Q4 2024 Medtronic PLC Earnings Call

And all references to share gains or losses referred to a revenue share in the first calendar quarter of 2024 compared to the first calendar quarter of 2023, unless otherwise stated.

Reconciliations of all non-GAAP financial measures can be found in our earnings press release or on our website at investor relation stop Medtronic Dotcom and finally, our EPS guidance does not include any charges or gains that would be reported as non-GAAP adjustments to earnings during the fiscal year.

Speaker Change: With that let's get into the studio and hear about the quarter and the year.

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Geoffrey Straub Martha: Hello everyone, and thank you for joining us today. We delivered a strong finish to the fiscal year with broad strength across our business. Each of our four segments delivered mid-single-digit or higher revenue growth, and this was on top of a strong mid-single-digit performance last year.

Speaker Change: Hello, everyone and thank you for joining US today, we delivered a strong finish to the fiscal year with broad strength across our businesses.

Speaker Change: Each of our four segments delivered mid single digit or higher revenue growth and this was on top of a strong mid single digit performance last year.

Unknown Executive: Throughout fiscal 24, we delivered consistent mid-single-digit revenue growth of over 5% for the full year. At the same time, we're making progress on our commitment to restore our earnings power, which is evident in our fiscal 25 bill. We're executing COGS cost out programs while maintaining pricing and maximizing efficiencies in our operating over, and we're translating our earnings into strong and improving cash flow, which we're investing to drive future growth and return to our shareholders. We also continue to enhance our operations to make the company even more resilient. And our global workforce is embracing a performance-driven culture that is translating into durable results. We made solid progress in fiscal.

Speaker Change: Throughout fiscal 'twenty, four we delivered consistent mid single digit revenue growth with over 5% for the full year.

Speaker Change: At the same time, we're making progress on our commitment to restore our earnings power, which is evident in our fiscal 'twenty five guidance.

Speaker Change: We're executing cogs cost out programs, while maintaining pricing and maximizing efficiencies in our operating overhead.

Speaker Change: And we are translating our earnings into strong and improving cash flow, which we're investing to drive future growth and return to our shareholders.

Speaker Change: We also continue to enhance our operating model to make the company, even more resilient and our global workforce is embracing a performance driven culture that is translating into durable results.

Speaker Change: We made solid progress in fiscal 'twenty, four and the momentum we're building into the new year has me very excited for 25.

Geoffrey Straub Martha: And the momentum we're building into the new year has me very excited for 2020. We're at the beginning stages of new products. The runway from the differentiated technologies we've recently launched, along with the innovation we will launch over the next 12 months, gives me significant confidence in our ability to drive durable growth.

Speaker Change: We're at the beginning stages of new product cycles, the runway from the differentiated technologies, we've recently launched.

Speaker Change: Along with the innovation, we will watch over the next 12 months.

Speaker Change: Give me significant confidence in our ability to drive durable growth.

Unknown Executive: These launches put us in a strong position in some of Medtech's most attractive markets, like AFib, Structural Heart, Robotics, Neuromodulation, Hypertension, and Diabetes. And this is further enhanced as we apply AI across our portfolio. All that to say, we are very optimistic about what we can achieve here in Fiscal 25 and beyond. Now, let's turn to the details of our Q4 results, where we had a number of standout performances. We look at our businesses in three categories.

Speaker Change: These launches put us in a strong position in some of med Tech's most attractive markets like Afib structural heart robotics, Neuromodulation hypertension and diabetes.

Speaker Change: And this is further enhanced as we apply AI across our portfolio.

Speaker Change: All that to say we are very optimistic about what we can achieve here in fiscal 'twenty five and beyond.

Speaker Change: Now, let's turn to the details of our Q4 results, where we had a number of standout performances, we look at our businesses in three categories.

Unknown Executive: Established Market Leaders, Synergistic, and Highest Our established market leader and synergistic businesses both grew mid-single digits, while our highest growth businesses delivered high single digits. Looking first at our established market leaders, they made up just under half of our revenue and grew 5%. The highlight of the quarter was cranial and spinal technology. After growing 6% or higher every quarter this year, CST accelerated to 9% growth in Q4. I want to say that one more time: 9% growth in Q4.

Speaker Change: Stablish market leaders synergistic and highest growth.

Speaker Change: Our established market leader and synergistic businesses, both grew mid single digits, while our highest growth businesses delivered high single digit growth.

Speaker Change: Looking first at our established market leaders combined they made up just under half of our revenue and grew 5%.

Speaker Change: The highlight of the quarter was cranial and spinal technologies after growing 6% or higher every quarter. This year CST accelerated to 9% growth in Q4, I want to say that one more time, 9% growth in Q4. This was driven by an outstanding quarter for capital sales with neurosurgery growing 14%.

Unknown Executive: This was driven by an outstanding quarter for capital sales, with neurosurgery growing 14%. We had double-digit revenue growth in Mazor Robotics, Stealth Phasing Navigation, O-Arm Imaging, and Midas Rex-powered Surgical Intensive Care. And this pulled through spine implants and biologics with high single-digit growth in biologics and mid-single-digit growth in core spine, including 8% core spine growth in the US. We also continue to see strong adoption of unit-adapted spine intelligence, our integrated AI surgical planning.

Speaker Change: We had double digit revenue growth in Missoula, robotics stealth station navigation O arm imaging and Midas Rex powered surgical instruments.

Speaker Change: And this pulled through spine implants, and biologics with high single digit growth in biologics in mid single digit growth in core spine, including 8% core spine growth in the U S.

Speaker Change: We also continue to see strong adoption of unit adapted spine intelligence, our integrated AI surgical planning solution here, we're taking data and building deep learning models that see patterns and create personalized outcomes for patients.

Unknown Executive: Here, we're taking data and building deep learning models that see patterns and create personalized outcomes for patients. As I've been sharing for several quarters now, our strategy of combining best-in-class implants and biologics with our best-in-class enabling technology and then adding our unique intelligence into the procedure is a winning formula. We call it the ABLE ecosystem, and it's a big competitive differentiator for us.

Speaker Change: As I've been sharing for several quarters now our strategy of combining best in class implants, and biologics with our best in class, enabling technology, and then adding our unique intelligence into the procedure is a winning formula in spine, we call. It the able ecosystem and it's a big competitive differentiator for us able is key.

Unknown Executive: ABLE is creating value for patients. It's winning over surgeons all around the world, and it's changing the competitive dynamics of the spine market, and it's attracting the best reps to Medtronic to expand our business. Next, in cardiac rhythm management, cardiac pacing therapies delivered another strong quarter of high single-digit growth. Our micro leadless pacemaker franchise grew over 20 percent, driven by the adoption of our latest generation micro AV2 and VR2, which improved procedure efficiency and increased battery longevity by 40 percent to 16 or 17 years. Now, we hold the vast majority of shares in the Leadless Paces.

Speaker Change: Creating value for patients, it's winning over surgeons all around the world.

Speaker Change: And it's changing the competitive dynamics of the spine marketplace.

Speaker Change: And it's attracting the best reps to Medtronic to expand our business.

Speaker Change: Next in cardiac rhythm management cardiac pacing therapies delivered another strong quarter of high single digit growth, our micra <unk> pacemaker franchise grew over 20% driven by the adoption of our latest generation micro 82, and V are too, which improved procedure efficiency and.

Speaker Change: Kris battery longevity by 40% to 16 or 17 years.

Speaker Change: Now we hold the vast majority of share in the leafless pacing space. We also continue to expand our pacing leadership as the only company to offer an approved lead for an innovative alternative form of pacing called conduction system pacing. Our 38 30 conduction system pacing lead grew over 40%.

Unknown Executive: We also continue to expand our pacing leadership as the only company to offer an approved lead for an innovative alternative form of pacing called Conduction System Pacing. Our 3830 conduction system pacing lead grew by over 40%. In defibrillation solutions, we're seeing good early adoption of our innovative Aurora EVIC-D, which requires no leads in the heart.

In Defibrillation solutions, we're seeing good early adoption of our innovative Aurora EV ICD, which requires no leads in the heart now is more in planners complete their training, we expect EV ICD sales to ramp and become a significant driver of CRM growth taking share from the competitors S. ICD.

Unknown Executive: Now, as more implanters complete their training, we expect EVIC-D sales to ramp and become a significant driver of CRM growth, taking share from the competitor's SICD. Next, in surgical, we grew 5%. Our advanced energy product lines grew high single digits on the continued launch of our Ligature XP Maryland vessel. We've now taken energy share from our main competitor for six quarters in a row.

Speaker Change: T system.

Speaker Change: Next in surgical we grew 5% our advanced energy product lines grew high single digits on the continued launch of our literature X P, Maryland vessel sealer.

Speaker Change: We've now taken energy share from our main competitor for six quarters in a row.

Unknown Executive: Our wound management business also grew high single digits as strong sales of our V-lock barbed sutures also resulted in continued share gains from our main competitors. In Q4, we expanded the capabilities of our touch surgery digitally. Just as our able ecosystem is transforming spine, touch surgery is transforming laparoscopic and robotic surgery. We collect robust data sets from surgeries, including video, to create models that inject intelligence into these procedures. We launched 14 new AI-based algorithms on our Touch Surgery Performance Insights platform just at SAGES last month. These first-in-class algorithms automatically analyze surgical procedures from anatomy to critical structures, enabling surgeons to objectively assess performance.

Speaker Change: Our wound management business also grew high single digits as strong sales of our V. Lock barbed sutures also resulted in continued share gains from our main competitor.

Speaker Change: In Q4, we expanded the capabilities of our touch surgery digital ecosystem, just as are able ecosystem is transforming spine touch surgery is transforming laparoscopic and robotic surgical procedures.

Speaker Change: We collect robust datasets from surgeries, including video to create models that inject intelligence into these procedures we've.

Speaker Change: We've launched 14, new AI based algorithms on our touch surgery performance insights platform just at stages last month.

Speaker Change: These first in class algorithms automatically analyze surgical procedures from anatomy to critical structures, enabling surgeons to objectively assess performance.

Unknown Executive: We also launched Touch Surgery Livestream, which enables secure and seamless telepresence, including training and proctoring from a procedure room to really anywhere in the world. Overall, adoption of our touch surgery ecosystem is accelerating, and it's becoming a very important differentiator for our surgical franchise. Now turning to our synergistic businesses, combined, they grew 5% in Q4. Cardiac surgery, ENT, and endoscopy all grew high single-digit. Pelvic Health, Coronary, Peripheral Vascular, and Neuromodulation all grew mid-singleton.

Speaker Change: We also launched touch surgery, livestream, which enables secure and seamless telepresence, including training and Procter ing from our procedure room to really anywhere in the world overall adoption of our touch surgery ecosystem is accelerating and it's becoming a very important differentiator for our surgical franchise.

Speaker Change: Now turning to our synergistic businesses combined they grew 5% in Q4 cardiac surgery E N T. In endoscopy, all grew high single digits.

Speaker Change: Pelvic health coronary peripheral vascular and Neuromodulation all grew mid single digits.

