. Ryan Weispfenning then transitions the conversation to a question from Shagun Singh about the MedTech landscape and potential challenges under the Trump administration, particularly regarding tariffs and supply chain strategy, with an emphasis on imports from China. Geoff Martha begins his response by asserting that the underlying MedTech market is healthy.

The article discusses growth in medical procedures driven by innovation, such as minimally invasive techniques and advancements in pacing technology. It highlights the stability of this growth due to both innovation and demographic factors, emphasizing healthcare's consistent priority status for governments globally. The article briefly mentions uncertainties surrounding policies with the election of President Trump, particularly regarding healthcare and tariffs but notes the company's minimal exposure to Chinese imports. The conversation shifts to a Q&A segment, where Chris Pasquale from Nephron inquires about the Diabetes segment and an upcoming FDA submission for a Type 2 label expansion, questioning the composition of the U.S. insulin pump user base and the lack of a more compact design for Type 2 users. Que Dallara responds, stating that enrollment for Type 2 is complete.

The paragraph discusses a company's financial and strategic updates. They plan to submit to the FDA for an expanded indication in the first half of the next calendar year and see significant opportunities in the Type 2 market, supported by strong clinical data. The conversation shifts to financial guidance, where they acknowledge absorbing more foreign exchange (FX) headwinds but still increasing their earnings per share (EPS) guidance. The margin guidance is slightly lower than the previous quarter, with revenue guidance up and tax rates slightly increasing. Despite these challenges, they remain optimistic, with EPS guidance raised by $0.01 at the midpoint. They also mention the impact of their hedging program on FX visibility and continued investment in commercial and R&D activities.

The paragraph discusses the issue of uncontrolled hypertension in the Medicare population over 65, noting that 16 to 18 million patients in this group have high blood pressure despite being on medication. The conversation highlights that the addressable market is about half of the Medicare population when considering both in and outpatient settings. Sean Salmon explains that the NTAP and TPT reimbursements target fee-for-service Medicare patients but do not include those on Medicare Advantage. There is significant potential demand for a new therapy, contingent on achieving proper coverage and establishing treatment centers. Following this discussion, the dialogue shifts to Rich Newitter asking about the continued strong performance of the company's Spine business, especially in the U.S.

The paragraph discusses the state of the U.S. core Spine franchise market, highlighting recent growth and sustainability. Geoff Martha and Brett Wall from Medtronic attribute this growth to market expansion and consolidation favoring companies with scale and technology. The AiBLE system is mentioned as a key technological advantage, enabling recruitment of top representatives and physicians, thereby expanding market opportunities. Despite market disruptions due to consolidation, Medtronic sees this as an opportunity to gain market share and continues to have a strong growth pipeline. Rich Newitter inquires about the competitive landscape, and Brett Wall notes Medtronic's advantage and ongoing recruitment of high-quality personnel to capitalize on consolidation opportunities.

The paragraph discusses the state of the Transcatheter Aortic Valve Replacement (TAVR) market, noting its healthy condition and high single-digit growth potential. Sean Salmon highlights opportunities for market expansion, particularly with the inclusion of asymptomatic patients and future advancements in treating moderate aortic stenosis. He emphasizes the strength and improving evidence base of their product, particularly in specific conditions like small annulus, and notes that upcoming trial results and global growth could further enhance this market.

The paragraph discusses updates on a company's mitral and tricuspid valve replacement and repair programs. They have launched the FX+ product in the U.S. and Europe, with plans to expand to other markets, including Japan. Sean Salmon provides an update on the Intrepid valve, which is undergoing the APOLLO trial for U.S. and European approval. The trial is progressing well, particularly with a 29 French version for the transseptal approach, showing excellent clinical outcomes by entirely eliminating regurgitation. It is aimed at patients who are not suitable for clips, surgery, or have severe mitral annular calcification. The same valve is being used in an early feasibility study for tricuspid applications, with future modifications planned.

The paragraph discusses updates and questions related to a company's structural heart and diabetes product pipelines. It highlights the successful performance of their Structural Heart business, notably their TAVR franchise, and mentions ongoing developments in mitral and tricuspid valve repair with Intrepid. Geoff Martha emphasizes the profitability and positive market outlook of this sector. Ryan Weispfenning moderates a Q&A session where Matt Miksic from Barclays inquires about timelines for key projects like Affera and Ardian, particularly their U.S. rollout and anticipated developments in diabetes technology, such as a patch pump. Miksic also queries about the earnings growth, noting the impact of FX headwinds on EPS, particularly noting a 5% headwind, and seeks clarification on financial projections for the year.

The paragraph discusses the company's progress and plans for its products, particularly focusing on Affera, a part of their Pulse Field Ablation (PFA) story. They are in the process of scaling Affera, without providing specific figures, and achieving strong double-digit growth with PulseSelect. The uncertainty regarding CMS coverage timing is acknowledged, despite strong FDA approval. In the diabetes segment, the company is investing heavily in patch programs, although no specific timeline is provided for their release.

In the paragraph, the company discusses its strategy for dealing with earnings growth and foreign exchange challenges. They anticipate high single-digit to double-digit earnings growth in the second half of the year, despite a 5-point foreign exchange headwind impacting earnings per share (EPS). The company emphasizes the importance of their hedging program, which helps stabilize currency fluctuations. They are also focusing on growing their U.S. business and implementing dynamic pricing strategies in countries with devalued currencies to mitigate these impacts. Leadership is prioritizing these efforts to reduce the company's exposure to currency fluctuations, emphasizing investment in U.S. growth and other strategic actions.

The paragraph discusses the company's focus on tuck-in mergers and acquisitions (M&A) as a key part of their growth strategy. The leadership team prioritizes high-growth markets and segments for M&A while ensuring well-established businesses receive necessary support. The company emphasizes an ongoing process of portfolio management to align with their mission and strengths amidst a competitive environment.

The paragraph discusses the company's strategy for leveraging its strengths to achieve reliable mid-single-digit growth through innovation. It highlights the importance of a carefully constructed portfolio for financial performance, aiming to translate top-line growth into earnings and cash flow, leading to shareholder returns. The speakers express gratitude to analysts and participants, encouraging follow-up communication as needed. They also announce the next earnings broadcast for February 18 and wish U.S. participants a Happy Thanksgiving.

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