Unknown Executive: In Neuromod, brain modulation had an outstanding quarter, growing low double digits. This was the first quarter to benefit from the launch of PerceptRC with BrainSense technology, the only complete sensing-enabled DBS system on the market. Here we're seeing strong uptake and excitement for this exclusive technology, and it's extending our number one leadership position in DBS in both Europe and the US. Our Neuromod business also received really great news at the end of Q4 with the U.S. FDA approving the Inceptive Closed-Loop Spinal Cord Stimulator. The Inceptive platform is a game-changer in chronic pain therapy.

Speaker Change: And neuro Mod brain modulation had an outstanding quarter growing low double digits. This was the first quarter of benefit from the launch of Percept Arce with brain sense technology. The only complete sensing enabled DBS system on the market here.

Speaker Change: Here, we're seeing strong uptake and excitement for this exclusive technology and it's extending our number one leadership position in DBS in both Europe and in the U S.

Speaker Change: Our Neuromodulation. This also received really great news at the end of Q4 with the U S. F. D. A proving the inceptive closed loop spinal cord stimulator. The Inceptive platform is a game changer in chronic pain therapy, the device automatically senses and adjust stimulation 50 times a second.

Unknown Executive: The device automatically senses and adjusts stimulation 50 times a second, 24-7, with no required interaction from the patient. And the therapy is delivered from the smallest and thinnest closed-loop SCS device on the market, along with the best 3T and 1.5T full-body conditional MRI access. Given all these advantages will now be carried in the bags of our very large SCS Salesforce, we expect PaintStem to grow above market in the coming years. Now, let's cover the highlights from the businesses in our highest growth market. Combined, they made up 20% of revenue and grew high single digits.

Speaker Change: 24, 7% with no required interaction from the patient.

Speaker Change: And the therapy is delivered from the smallest and finished closed loop SCS device on the market along with the best three T and one and a half T full body conditional MRI access.

Speaker Change: Given all these advantages will now be carried in the bags of our very large SCS sales force, we expect pain stem to grow above market in the coming quarters.

Speaker Change: Now, let's cover the highlights from the businesses in our highest growth markets combined they made up 20% of revenue and grew high single digits and we expect that their contribution to overall growth will accelerate over the coming quarters as we launched new technology.

Unknown Executive: And we expect that their contribution to overall growth will accelerate over the coming quarters as we launch new technology. I'll start this quarter with cardiac ablation solutions, which delivered 21% sequential growth in the quarter, including 23% in the U.S. This is driven by our pulse field ablation products, which are more than offsetting declines in our cryoproduct quality. Q4 marked the first quarter of our Pulse Select PFA catheter launch. It's off to a great start with strong adoption from both focal RF and single shot users.

Speaker Change: I'll start this quarter with cardiac ablation solutions, which delivered 21% sequential growth in the quarter, including 23% in the U S. This was driven by our pulse field ablation products, which are more than offsetting declines in our cryo product line.

Speaker Change: Q4 marked the first quarter of our pulse select PFA catheter launch it's off to a great start with strong adoption from both focal RF and single shot users as we expand the POS looked launch. We also continue to advance our robust pipeline of PSA technology.

Unknown Executive: As we expand the Pulse Select launch, we also continue to advance our robust pipeline of PFA technology. Last week, US pivotal data for our SPHERE-9 focal catheter were presented at HRS and published in Nature Medicine. These data were impressive, especially when you consider we were studying persistent AF patients, the most challenging to treat. We showed Sphere 9 has an excellent safety profile, superior efficiency, and numerically higher freedom from recurrent AFib compared head-to-head with the market-leading traditional RF ablation technology.

Speaker Change: Last week U S pivotal data for our sphere nine focal catheter were presented at HRS and published in nature Medicine. These data were impressive, especially when you consider we were studying persistent AF patients the most challenging to treat.

Speaker Change: We showed sphere nine has an excellent safety profile superior efficiency and numerically higher freedom from recurrent afib compared head to head with the market, leading traditional RF ablation technology.

Unknown Executive: Sphere 9 can perform both PF and RF ablation, as well as high-density mapping, all from a single device, and we're looking forward to offering U.S. clinicians this first-of-its-kind wide-focal camera. The outcome of all this is that we expect our cash business to continue to accelerate its growth throughout the coming fiscal year as we increase our PFA account trading and catheter production to meet the high demand. And over time, we expect our C.A.S.T.

Speaker Change: So your non can perform both P F and RF ablation as well as high density mapping all from a single device and we're looking forward to offering U S. Clinicians. This first of its kind wide vocal catheter.

Speaker Change: The output of all this is that we expect our cash business to continue to accelerate its growth throughout the coming fiscal year as we increase our PSA count training and catheter production to meet the high demand and over time, we expect our cash business will reach market growth and then win share.

Speaker Change: And this will be driven by our PFA launches and the pull through of our broader portfolio treating the growing population of patients with afib.

Unknown Executive: The business will reach market growth and then win share, and this will be driven by our PFA launches and the pull through of our broader portfolio. Treating the Growing Population of Patients with AFib

Unknown Executive: Next, in Structural Heart, TAVR continues to be a very important growth driver for Medtronic, and we grew high single digits in the quarter. Structural Heart had two meaningful developments during Q3. First, data from our SMART trial was published in the New England Journal of Medicine and presented at ACC last. Smart? No, it clearly showed our valve was better than Edward Sapien and small annulus patients who are primarily women.

Speaker Change: Next in structural heart Tavern continues to be a very important growth driver for Medtronic and we grew high single digits in the quarter structural heart had two meaningful developments. During Q4 first data from our Smart trial was published in the New England Journal of Medicine and presented at ACC last month.

Speaker Change: Smart well it clearly showed our valve was better than Edwards SAPIEN in small animals patients who are primarily women. This is a large segment of the <unk> space about 40%, which is which is larger than most realized now while it takes time to broadly change clinical practice and change customer contracting we're seeing early.

Unknown Executive: This is a large segment of the TAVR space, about 40%, which is larger than most realize. Now, while it takes time to broadly change clinical practice and change customer contracting, we're seeing early signs from many loyal Sapien users that they expect to increase the usage of Medtronic valves, and we're building our business for that growth. The second important development in Q4 was receiving U.S. FDA approval for Evolute FX Plus, our newest TAVR valve.

Speaker Change: Signs for many loyal SAPIEN users that they expect to increase their usage of Medtronic valves, and we're building our business for that growth.

Speaker Change: The second important development in Q4 was receiving U S. FDA approval for Evolute FX, plus our newest Havre valve FX plus has large windows in the frame to allow easy coronary access while providing the same exceptionals outperformance of our evolute platform.

Unknown Executive: FX Plus has large windows in the frame to allow easy coronary access while providing the same exceptional valve performance of our Evolute platform. We've just started the limited launch now and are receiving really strong positive feedback from physicians. Full market release is expected in August.

Speaker Change: We've just started the limited launch now and are receiving really strong positive feedback from physicians full market release is expected in August.

Unknown Executive: So when you consider our four-year low-risk..., our smart data, and our new FX Plus valve, we expect this combination to drive our tavern growth at or above the market, especially as the FX Plus launch ramps up in our second fiscal quarter. Turning to robotic surgical technologies, we're establishing a strong foundation here, and we continue to expand the Hugo system installed there. In the U.S., we are nearing completion of our urology pivotal trial. We also have now started enrollment in two new indication studies, hernia and gynecology.

Speaker Change: So when you consider our four year low risk data.

Speaker Change: Our smart data and our new FX plus valve, we expect this combination to drive our tavern growth at or above the market, especially as the FX plus launch ramps in our second fiscal quarter.

Speaker Change: Turning to robotics surgical technologies, we're establishing a strong foundation here and we continue to expand the Hugo system installed base.

Speaker Change: In the U S. We are nearing completion of our urology pivotal trial.

We also have now started enrollment in two new indication studies hernia in gynecology. In addition, our development teams are making progress, bringing our advanced surgical technologies to Hugo such as ICD and our ligature vessel sealing technology.

Unknown Executive: In addition, our development teams are making progress bringing our advanced surgical technologies to Hugo, such as ICG and our ligature vessel sealing technology. In diabetes, our team delivered another strong quarter, growing 11% globally. In the U.S., we grew 12% as the rollout of the MiniMed 7AG system continued. New US users doubled year over year again this quarter, and since launch, we've seen a significant increase in CGM attachment, resulting in high teens growth in US CGM revenue in Q4. Users are choosing our differentiated 7AG system for the outcomes it delivers, all with less effort and less burden. 780G is the only AID system that provides both basal insulin adjustments and correction doses every five minutes.

And diabetes, our team delivered another strong quarter growing 11% globally in the U S. We grew 12% as the rollout of the mini Med seven AG system continues new U S users doubled year over year again, this quarter and since launch we've seen a significant increase in CGM attachment rates, resulting in <unk>.

Speaker Change: High teens growth in U S CGM revenue in Q4 youth.

Speaker Change: Users are choosing our differentiated seven AG system for the outcomes it delivers all with less effort and less burden.

Speaker Change: Seven Atg is the only AI system that provides both basal insulin adjustments and correction doses every five minutes. It offers flexible glucose targets as low as 100 and features our proprietary meal detection technology.

Unknown Executive: It offers flexible glucose targets as low as a hundred and features our proprietary meal detection technology. This all leads to 7AG users achieving a high time and range as well as spending more time in automation with our SmartGuard technology. In Europe, we began the limited launch of Simplair Sync with 7AG, and we're preparing for a commercial launch this summer. The early users and their healthcare providers are giving us fantastic feedback. Simplair Sync is half the size of our current sensor, is disposable, and it's a lot easier to put on.

Speaker Change: This all leads to seven AG users, achieving a high time and range as well as spending more time in automation with our smartcard technology.

Speaker Change: In Europe, we began the limited launch of some players sync with seven AG and were preparing for commercial launch. This summer the early users and their health care providers are giving us fantastic feedback. Some players think is half the size of our current sensor is disposable and it's a lot easier to put on and in the U S. I'm pleased to announce that.

Unknown Executive: And in the U.S., I'm pleased to announce that we have now submitted some PlayerSync to the FDA. Look, the turnaround in diabetes is palpable and now becoming a sustained growth. We're committed to getting the business back to market leadership. This is why we're investing heavily in expanding indications for the 780G system and developing next generation differentiated technology. This includes durable pumps, smart pens, patch pumps, CGM, and software and algorithms. You've seen us execute a steady drumbeat of submissions, product approvals, and expanded indications. And this is a pace we expect to continue.

Speaker Change: We have now submitted some players synced to the F D a.

Look the turnaround in diabetes is palpable and now becoming a sustained growth story.

Speaker Change: We're committed to getting the business back to market leadership. This is why we're investing heavily in expanding indications for 700 Atg system and developing next generation differentiated technology. This includes durable pumps smart pens patch pumps, CGM and software and algorithms you've seen us execute a steady.

Speaker Change: Drumbeat of submissions product approvals and expanded indications and this is a cadence we expect to continue.

Unknown Executive: We're the only company building out a complete ecosystem of leading technology for patients who require intensive insulin management. We believe this strategy positions us well and will drive our growth as the market continues to shift to automated insulin delivery and smart. Finally, turning to hypertension, we believe simplicity will become an important growth driver for... Since gaining approval last year, we've been training physicians, and we're getting very favorable feedback from both clinicians and patients.

Speaker Change: We're the only company building out a complete ecosystem of leading technology for patients who require intensive insulin management.

Speaker Change: We believe this strategy positions us well and will drive our growth as the market continues to shift to automated insulin delivery and smart dosing finally, turning to hypertension. We believe simplicity will become an important growth driver for Medtronic since gaining approval last year, we've been training physicians and.

Speaker Change: We're getting very favorable feedback from both clinicians and patients. We've also been working very closely with both CMS and private payers in the United States and expect to make significant progress on coverage and payment here in fiscal 'twenty five.

Unknown Executive: We've also been working very closely with both CMS and private payers in the United States and expect to make significant progress on coverage and payment here in fiscal 2020. With over 1 billion people worldwide living with hypertension, every 1% penetration into the target market is over a billion dollars of revenue. Our simplicity procedure represents a massive change. Now with that, let's go to Karen for a deeper look at Q4 financial performance and our Fiscal 25. Karen, it's over to you. Thanks.

Speaker Change: With over 1 billion people worldwide living with hypertension.

Speaker Change: And every 1% penetration into the target market is over a billion dollars of revenue.

Our simplicity procedure represents a massive opportunity.

Speaker Change: Now with that let's go to Karen for a deeper look at Q4 financial performance and our fiscal 'twenty five guidance Karen over to you.

Karen: Thanks, Jeff.

Karen L. Parkhill: So recapping our financials, the fourth quarter was yet another where we delivered on our commitment, growing 5.4% ahead of expectation. We continue to drive durable mid-single-digit revenue growth, as committed, with more than 5% in fiscal 24. Importantly, we accelerated our comp-adjusted growth every quarter. Adjusted EPS in the fourth quarter was $1.46, at the upper end of our guidance range, exceeding consensus.

Karen: So recapping our financials the fourth quarter was yet another where we delivered on our commitments growing 5.4% ahead of expectations.

Karen: We continue to drive durable mid single digit revenue growth.

Karen: As committed with more than 5% in fiscal 'twenty four.

Karen: Importantly, we accelerated our comp adjusted growth every quarter.

Karen: And adjusted EPS in the fourth quarter was $1 46 at the upper end of our guidance range and exceeding consensus.

Karen L. Parkhill: The strength of our global business was apparent, with broad-based growth around the world. As I noted last quarter, we expected our U.S. growth to improve as we launched new products, and we delivered that with mid-single-digit growth. Our non-U.S. developed markets also grew mid-single-digits, including 7% growth in Western Europe and 5% growth in Japan.

Karen: The strength of our global business was apparent with broad based growth around the world.

Karen: As I noted last quarter, we expected our U S growth to improve as we launch new products and we delivered that with mid single digit growth.

Karen: Our non U S developed markets also grew mid single digits, including 7% growth in Western Europe, and 5% growth in Japan.

Karen L. Parkhill: And emerging markets remain strong, growing 13% and now comprising 18% of our total revenue. Looking down the P&L, our adjusted gross margin was roughly stable at 65.8%, as our cost-out programs offset inflation. And our adjusted operating margin declined slightly more than expected, given higher sales incentives on the higher revenue, along with increased investments we've made in SG&A to support upcoming product launches.

Karen: In emerging markets remains strong growing 13% and now comprises 18% of our total revenue.

Looking down the P&L, our adjusted gross margin was roughly stable at 65, 8% as our cost out programs offset inflation.

Karen: And our adjusted operating margin declined slightly more than expected given higher sales incentives on the higher revenue along with increased investments we've made in SG&A to support upcoming product launches.

Karen L. Parkhill: That said, we delivered operating profit in line with expectations. We also continued to drive strong improvement in our free cash flow during the quarter, as we focused across the organization on working capital. In fact, our free cash flow increased by 14% over last year to $5.2 billion, with a conversion rate well north of 100% in the back half of the year. Looking ahead to Fiscal 25, we expect to continue to drive a year-over-year increase in both free cash flow and our conversion rate. Turning to Capital Allocation, our robust balance sheet allows us to operate from a position of strength.

Karen: That said, we delivered operating profit in line with expectations.

Karen: We also continued to drive strong improvement in our free cash flow during the quarter as we focused across the organization on working capital.

Karen: In fact, our free cash flow increased by 14% over last year to $5.2 billion with a conversion rate well north of 100% in the back half of the year.

Looking ahead to fiscal 'twenty five we expect to continue to drive a year over year increase in both free cash flow and our conversion rate.

Karen: Turning to capital allocation.

Karen: Our robust balance sheet allows us to operate from a position of strength.

Karen L. Parkhill: As you know, we prioritize both investing in our future growth and returning capital to our shareholders. We continue to evaluate Tuckin' M&A opportunities against a high bar as we prioritize profitable growth. And to our shareholders, we remain committed to returning a minimum of 50% of our free cash flow. In fact, in FY24, we returned $5.5 billion through both dividends and share repurchases. And over the past few months, we've repurchased over $2.5 billion in the open market.

Karen: As you know, we prioritize both investing in our future growth and returning capital to our shareholders.

Karen: We continue to evaluate tuck in M&A opportunities against a high bar.

Karen: As we prioritize profitable growth.

Karen: And to our shareholders, we remain committed to returning a minimum of 50% of our free cash flow.

Karen: In fact in FY 'twenty, four we returned $5 $5 billion through both dividends and share repurchases.

Karen: And over the past few months, we've repurchased over two and a half billion in the open market, reflecting the confidence we have as we finalized our plan and our ability to deliver ahead.

Karen L. Parkhill: Reflecting the confidence we have as we finalized our plan and in our ability to deliver ahead. This confidence is also evident in the decision by our board to increase our dividend for the 47th consecutive year, which we announced this morning. The yield from our growing dividend is an important component of the total return we generate for our shareholders. It's worth noting that we've been able to grow our dividend by 30% over the past five years and 130% over the past decade. Now, turning to our guidance.

Karen: This confidence is also evident in the decision by our board to increase our dividend for the 47th consecutive year, which we announced this morning.

Karen: The yields from our growing dividend is an important component of the total return we generate for our shareholders.

Karen: It's worth noting that we've been able to grow our dividend by 30% over the past five years and.

Karen: 130% over the past decade.

Karen: Now turning to our guidance.

Karen L. Parkhill: After six quarters in a row, we've firmly established a track record of delivering durable mid-single-digit revenue growth. And, as Jeff mentioned, we're at the beginning stages of many new product cycles that enable confidence in our top line. Given this backdrop, we'd have you start the year modeling our fiscal 25 organic revenue growth at 4 to 5 percent, including four to four and a half percent in the first quarter. Our product launches will be ramping through the year.

After six quarters in a row, we firmly established a track record of delivering durable mid single digit revenue growth.

Speaker Change: And as Jeff mentioned, we're at the beginning stages of many new product cycles that enable confidence in our topline.

Speaker Change: Given this backdrop, we'd have you start the year modeling our fiscal 'twenty five organic revenue growth at 4% to 5%.

Speaker Change: Including four to four 5% in the first quarter.

Our product launches will be ramping through the year.

Karen L. Parkhill: So we expect revenue growth to accelerate through the quarters as well. By segment, we'd expect our three portfolios to be roughly aligned with the corporate average, and Diabetes to grow Above the Corporate App. Our organic growth guidance continues to exclude revenue reported in other currencies as well as foreign exchange, and I direct you to the guidance slide in our earnings presentation for additional details. Regarding currency, based on recent rates, we would see a full year unfavorable impact on revenue in the range of $275 to $375 million, including an unfavorable impact of $85 to $135 million in the first quarter.

Speaker Change: So we expect revenue growth to accelerate through the quarters as well.

Speaker Change: By segment, we would expect our three portfolios to be roughly aligned with the corporate average and diabetes to grow above the corporate average.

Speaker Change: Our organic growth guidance continues to exclude revenue reported in other as well as foreign exchange and I direct you to the guidance slide in our earnings presentation for additional details.

Regarding currency based on recent rates, we would see a full year unfavorable impact to revenue in the range of $275 million to $375 million in.

Speaker Change: Including an unfavorable impact of $85 million to $135 million in the first quarter.

Karen L. Parkhill: Down the P&L, we expect an expansion in our operating margin as we drive efficiencies in our overhead spend. At the same time, we continue to appropriately invest in R&D to drive future growth. Taking all of this together, we're guiding our fiscal 25 non-GAAP diluted EPS in the range of $5.40 to $5.50, including $1.19 to $1.21 in the first quarter. This includes an unfavorable 5% impact from foreign currency for the full year with an unfavorable 6% impact in the first quarter based on recent rates. Our Fiscal 25 Outlook reflects our commitment to restore our earnings power, with EPS growth at the midpoint of about 5%. Importantly, at current rates, the impact from currency lessens through the year.

Speaker Change: Down the P&L, we expect expansion in our operating margin as we drive efficiencies in our overhead spend.

Speaker Change: At the same time, we continue to appropriately invest in R&D to drive future growth.

Speaker Change: Taking all of this together, we're guiding our fiscal 25 non-GAAP diluted EPS in the range of $5 40 to $5 50.

Speaker Change: Including $1 19 to $1 21 in the first quarter.

Speaker Change: This includes an unfavorable 5% impact from foreign currency for the full year with an unfavorable 6% impact in the first quarter based on recent rates.

Speaker Change: Our fiscal 'twenty five outlook reflects our commitment to restore our earnings power with EPS growth at the midpoint of about 5%.

Speaker Change: Importantly at current rates the impact from currency lessens through the year.

Karen L. Parkhill: So we expect to be ending the year with high single-digit EPS growth on a reported basis, in line with our longer-term objectives. Now, as we close this important fiscal year, I want to take a moment to express my gratitude to the employees of Medtronic around the world. The important results we delivered this year are all due to your hard work, dedication, and commitment to Medtronic and our mission. Thank you for being the driving force behind our success. Jeff is sending it back to you.

Speaker Change: So we expect to be ending the year with high single digit EPS growth on a reported basis in line with our longer term objective.

Speaker Change: Now as we close this important fiscal year I want to take a moment to express my gratitude to the employees of Medtronic around the world.

Speaker Change: The important results. We delivered this year are all due to your hard work dedication and commitment to Medtronic and our mission.

Speaker Change: Thank you for being the driving force behind our success.

Speaker Change: Jeff sending it back to you.

Jeff: Alright, Thank you Karen.

Geoffrey Straub Martha: Now, before we go to the analyst questions, I'll close with a few brief remarks. I hope you feel what we do, the momentum that Medtronic is building, momentum that was set in motion by the comprehensive transformation we embarked on a few years ago. We streamlined our operating model. We put in place a performance-driven culture, and we changed incentives. We brought in new leaders.

Jeff: Now before we go to the analyst questions I'll close with a few brief remarks.

Jeff: I hope you're feeling what we are that the momentum at Medtronic is building momentum that was set in motion by the comprehensive transformation, we embarked on a few years ago.

Jeff: We streamlined our operating model, we put in place performance driven culture, and we change incentives we brought in new leaders, we improved how we allocate capital.

Geoffrey Straub Martha: We improved how we allocate capital. And we started the work of driving significant operational efficiencies to leverage our... This transformation is taking hold, and you're seeing it in our results, and just in time for a very important Medtronic milestone. We're celebrating our company's 75th anniversary. It was back in 1949 that a medical electronics repair business was started in a garage in Minneapolis.

Jeff: And we started the work of driving significant operational efficiencies to leverage our scale.

Jeff: This transformation is taking hold and you're seeing it in our results.

Jeff: And just in time for a very important medtronic milestone, we're celebrating our company's 75th anniversary this year.

Geoffrey Straub Martha: Now certainly, a lot has changed over the past 75 years, but what hasn't stopped since our humble beginnings in that garage is our spirit of innovation and our dedication to delivering life-transforming health technology that alleviates pain, restores health, and extends life. As we celebrate our past, we are even more excited about our future. That legacy of invention and market creation continues today. And you see it. You see it with our PFA products in A5. Our sensing products for neuromodulation.

Jeff: It was back in 1949 that are medical electronics repair business was started in a garage in Minneapolis.

Geoffrey Straub Martha: Our 780G and Simplera Sync System. You see it with our robotics, with our Evolute TAVR system and our Simplicity Hypertension Procedure, and the dozens of new products across our business. Our pipeline of breakthrough innovation is impressive, and I'm incredibly excited about the impact that these products will have on patients, on physicians, and on our performers. It's these new products, combined with exposure to secular growth markets and an aging population, that put us in a great spot to continue delivering durable revenue.

Jeff: Certainly a lot has changed over the past 75 years, but what hasnt stopped from the humble beginnings in that garage is our spirit of innovation and our dedication to delivering life transforming health technology that alleviates pain, where stores health and extends life.

Jeff: As we celebrate our past, we're even more excited about our future that legacy of invention and market creation continues today and you see it you see it with our PSA products in Afib are sensing products in neuromodulation or seven atg and some players sync system.

Jeff: You see it with our robotics with our evolute camera system, and our simplicity hypertension procedure and a dozens of new products across our businesses.

Jeff: Our pipeline of breakthrough innovation is impressive.

Jeff: And I'm incredibly excited about the impact that these products will have on patients on physicians and on our performance.

Jeff: It's these new product cycles, combined with exposure to secular growth markets and an aging population that put us in a great spot to continue delivering durable revenue growth.

Geoffrey Straub Martha: And when you add this to our improving earnings power, our strong free cash flow, and dividend growth, you have a great formula for creating shareholder value. Finally, I'd like to join Karen in expressing my gratitude to our employees watching today. We've been through a lot of change, but through it all, your unwavering focus on our mission and performance has propelled our company forward. Your contributions matter, not just for Medtronic but for the millions of patients around the world that depend on them.

Jeff: And when you add this to our improving earnings power, our strong free cash flow and dividend growth.

Jeff: You have a great formula for creating shareholder value.

Speaker Change: Finally, I'd like to join Karen in expressing my gratitude to our employees watching today.

Speaker Change: We've been through a lot of change, but through it all your unwavering focus on our mission and performance has propelled our company forward your contributions matter not just for Medtronic, but for the millions of patients around the world that depend on us and as we continue to innovate and grow I'm confident that together we will.

Geoffrey Straub Martha: And as we continue to innovate and grow, I'm confident that together we will achieve even greater heights in Fiscal 25. So with that, let's move to Q&A, where we're going to try to get to as many answers as possible. So we ask that you limit yourself to just one question and, only if needed, a related follow-up. If you have additional questions, you can reach out to Ryan and the investor relations team after the meeting. With that said, Brad, can you please give the instructions for asking questions? For Cell Site Analysts that would like to ask a question, please

Speaker Change: Chief even greater heights in fiscal 'twenty five.

Speaker Change: So with that let's move to Q&A, where we're going to try to get to as many analysts as possible. So we ask that you limit yourself to just one question and only if needed a related follow up if you have additional questions you can reach out to Ryan and the Investor Relations team after the call.

Speaker Change: With that Brad can you. Please give the instructions for asking a question for the sell side analysts that would like to ask a question. Please select the participants button and click raise hand.

Operator: For the Cell Site Analysts that would like to ask a question, please select the Participants button and click Raise Hand. If you're using the mobile app, press the More button and select Raise Hand.

Speaker Change: If you're using the mobile app pressed them more button and select raise hand.

Operator: Your lines are currently on mute. When called upon, you will receive a request to unmute your line, which you must respond to before asking your question. Lastly, please be advised that this Q&A session is being recorded. For today's session, Geoff, Karen, and Ryan are joined by Que Dallara, EVP and President of Diabetes, Mike Marinaro, EVP and President of the Medical Surgical Portfolio, Sean Salmon, EVP and President of the Cardiovascular Portfolio, and Brett Wall, EVP and President of the Neuroscience Portfolio. We'll pause for a few seconds to assemble the key, and then we'll take the first question from Travis Steed at Bank of America. Travis, please go ahead.

Speaker Change: Your lines are currently on mute.

Speaker Change: When called upon you will receive a request to Amit Your line, which you must respond to before asking your question.

Speaker Change: Lastly, please be advised that this Q&A session is being recorded.

Speaker Change: For today's session Geoff Karen and Ryan are joined by Q to Lora, EVP and president of diabetes, Mike Marinara, EVP and president of the medical surgical portfolio, Sean Salmon, EVP and president of the cardiovascular portfolio and Brett wall, EVP and president of the neuroscience portfolio.

Speaker Change: We'll pause for a few seconds to assemble the queue.

Okay.

Speaker Change: Okay.

Speaker Change: Great. We'll take the first question from Travis Steed at Bank of America Travis. Please go ahead.

Travis Steed: Hey, good morning, everybody. Thanks for the question I wanted to ask about the EPS guidance.

Speaker Change: Ex currency, 9% to 11% I guess buyback, maybe add 1%, 2%, there, but still kind of above kind of what Medtronic. Historically has done so wanted to kind of understand the puts and takes better on your EPS guidance and how you're going to get there and then kind of longer term youre talking a lot about restoring earnings power is how should we think about kind of.

Speaker Change: The pathway.

Speaker Change: On growing kind of EPS.

Speaker Change: Beyond FY 'twenty five.

Speaker Change: The question.

Geoffrey Straub Martha: Well, Travis, thanks for the question. I'm going to hand this to Karen in a second, but let me just make a few opening comments about this. Look, earnings power is something we've been working on for years. For example, we started our aggressive global operations and supply chain transformation over three years ago. We've been improving pricing. You see that in our FY24 results, and we're strengthening this muscle and building on our momentum on pricing going into FY25.

Travis Steed: Travis Thanks for the question ever hand, this to Karen in a second but let me just make a few opening comments on this look the earnings power or something we've been working on for years. You know if for example, you know we started our aggressive global operations and supply chain transformation over three years ago.

Travis Steed: And we've been improving pricing you see that in FY 'twenty for our results and were strengthening this muscle building on our momentum on pricing going into FY 'twenty five yes, we've made some tangible changes to mix like exiting our ventilation business and divesting our dialysis business. These are easier a couple of examples in Chicago through a more detailed but.

Geoffrey Straub Martha: We've made some tangible changes to the mix, like exiting our ventilation business and divesting our dialysis business. These are just a couple of examples, and I'm sure Karen will go through them in more detail. But the point is, I think they're structural, programmatic, structural changes to the enterprise that are allowing us to achieve top-line growth, but at the same time, growing that earnings power. Like I said, they're structural, they're programmatic, and they're giving us confidence for FY25 and beyond in terms of that earnings power improvement. So, Karen, you can walk through some of the details on this. Sure. Thanks, Jeff and Travis. So, I would say in about 25.

Travis Steed: The point is there I think the structural.

Travis Steed: Program programmatic.

Travis Steed: Structural changes to the enterprise that are allowing us to achieve top line growth.

Travis Steed: But at the same time growing that earnings power.

Travis Steed: Like I said that there are structural their programmatic.

Karen: And they're giving us the confidence into FY 'twenty five and beyond in terms of that earnings power improvements up Karen you can walk through some of the details on this sure. Thanks, Jeff and Travis So I would say and in 25, we're focused on three key three three key things delivering continued mid single digit topline growth while executing on our.

Karen L. Parkhill: Thanks, Jeff and Travis. So I would say in 25, we're focused on three key things, delivering continued mid-single-digit top-line growth while executing on our strong pipeline, investing in our high-priority growth drivers, and restoring the earnings power of the company, as Jeff talked about. And, you know, our guidance all starts with confidence and durability on our top line. We've got really high confidence given the track record that we have had over the last six quarters and the fact that we've got this very robust pipeline coming to market. You know, much of it has already been approved by regulators, and much of it is also moving from limited market release to full market release.

Karen: Strong pipeline investing in our high priority growth drivers and restoring the earnings power of the company as Jeff talked about.

Speaker Change: And you know our guidance I'll start with confidence and durability on our topline and we've got really high confidence given the track record that we've had over the last six quarters and the fact that we've got this very robust pipeline coming to market in a much of it has already been approved by regulators and much of it is also moving from limited market release to full market release.

Karen: <unk>.

Karen L. Parkhill: So, you know, we expect gross margins to be flat year over year on a constant currency basis because we've got costs down and pricing offsetting inflation. And on operating expenses, we continue to make appropriate investments in R&D to drive our future growth and will really drive leverage in SG&A. And that's through programmatic changes that we've implemented throughout the company, including discipline on headcount and focus on discretionary expenses. We've also got an increased use of automation and digitization.

Karen: And so we expect on gross margin to be flat year over year on a constant currency basis, because they've got costs down and pricing offsetting inflation.

And on operating expenses, we continue to make appropriate investments in R&D to drive our future growth.

Karen: And will really drive leverage in SG&A and that through programmatic changes that we've implemented throughout the company, including discipline on head count focus on discretionary expenses.

Karen: Also got increased use of automation and Digitization and we've elevated the review and reporting on our expenses and our margins and we've driven some structural changes to like eliminating our respiratory intervention operating unit.

Karen L. Parkhill: And we've elevated the review and reporting on our expenses and our margins. And we've driven some structural changes, too, like eliminating our respiratory interventions operating unit. And on this expense, you know, we've taken costs out already, and you're seeing the full benefit of it this year. And we actually drove this kind of leverage in 2024. It was just masked by the impact of the True Open Incentive Compensation that we did from 2023 to 2024.

Karen: And on this on this expense you know we've taken cost out already and Youre seeing the full benefit of it this year.

Karen: We actually drove this kind of leverage in 'twenty four it was just masked by the impact of the true up and incentive compensation that we did from 'twenty three to 'twenty four.

Karen L. Parkhill: And then, on top of operating leverage, you'll also see a large benefit from a reduced share count, which will be a bit offset by incremental interest in tax. But when you put it all together, we expect this four to five percent top line growth, along with operating leverage and share count, to deliver that high single-digit EPS growth for the year. And as our currency headwinds debate continues, we've said we expect high single-digit actual or reported EPS in the back half of the year.

Karen: And then on top of operating leverage you'll also see a large benefit from reduced share count, which will be a bit offset by incremental interest and tax but when you put it all together and we expect this 4% to 5% top line growth along with operating leverage and share count to deliver that high single digit.

Karen: P S growth for the year.

Karen: And as our currency headwind debate, we've said, we expect high single digit actual our reported EPS in the back half of the year and that goes to beyond you know beyond this fiscal year, so beyond FY 'twenty five.

Karen L. Parkhill: And that goes beyond this fiscal year. So beyond FY25, we're focused on maintaining this mid single-digit revenue growth and continuing to drive leverage down the P&L to deliver that high single-digit EPS growth.

Karen: We're focused on maintaining this mid single digit revenue growth and continuing to drive leverage down the P&L to deliver that high single digit EPS growth.

Speaker Change: Great. Thanks, a lot <unk>.

Karen: Yep.

Operator: Thanks, Travis. Next question, please, Brad.

Thanks Travis next question. Please Brad the next question comes from Robbie Marcus with JP Morgan Ravi. Please go ahead.

Operator: The next question comes from Robbie Marcus at J.P. Morgan. Robbie, please go ahead.

Unknown Attendee: Oh, great. Good morning, everyone.

Robert Justin Marcus: Oh, great. Good morning, everyone. Thanks for taking the questions.

Unknown Attendee: Thanks for taking those questions. Maybe to start, I wanted to zero in on you in the guide. You have accelerating revenue growth throughout the year, with the first quarter where it is probably second half better than the first half. I was hoping you could spend a minute on some of the products there because there are a lot of moving pieces and how we should think about the sources of upside and your confidence levels around that upside.

Robert Justin Marcus: Maybe to start I wanted to zero in <unk>.

Robert Justin Marcus: And the guide you have accelerating revenue growth it feels like throughout the year with first quarter, where it is probably second half better than first half.

Robert Justin Marcus: I was hoping you could spend a minute on some of the products there because there's a lot of moving pieces and how we should think about the sources for upside and your confidence levels around that upside.

Speaker Change: And then I have one follow up sure.

Geoffrey Straub Martha: I'll take a stab at this, Robbie, and Karen can jump in if I missed anything here. Well, first of all, look, we've got a lot, as have been pointed out by many of you on the call here, a lot of approvals here recently in really high-growth areas, and we're in the early stages of these launches. But specifically, to answer your question here, in FY25, some of them... One is in the structural heart with evolute effects.

Speaker Change: I'll take I'll take a stab at this Ravi and Karen can jump in if I Miss anything here.

Speaker Change: Well first of all look we've got a lot.

Speaker Change: <unk> pointed out by many of you on the call here a lot of approvals here recently and really high growth areas and we're in the early stages of these of these launches, but specifically to answer your question here in FY 'twenty five some of them. One is in structural heart with evolute effects as it moves from this limited market release in the U S.

Speaker Change: For a full market release.

Speaker Change: Where we're seeing strong uptick in the smart trial.

Geoffrey Straub Martha: As it moves from this limited market release in the U.S. to a full market release, we're seeing strong upticks, and the SMART trial results in small annulus continue to build on our body of clinical evidence, and we are seeing it change referral patterns.

Speaker Change: <unk> continues to build.

Speaker Change: The smarter hours without some small annualized continues to build on our body of clinical evidence and we are seeing it change referral patterns I mean, it's a it's pretty clear here what to do with these with these patients and it's a bigger cohort of patients and I think most imagined at 40% of the market. So so our structural heart taverns want.

Geoffrey Straub Martha: I mean, it's pretty clear here what to do with these patients, and it's a bigger cohort of patients than I think most imagined at 40% of the market. So structural heart TAVR is one, evolving effects plus the changing referral patterns from SMART. PFA is another one. We've got pulse select here. You saw the results with the over 20% sequential growth in the business, and we really, really haven't seen anything from FAER yet. That's coming. So PFA is going to be a big one for us, and throughout the year, it's accelerating. And leadless, not only...

Speaker Change: Evolute FX plus the changing referral patterns from smart.

Speaker Change: <unk> is another one that we've got a pulse select here you saw the results with the over 20% sequential growth in the business.

Speaker Change: And we really really haven't seen anything from a fair yet that's coming.

Speaker Change: PSA is going to be a big one for us and throughout.

Speaker Change: Throughout the year, it's accelerating and needless not only I mean look we.

Geoffrey Straub Martha: I mean, look, first of all, we still maintain the lion's share of the market here. And we just launched it, recently launched it, and we're continuing to take share. We just launched micro AV2 and VR2, and the market's expanding, like UnitedHealth Group, which you guys know is the largest commercial insurer in the U.S., just updated its policies to cover lupus pacemakers. And so you see us performing strong new launches in an expanding market. That's some of the cardiovascular related ones. And then, again, our EVICD as well.

Speaker Change: First of all we still maintain the lion's share of the market here.

Speaker Change: And we.

Speaker Change: We just launched recently launched it and we're continuing to take share where we just launched a micro <unk> and VR too and the market's expanding like Unitedhealth group.

Speaker Change: Which you guys know is the largest commercial insurer in the U S. Just updated its policies to cover this pacemakers and so I see us performing strong new launches and an expanding market. So that's some of the cardiovascular related ones and that again, our EV ICD as well so there's a lot for FY 'twenty.

Geoffrey Straub Martha: So there's a lot for FY20, you know, in this fiscal year from cardiology. Neuroscience also has a lot. I mean, spine, you saw the acceleration.

Speaker Change: In this fiscal year for them from Cardiology Neuroscience also has a lot I mean spine you saw the acceleration we should we expect that to continue.

Geoffrey Straub Martha: We expect that to continue, you know, with the combination of the implants, plus the enabling technology, plus the AI having a real impact. And this has been something we've been building on. And you're seeing good performance relative to the competition. I mean, I know there are a lot of buys out there on Galobus. But when you look at apples to apples, you know, we grew nine percent, and they grew three on an apples to apples pro forma basis in the year. When you look at, you know, the combined invasive and globalists, that's three, and we're nine. That's a pretty big gap between them.

Speaker Change: With.

Speaker Change: With the combination of the implants, plus the enabling technology plus.

Speaker Change: The.

Speaker Change: Plus the AI, having a real impact and this has been something we've been building on.

Speaker Change: And Youre seeing good performance relative to the competition I mean, I know, there's a lot of our buys.

Speaker Change: Buys out there on on Globus.

Speaker Change: But when you look at apples to apples, we grew 9% and they grew three on an apples to apples pro forma basis in the year. When you look at the combined invasive and Globus. That's three and were nine that's a pretty big gap and we're and we've got four times the installed base, which is really a key to <unk>.

Geoffrey Straub Martha: And we're and we've got four times the installed base, which is really a key to growth in that market. Now, E&T continues to do well, and that's accelerating from the continued adoption of Propel and Sinova that came from the Intersect acquisition. And then, of course, in Neuromod. With the closed loop technology, PerceptRC, you know, in my prepared remarks, you heard DBS growing double digits. And then right at the end of the quarter, we got the launch of the approval of Inceptiv, which is our eCAPS closed loop stimulator for pain. We think it's a better product that's on the market.

Speaker Change: Growth in that market now <unk> continues to do well and that's accelerating from the continued adoption of the AR of.

Speaker Change: Propel and <unk>.

That came from the intersect acquisition and then of course in Neuromodulators with the closed loop technology Percept Darcy.

Speaker Change: In my prepared remarks, you heard CBS growing double digits.

Speaker Change: And then right at the end of the quarter, we got the.

Speaker Change: The launch of the approval of Inceptive, which is R E.

Speaker Change: <unk> closed loop stimulator for pain.

Geoffrey Straub Martha: And with our large sales force, we're gonna do some damage there. And then, and then the diabetes. The 70G US growth continues to be low double digits, I think we're going to continue to surprise people with diabetes and show continued strength. And then, of course, Hugo and Ardian are both really good leading indicators of growth that you'll be seeing later in the year. So I mean, that's, there's a lot spread across the businesses. And that's why we have confidence in mid single-digit revenue growth. And Karen talked about how that translates to the bottom.

Speaker Change: We think it's a better product that's on the market and with our large sales force, we're going to do some damage there and then and then the diabetes.

Speaker Change: 70, <unk> U S growth continues low double digits I think we're going to continue to.

Speaker Change: Surprise people on diabetes and show continued strengthen and then of course, Hugo and and Ardian.

Speaker Change: Are both really good leading indicators of of growth that youll see youll be seeing later in the year. So I mean, theres a lot spread across.

Speaker Change: The businesses and that's why we have the confidence in the mid single digits our.

Speaker Change: Our revenue growth and Karen talked about how that translates to the bottom line, yes, and I would just add just briefly that our end markets are growing our back orders are down our supply chain has improved the impact of DVT in China is largely behind US and then obviously, we've got a long list of products that Jeff talked about.

Karen L. Parkhill: Yep, and I would just add just briefly that our end markets are growing, our back orders are down, our supply chain has improved, the impact of VVP in China is largely behind us, and then obviously we've got the long list of products that Jeff talked about. You know, it's said another way, we're entering the year with a lot less questions too, you know, like risks, like, you know, like go back a year ago, China, a lot of uncertainty there, we had a high single digit growth for the year, accelerating throughout the year, double digits in the last two quarters, so these are, you know, putting these things, some of these questions, risks, or obstacles behind us is also, I think, another one that is just the elimination of those plus the addition of the new products is, you add it all up, it feels good going into the year.

Speaker Change: Said another way, we're entering the year with a lot less questions too.

Uh huh.

Speaker Change: Risks like.

Speaker Change: Go back a year ago, your China, a lot of uncertainty there we had a high single digit growth for the year accelerating throughout the year double digits in the last two quarters. So these are putting these things some of these questions risks or obstacles behind this is also I think another one that.

Speaker Change: The elimination of those plus the addition of the new products as you add it all up it feels good going into the year.

Unknown Attendee: Great. Maybe a quick follow-up here. Karen, I appreciate the high-level building blocks down the P&L, but I was hoping you could put a little more meat on the bone.

Speaker Change: Great maybe a quick follow up here at Cowen I appreciate the high level building blocks down the P&L I was hoping you could put a little more meat on the bone.

Unknown Attendee: You talked about gross margin expansion. How should we think about that? It sounds like R&D, de-leverage, and SG&A. You have a lot of costs. I think that drove the miss in operating margin in the fourth quarter. What do we think about the level of investment versus savings in SG&A? It sounds like that does get us to a positive operating margin expansion. But then how do we think about the level of tax? I know it's going higher, but how much higher? Thanks.

Speaker Change: You talked about gross margin expansion, how should we think about that it sounds like R&D leverage SG&A you'd have a lot of cost I think that drove the miss in operating margin in fourth quarter.

Speaker Change: So how do we think about the level of investment versus savings in SG&A. It sounds like that does get us to a positive operating margin expansion and then how do we think about the level of tax I know, it's going higher but how much higher.

Karen L. Parkhill: Sure, Robbie. So just on the detail, on gross margin, I said we expect it to be flat on a constant currency basis. We will have some currency headwinds, about half a point of downward pressure on gross margin at recent rates. But as I said, we've got, you know, good cost control and pricing offsetting inflation there. And as those currency headwinds on the gross margin line should abate as we move through the year and be away, be gone as we exit the year. As we look at R&D and SG&A, I would say in R&D, you know, we're focused on continuing to invest. It's a critical priority for us.

Speaker Change: Sure Robbie so.

Speaker Change: Just on the detail on gross margin I said, we expect it flat on a constant currency basis, we will have some currency headwind and about half a point of downward pressure on gross margin at recent rates.

Speaker Change: But as I said, we've got good costs down and pricing offsetting inflation there.

Speaker Change: And as those currency headwinds on the gross margin line should that should abate as we move through the year end and be away be gone as we exit the year and as we look at R&D and SG&A I would say in R&D. You know, we're focused on continuing to invest as a critical priority priority to it and I've.

Karen L. Parkhill: You know, I've talked about it being the one line item that's allowed to grow in line with or more than revenue in certain years. And we've been focused on driving efficiencies across the company, including in R&D, to enable these levels of investment. You know, some of the recent portfolio moves we've made, like setting up the JV for our renal care or shutting down our ventilator business, have allowed us to reallocate investment into our highest strategic priorities in R&D. So that remains an area of investment.

Speaker Change: About it being the one lie on line item, that's allowed to grow in line or more than revenue in certain years.

Speaker Change: And we've been focused on driving efficiencies across the company, including in R&D to enable these levels of investment in some of the recent portfolio moves we've made and like setting up the JV for our renal care are shutting down our ventilator business has allowed us to reallocate investment into our highest strategic priorities.

Karen L. Parkhill: And then on SG&A, we are focused on driving continued significant leverage in SG&A. And I talked about the programmatic savings that we've been driving, that you're seeing more this fiscal year than you saw last year. We actually drove this kind of leverage in 24. I said it was just masked by the impact of the true open incentive compensation.

Speaker Change: In R&D and so that remains.

Speaker Change: An area of investment and then on SG&A. We are focused on driving continued significant leverage in SG&A and I talked about the programmatic savings that we've been driving that youre seeing more of this fiscal year than you saw last year, we actually drove this kind of leverage in 'twenty four.

Speaker Change: And I said it was just masked by the impact of the trip and incentive compensation.

So we're excited about what we're going to continue to drive in SG&A.

Karen L. Parkhill: So we're excited about what we're going to continue to drive in SG&A. And then on tax, you know, we expect tax to be a bit of a headwind given global tax reform. We're pleased with the work that we've done to offset, you know, some of this, both on the tax line and above the tax line. But we expect it to be about a point higher than we had this past fiscal year. So, so right.

Speaker Change: And then on tax we expect tax to be a bit of a headwind given global tax reform. We're pleased that the work that we've done to offset you know.

Speaker Change: Some of that both on the tax line and above the tax line.

Speaker Change: But we expect it to be about a point higher than we had this past fiscal year.

Geoffrey Straub Martha: So, Rob, when you think about FY25, on the bottom line, as Karen mentioned, that's going to come from operating margin actions, and it goes beyond expense management. These are programmatic changes we made in FY24, and we'll see the full benefit of them. So these are changes that are being made in the bank, and you'll see the full benefit of that in FY25. On the gross margin line, which is super important, those programs are underway, and as Karen mentioned, it's hard to see that because of some of the inflation and FX, but as we get into FY26, as those abate, you'll see that gross margin start to expand as well.

Speaker Change: So suraj you might think about when you think about FY 'twenty five on the bottom line.

Speaker Change: Karen mentioned.

Speaker Change: That's going to come from operating margin.

Speaker Change: Actions in it.

Speaker Change: Goes beyond expense management. These are programmatic changes we've made in FY 'twenty, four and and we will see the full benefit of a series of changes that are made in the bank and you will see the full benefit of that FY 'twenty five on the gross margin line, which is super important those those programs are underway as Karen mentioned have been it's hard to see that because of.

Speaker Change: Some of the inflation and FX, but as we get into FY 'twenty six of those abate, you'll see that gross margin start to expand as well. So we think we've laid this out.

Geoffrey Straub Martha: So we think we've laid this out the right way and got the programs lined up against it and have been working on it for some time, and we'll see those benefits accrue over the next couple of years.

Speaker Change: The right way and got the programs lined up again against it have been working on for some time and Youll see we will see those benefits accrue over the next couple of years.

Speaker Change: Great. Thanks, a lot.

Karen L. Parkhill: Thank you, Robbie. Next question, please, Brett. The next question comes from Vijay Kumar at Evercore. Vijay, please go ahead. Hey guys.

Robbie: Thank you Robbie next question. Please the next question comes from Vijay Kumar of Evercore Vijay. Please go ahead.

Unknown Attendee: Hey guys, thanks for taking my question and congrats on a nice spring here. Jeff, one on your comments about restoring EPS power. What does that mean? What is the right base we should be thinking of? Are we thinking of... Operating margins perhaps getting back to the upper 20s. Is there a time frame for that and maybe some clarification on what that means?

Vijay Muniyappa Kumar: Hey, guys. Thanks for taking my question in.

Vijay Muniyappa Kumar: Congrats on a nice sprint here, Jeff one on Iraq, restoring EPS power.

Vijay Muniyappa Kumar: Comments.

Speaker Change: What does it mean.

Speaker Change: Where does the rate base, we should be thinking of or are we thinking of.

Speaker Change: Operating margins, perhaps getting back to upper twenty's as our timeframe for that and.

Speaker Change: Maybe some clarification on what that means.

Geoffrey Straub Martha: Well, look, I'll let I'm gonna have Karen answer that. She kind of hit on that some in her prepared remarks, but I'd like her, you know, kind of redo some of that. But the like I said, just a second ago, on uh, the operating margin, you know, we've got a lot of confidence in that for the year given the changes we've already made and the changes we've already made in the gross margin line and our continuing expansion, those will start to hit in the later part of the year and move into next year. I'll care and kind of quantify yeah.

Speaker Change: Well look I'll let.

Speaker Change: Karen answer that she kind of hit on that some in our in our prepared remarks, but have her kind of reduce some of that but.

Speaker Change: Like I said, just a second ago.

Speaker Change: On.

Speaker Change: The operating.

Speaker Change: Operating margin.

Speaker Change: We've got a lot of confidence in that for the year given the changes we've already made and the changes we've already made in the gross margin line and are continuing to expand those will start to hit in the later part of the year and move into next year I'll I'll, Karen kind of quantified yeah, and just on restoring the earnings power of Vijay It means that we are.

Karen L. Parkhill: Yeah, and just on restoring the earnings power, Vijay, it means that we, you know, are focused on driving that durable mid single-digit top line. It starts there, but then driving leverage down the P&L to deliver high single-digit EPS. And you'll see us exit the year of FY 25 doing that, and we're focused on maintaining it and driving it further from there.

Speaker Change: Focused on driving that durable mid single digit top line and it starts there, but then driving leverage down the P&L to deliver high single digit EPS and you'll see us exit.

Speaker Change: Exit the year and FY.

Speaker Change: FY 'twenty five doing that and we're focused on maintaining it and driving it continues.

Speaker Change: From there.

Unknown Attendee: And just related to that, when you say operating margin leverage this year, is that on an XFX basis, or what is the implied operating margin on a reported basis for fiscal 25?

Speaker Change: Understood and just.

Speaker Change: Of related to that when you say operating margin.

Speaker Change: Our leveraged us here is that on an ex FX basis or whats the implied operating margins on a reported basis for fiscal 'twenty.

Speaker Change: <unk> 25.

Karen L. Parkhill: Yeah, we're expecting margins around 26% and 25%. And that's on a reported basis.

Speaker Change: Yeah, we're expecting margins around 26% and 25.

Speaker Change: And that's on a that's on a reported basis.

Speaker Change: So we're up from where we were in.

Speaker Change: Yes.

Unknown Attendee: Thank you, Vijay. Next question, Brad. The next question comes from Larry Biegelsen at Wells Fargo. Larry, please go ahead.

Unknown Attendee: So up from where we weren't. Thank you, Vijay. Next question, Brad. The next question comes from Larry Biegelsen at Wells Fargo. Larry, please go ahead. Good morning. Thanks for taking the questions. Congratulations on a nice quarter here. Hey, Sean.

Speaker Change: Thank you Vijay next question Brad.

Speaker Change: Next question comes from Larry <unk> of Wells Fargo Berry. Please go ahead.

Larry: Good morning, Thanks for taking the questions congrats on a nice quarter here Sean.

Speaker Change: It was great to see the mid single digit growth in air solutions in Q4, and congrats on the <unk> data.

Speaker Change: How should we be thinking about the AF business before the apparel launch in the U S. Just remind us on the launch timing, there and where you are with supply and your ability to get mapping equipment and personnel out there in the field. Thanks for taking the question.

Sean M. Salmon: Thanks, Larry. First of all, the business is doing exceptionally well, like that sequential growth that we've seen, and the demand and interest coming out of both HRS and AIRA for our new technologies is really astonishingly great. It's really, really high. And as in the United States, our pull field is moving pretty fast there, and we're catching that wave, obviously, with our first entry here. And I'd say that, as we scale up for further penetration of therapy, there are lots of other approvals we're getting around the world.

Larry: Thanks, Larry.

Speaker Change: The business is doing exceptionally well on that sequential growth that we've seen in the demand and interest coming out of both HRS and <unk>.

Speaker Change: New technologies is really.

Speaker Change: Astonishingly, great, it's really really high.

Speaker Change: As in the United States.

Speaker Change: Our pulp sales moving pretty fast burn more cash in that way of obviously with our first entry here.

Speaker Change: I would say that there is.

Speaker Change: As we scale up for.

Speaker Change: Further penetration of therapy, there's lots of other approvals, we're getting around the world There's special capacity.

Sean M. Salmon: There's an expansion of capacity. And, you know, the most important thing to get fair to the United States was that last module of clinical data. As you saw, that was really pristine when taken head to head with the market leading technology and just narrowly missing on superior efficacy. So that's, that's all bobbing.

Speaker Change: The most important thing to get fair to United States was that last module clinical data as we saw that was really pristine taking on head to head the market, leading technology and just narrowly missing.

Speaker Change: Oscar efficacy. So that's that's all boding well to your point the other things we have to get right are scaling up manufacturing and that's something we.

Sean M. Salmon: Well, to your point, though, the things we have to get right are scaling up manufacturing. And that's something we've put a lot of effort toward; we've moved into new Medtronic facilities away from the sort of acquired clean room that we purchased with Affara. And the last point you asked about capital, and you know, that's certainly not going to be a barrier to our success. We have all kinds of ways of helping with capital acquisition, including placing capital, leasing, catheter costs, things like that, that we'll be availing ourselves of throughout the launch of that product as well.

Speaker Change: And quite a lot of effort towards moving into new Medtronic facilities away from the sort of acquired clean room that.

Speaker Change: We purchased with a thorough.

Speaker Change: And.

Speaker Change: The last point.

Speaker Change: Asked about capital and that's certainly not going to be embarrassing to our success, we have all kinds of ways of.

Speaker Change: Helping with capital acquisition, placing capital leasing capital costs things like that that will be availing ourselves to throughout the launch of that product as well. So look I think all things are going up.

Sean M. Salmon: So look, I think all things are going up. We're really excited about Pulsefield ablation, and customers are really kind of beating the door down for it every single day. So it's, it's exciting to be part of. Thanks for taking the question. Thanks, Larry. Next question, please, Brad. The next question comes from Peter Chickering at Deutsche Bank.

Speaker Change: We're really excited about wholesale ablation.

Speaker Change: Customers are really kind of beat the door down for it every single day. So it's it's exciting to be part of.

Speaker Change: Thanks for taking the question.

Operator: Thanks, Larry. Next question, please, Brad. The next question comes from Peter Chickering at Deutsche Bank. Peter, please go ahead. Hey, good morning, guys. Quick lessons on margins this quarter, you know, the operating margins.

Speaker Change: Thanks, Larry next question. Please Brad the next question comes from Peter Chickering Deutsche Bank. Please.

Unknown Attendee: Yeah, thanks, Peter, for the question. You're right.

Speaker Change: Please go ahead.

Speaker Change: Hey.

Speaker Change: Good morning, guys quick.

Unknown Attendee: Quick questions on margin this quarter, the operating margins relative software expected SG&A pressures can you just walk through what the variance was services expectations that he talked about higher sales conference poker product launches just want to make sure I understand what happened versus what you were expecting.

Karen L. Parkhill: So with the outperformance that we had on the top line, we did have some incremental incentive accruals in the quarter on sales incentive comp. And we've purposely driven investments in our strategic growth drivers as we work to commercialize many of the exciting innovations that we've got heading into 25. You know, we did all this and absorbed the incremental, you know, incentive comp and investments while still delivering on our financial commitments and beating the bottom line. But that's what it was driven by.

Speaker Change: Yeah. Thanks, Peter for the question.

Speaker Change: You're right that so with the outperformance that we had on the top line, we did have some incremental incentive accruals in the quarter.

Speaker Change: On sales incentive comp and we purposely driven investments and our strategic growth drivers as we work to commercialize many of the exciting innovations that we've got heading into 'twenty five.

Speaker Change: We did all of that and absorbed the incremental incentive comp and investments while still delivering on our financial commitments.

Speaker Change: And beating the bottom line.

Speaker Change: But that's what it was driven by.

Speaker Change: Okay, and then cranial fine.

Speaker Change: Pretty strong this quarter can you talk about the durability of that growth is or where we should think about that growing into fiscal 'twenty five. Thanks. So much.

Brett A. Wall: You bet. Hey Peto, it's Brett Wall.

Brett A. Wall: Yes, you bet, Hey, Peter it's Brett wall. Thanks for the question. We think it is very durable if you look at where this business is going as Jeff mentioned, we grew three times our nearest competitor in this space and that's on a very large base of business. We are recruiting the best sales reps. We have this technology system with <unk> that is allowing us to change out.

Brett A. Wall: Thanks for the question. We think it's very durable. If you look at where this business is going, as Jeff mentioned, we grew three times the size of our nearest competitor in the space, and that's on a very large base of business. We are recruiting the best sales reps. We have this technology system with ABLE that is allowing us to change how spine surgery is being done. We are recruiting physicians, sales reps, and our technology is making a difference in the marketplace. We see that as durable for several, several quarters. Yeah, you know, just one final point on that.

Brett A. Wall: Spine surgeries being done we are recruiting physicians sales reps and our technology is making a difference in the marketplace. We see that is durable for.

Brett A. Wall: For several several quarters here.

Geoffrey Straub Martha: Yeah, you know, just one final point on that, you know, it's like the model in the industry is changing to this capital equipment. It's enabling technology. Now the enabling technology has to have good stuff. It has to be integrated, and it has to have value.

Brett A. Wall: Just one final point on that.

Brett A. Wall: The model is and the industry is changing to this capital equipment is enabling technology now uniquely technologists. The good stuff that has to be integrated has to have value.

Geoffrey Straub Martha: AI is a big piece of that, and it's in the accounts for making investments in a company now. You know, the Medtronic ecosystem, Able versus some other ecosystem, and there aren't many out there, right? So, you know, that's why we keep emphasizing our installed base. And it's also changing the industry structure because it takes a lot of expertise and capital to build these ecosystems. So you don't have, you know, this long tail of tiny spine companies that are preying on docs; those are going away. And so, you know, that's why we think this is durable. And we're, you know, this, yeah, we're investing heavily in this, and have been for years. All right, thanks so much.

Brett A. Wall: It is a big piece of that and as.

Brett A. Wall: Accounts, we're making investments in a company now.

Brett A. Wall: The Medtronic ecosystem able versus some other ecosystem and theres not many out there right. So.

Brett A. Wall: That's why we keep emphasizing our installed base.

Brett A. Wall: And it's also changing the industry structure as this takes a lot of expertise and capital to build this ecosystem. So you don't have this long tailed tiny spine companies.

Brett A. Wall: That are preying on docs those are going away.

Brett A. Wall: And so that's why we think this is durable and we're you know.

Brett A. Wall: This year, we're investing heavily in this area.

Brett A. Wall: And have been for years.

Speaker Change: Alright, thanks, so much.

Operator: Thank you, Peto. Next question, please, Brad. The next question comes from Josh Jennings at Cowen & Company. Josh, please go ahead.

Speaker Change: Thank you Peter next question. Please spread the next question comes from Josh Jennings with Cowen and company Josh. Please go ahead.

Unknown Attendee: Hi, good morning. Thanks for taking the time to answer the question. I had trouble with the mute button there. I wanted to ask about emerging markets, you know; almost just under 20% of the revenue base grew double digits in fiscal 24. Maybe just help us understand some of the puts and takes there. I think Karen you said most of the VBB headwinds are behind Medtronic now heading into fiscal 25. China accounts for almost 40% of the emerging market revenue base. You just talk about overall emerging market trends, expectations for sustainable double-digit growth, and specifics around China. Can we see an acceleration in Medtronic's performance and growth in China? Thanks for taking the time to answer my question.

Joshua Thomas Jennings: Hi, good morning, Thanks for taking the question trouble with the mute button there.

Joshua Thomas Jennings: Wanted to ask about emerging markets almost just under 20% of the revenue base grew double digits in fiscal 'twenty four maybe just help us understand some of the puts and takes or anything can you said most of the BBB HAMP headwinds are behind Medtronic now heading into <unk>.

Speaker Change: Into fiscal 'twenty five China is almost 40% of the emerging market revenue base can you just talk about overall emerging market trends expectations for sustainable double digit growth and specifics around China can we see acceleration and Medtronic performance and our growth in China. Thanks for taking the question.

Geoffrey Straub Martha: Sure, Josh, thanks for the question. Look, as I think most of you know, the emerging market focus has been something that we've been on for a long time. And it has been almost like an independent growth driver for us up until, you know, basically COVID, right when certain markets like China shut down, and then you had VVP. So the last couple years have been choppy on emerging markets, I would say, but those fundamentals are coming back. VVP is almost like China's a big one there, right?

Joshua Thomas Jennings: Sure Josh Thanks for the question.

Speaker Change: As I think most of you know what I mean.

Speaker Change: Emerging market focus has been something that we've been on for for a long time.

Speaker Change: And it has been almost like an independent growth driver for us up until basically COVID-19 right when certain markets like China shut down and then you had DVT. So.

Speaker Change: Last Cup last couple of years have been choppy on emerging markets I would say, but those fundamentals are coming back right Pvp as almost like China is a big one there right.

Geoffrey Straub Martha: VVP is, you know, mainly behind us, not totally. You've seen. I'd say we're 80% of the way there. And you've seen the growth accelerating throughout the year, for us, the last two quarters, double digits for China. You know, when that last, you know, call it, we don't think the, you know, there's a little bit of a call hanging chads on VVP, and the timing of those tenders, and some of our smaller businesses in the, like aortic or peripheral vascular, and So going from double digits down to mid single, but we see in any given quarter, mid single to high single to double.

Speaker Change: <unk>, mainly behind us not totally you've seen I'd say, we're 80% of the way there.

Speaker Change: And you've seen the growth accelerating throughout the year.

Speaker Change: For us last two quarters double double digits for China.

Speaker Change: When that last call. It we don't think the you know.

Speaker Change: <unk>.

Speaker Change: Theres, a little bit of a cold hanging chads on DVT and the timing of those tenders and some of our smaller businesses and the like aortic <unk> peripheral vascular and Theres a little bit left in neurovascular when those hit it could impact a quarter or so going from that double digits down to mid single, but we see in any given quarter mid single to high single to double but China's by and large.

Geoffrey Straub Martha: But China is by and large back, and the procedures are strong. And that's a big part of our emerging market business. And, you know, we're a combination there of import and local, that also gives us some strength, our local product investments. And those local products can also be exported to other parts of the world. So I think the other thing we've done here over the last couple years is empowered our emerging market leaders a bit more than we have in the past. And they're able to allocate resources, I think, more effectively because more healthcare is local, and these markets have different emphasis on different clinical areas. And some have more cath labs than others.

Speaker Change: Back in the procedures are strong and that's a big part of our emerging market business.

Speaker Change: And we're a combination thereof import and local that also gives us some strength our local our product investments and those local products also can be.

Speaker Change: Exported to other parts of the world.

Speaker Change: So I think yes.

Speaker Change: The other thing we've done here over the last couple of years is empowered our emerging market leaders a bit more.

Speaker Change: And then we had in the past and they are able to allocate resources I think more effectively to.

Speaker Change: Because these.

Speaker Change: These more healthcare is local and these markets have different <unk>.

Speaker Change: Emphasis on different clinical areas.

Speaker Change: And some have more cath labs, and others and that makes a difference for example, and so with our.

Speaker Change: Emerging market leader is able to have more influence and control over the resources that has helped accelerate our growth as well. So I think the fundamentals are back, especially in China.

Geoffrey Straub Martha: And that makes a difference, for example. And so, with our emerging market leaders able to have more influence in control over the resources, that's helped accelerate our growth as well. So I think the fundamentals are back, especially in China. Some changes we've made to our model and our incentives have helped as well. And our continued investment in value products, you add all that up. And I see this as a continued strength and a continued source of growth for the company over the next decade and a half.

Speaker Change: Some changes we've made to our like our model and our incentives have helped as well and our continued investment in value products, you add all that up and I see this as a continued strength in a continued source of growth for for the company over a.

Speaker Change: Decade, plus.

Karen L. Parkhill: Karen, anything else? I would just say on VBP, you know, that can affect a quarter at an OU level, but we don't necessarily expect it to affect total Medtronic.

Speaker Change: Okay, and anything else I would just say on DVT that can affect the quarter at an OEM level, but we don't necessarily expect it to affect total medtronic.

Unknown Attendee: Just maybe one quick follow-up. Any product launches that we should be thinking about as we build out or update our model for fiscal 25, predicting these emerging markets, but China specifically. Thanks.

Speaker Change: Just maybe one quick follow up any any product launches that we should be.

Speaker Change: Thinking about as we build out our update.

Speaker Change: The intermodal for fiscal 'twenty, five, particularly in these emerging markets, but China specifically thanks.

Geoffrey Straub Martha: Well, in China, you know, specifically, we did just get approval for Ardian. So that'll take some time to get in all the hospitals, but we think that's going to do well.

Speaker Change: While in China.

Speaker Change: Specifically, we did just get we did just get.

Speaker Change: Approval for audience.

Speaker Change: So that'll take some time to get in all the hospitals, but we think thats going to do well, our we think our CST business there again.

Speaker Change: Separate from I think to some of the trends youre seeing in the U S.

<unk> got a strong local portfolio there.

Speaker Change: Nice flywheel of local innovation, so a local version of Missouri, Thats coming out a local version of our cell station navigation, that's coming out so I see strength there and then we've also.

Geoffrey Straub Martha: Our, we think our CST business there, again, separate from, I think, some of the trends you're seeing in the US, we've got a strong local portfolio there. And a nice flywheel of local innovation. So a local version of Missouri that's coming out. A local version of our cell station navigation that's coming out. So I see strength there.

Speaker Change: Started local manufacturing of some of our cardiology products.

Speaker Change: I was just there a couple weeks ago, where we saw the our local pacemaker.

Speaker Change: Off the line right next to that giant Tesla plant, we have a plant not quite as big.

But it's a damn good.

Speaker Change: <unk> technology plant and we're proud of that so I think.

Geoffrey Straub Martha: And then we've also, you know, started local manufacturing of some of our cardiology products. I was just there a couple weeks ago where I saw our local pacemaker coming off the line, right next to that giant Tesla plant. We have a plant, not quite as big. But it's a damn good implantable technology plant, and we're proud of that. So I think those would be some of the areas that I would highlight in China.

Speaker Change: These would be some of the areas that I would highlight in China.

Operator: Thanks, Josh. Take the next question, please, Brad. The next question comes from Rich Newitter at Trish Securities. Rich, please go ahead. Hi, thanks for taking the questions. Congratulations.

Speaker Change: Thanks, Josh next question please Brad.

Speaker Change: The next question comes from Rich New order interest Securities Rich. Please go ahead.

Speaker Change: Hi, Thanks for taking the questions and congrats on the quarter.

Unknown Attendee: Congratulations. Congratulations on the quarter!

Unknown Attendee: Maybe first just on Spine, you know, you continue to put the turnaround in that franchise continues to unfold high single-digit growth. And following up on an earlier question, I appreciate that you're growing faster than your closest competitor there, but you've talked about potential disruption from recent M&A and spine mergers as kind of being a once in a decade opportunity. So can you comment on what, if any, contribution you've been seeing from the M&A environment to your benefit already and what's ahead?

Maybe.

Speaker Change: First just on spine.

Speaker Change: You continue to put.

Speaker Change: The turnaround in that franchise continues to.

Speaker Change: Unfold high single digit growth and following up to an earlier question I. Appreciate that you are growing faster than.

Speaker Change: Your closest competitor there, but you've talked about.

Speaker Change: Potential disruption from recent M&A in spine mergers as kind of being a once in a.

Speaker Change: Once in a decade opportunity. So can you comment on what if any contribution.

Speaker Change: Been seeing from.

Speaker Change: The M&A environment.

Speaker Change: Do your benefit already and what's out in front you mentioned rep hire as you mentioned.

Unknown Attendee: You mentioned rep hires, as you mentioned, competitive conversions. I'm just trying to get a sense for whether we're at the point where you're seeing those benefits, or there's still more, more to come out in front; we could maybe even see these growth rates accelerate.

Speaker Change: Competitive conversions I'm, just trying to get a sense for whether we're.

Speaker Change: At the point, where youre seeing those benefits or theres still more more to come out in front, we could maybe even see these growth rates accelerate.

Brett A. Wall: Yeah, Rich, it's Brett Wall. Thanks for the question. We are seeing a contribution now from some of those conversions that we're seeing really across the United States, as you know, which is the largest spine market. And we see that continuing, you know, over the next several quarters here. And as Jeff mentioned, it's a combination of this technology portfolio, including AI surgical planning, including robotics, including powered surgical instrumentation, imaging, and navigation.

Rich: Yeah rich.

Speaker Change: Well thanks for the question.

Speaker Change: We are seeing good contribution now from some of those conversions that we're seeing really across the United States.

Speaker Change: As you know, which is the largest spine market and we see that continuing.

Speaker Change: Over the next several quarters here.

Jeff Wall: As Jeff mentioned, it's a combination of this technology portfolio, including AI surgical planning, including robotics, including powered surgical instrumentation and imaging and navigation, putting that all together is creating this very attractive place where.

Brett A. Wall: Putting that all together is creating this very attractive place where very good teams and reps and groups of people want to come together to work with Medtronic. So we have a very active program there. We're getting good contributions now, and we see that contribution continuing as we move forward. We have a very compelling story for those individuals to come along. And as I mentioned earlier, it's a lot more difficult now for companies that don't have that ecosystem to bring customers and these individual teams of reps and others along in that process. So we see that continuing. We're going to continue to invest there. And, as I mentioned, we have a compelling story for them to join Medtronic.

Speaker Change: Very good teams and reps and groups of people want to come together to work with Medtronic. So we have a very active program there.

Speaker Change: Getting good contribution now and we see that contribution continuing as we as we move forward we have a very.

Speaker Change: Compelling story for those individuals to come along and as was mentioned earlier, it's a lot more difficult now for <unk>.

Speaker Change: Companies that don't have that ecosystem.

Speaker Change: To bring the customers and the.

Speaker Change: These individuals teams of reps and others along in that process.

Speaker Change: So we see that continuing we're going to continue to invest there and.

Speaker Change: As I mentioned, we have a compelling story for them to join Medtronic.

Geoffrey Straub Martha: Yeah, I think, you know, taking a step back also, Rich, on this whole ecosystem approach capital plus, you know, consumables and CST, that's largely informing what we're doing in surgical as well. And, you know, how you acquire the capital with innovative financing and earn outs and things like that.

Speaker Change: Yes, I think taking.

Taking a step back also rich on this.

Speaker Change: This whole ecosystem approach capital plus.

Speaker Change: Consumables and CST, that's largely informing what we're doing in surgical as well.

Speaker Change: How you acquire the castle with innovative financing in and earn outs and things like that this is helping us and that's what gives us confidence also in our surgical business with as we bring in robotics with Hugo there as well.

Geoffrey Straub Martha: This is helping us, and that's what gives us confidence also in our surgical business as we bring in robotics with Hugo there as well. And the second point I'll make is that you start to see the turnaround in both diabetes and CST. And the point there is when we focus on these types of opportunities, you know, we're going to get results here, and you're seeing it there. And we're putting that same kind of focus on Hugo and our broader surgical business and our AFib business cast.

Speaker Change: And the second point I'll make is look you're starting to see the turnaround in both diabetes and CST and the point there is when we focus on these type of opportunities.

Speaker Change: We were going to get results here and Youre seeing it there and we're putting that same kind of focus on Hugo and our broader surgical business and our Afib business cast. These are two big opportunities.

Geoffrey Straub Martha: These are two big opportunities that we're focused on. And there are a lot of questions that we get on those two areas, and like CST and diabetes, with the kind of focus we're putting on them at the, at the leadership level of the company, I'm confident you're going to see those be growth drivers for the company as we move forward. And you're seeing it now on CAS.

Speaker Change: But we're focused on and a lot of I know, there's a lot of questions that we get on those two areas.

Speaker Change: And life safety in diabetes with the kind of focus we're putting on it.

Speaker Change: At the leadership level the company I'm confident youre going to see those be growth drivers for the company as we move forward.

Speaker Change: And you're seeing it now in cash.

Unknown Attendee: Thank you and thanks for coming. On the robot, in surgical, you're nearing the completion of the euro trial. Just curious if you could provide an estimation, you know, timing wise, should we be expecting a submission in 25 and potential launch, end of fiscal 25, early fiscal 26, any color that would be helpful?

Speaker Change: Thank you and thanks, Chris.

Speaker Change: On the robot.

Speaker Change: In surgical Youre nearing the completion for the for the Euro trial, just curious if you could provide an estimation.

Speaker Change: Timing wise should we be.

Speaker Change: Expecting we could see.

Speaker Change: Our submission in 'twenty, five and potential launch.

Speaker Change: This fiscal 'twenty five early fiscal 'twenty six.

Speaker Change #100: That would be helpful. Thank you.

Mike Marinaro: I'll let Mike Marinaro answer that question, Mike. Yeah, so thanks for asking.

Speaker Change #101: I'll, let Mike.

Speaker Change #102: Mike Monero answer that question Mike.

Mike Marinaro: Yeah, so thanks for the question. You know, I won't estimate when we will submit for the urology indication, but I'll also note that we are nearing completion, and in the quarter, we also initiated our indication work for both our GYN indication as well as a hernia indication, which will be really important for us as we move into general surgery launches across each of those to capture larger and larger pieces of the market. And we're seeing good execution and early execution inside of each of those studies as well.

Unknown Attendee: Yes, so thanks for the question.

Unknown Attendee: I won't estimate when we will when we will submit for urology indication, but also note that we are nearing completion and in the quarter. We also initiated our indication work for both.

Unknown Attendee: <unk> indication as well as a hernia indication, which will be really important for us as we move into general surgery. So critical that we are now operating across multiple indications so that as we come into the market. We can have a a series of.

Unknown Attendee: Launches across each of those to capture larger and larger pieces of the market and we're seeing good good execution.

Unknown Attendee: Early execution inside of each of those studies as well.

Speaker Change #103: Thank you.

Operator: Thanks, Rich. We are just past the top of the hour. So we'll take one more question, please, Brad. Our final question.

Speaker Change #104: Thanks Rich.

Speaker Change #105: We are just past the top of the hour. So we'll take one more question. Please breath.

Operator: Our final question will come from Matt Miksic at Barclays. Matt, please go ahead.

Speaker Change #106: Our final question will come from Matt Mexico Barclays. Matt. Please go ahead.

Unknown Attendee: Great, thanks so much. Maybe just a couple of follow-ups on some of the pipeline programs that you talked about, you know, just to frame expectations around, you know, for RDN simplicity, when, when does that, do you think start to noticeably show up and start to demonstrate some of the potential that you were describing earlier, Geoff? You know, and I guess the question is, does that mean that before this coming fiscal year is out, we'll start to see some traction with that new sensor in the U.S.? Thanks.

Matt: Great. Thanks, so much maybe just a couple of.

Matt: Follow ups on some of the pipeline programs that you talked about.

Matt: Just to frame expectations around.

Matt: We're already in simplicity win when does that Youre seeing start to noticeably show up and start to demonstrate some of the potential that you were describing earlier, Jeff and then and then on diabetes you found I wasn't sure if I call whether you file a.

Matt: Some clearer with.

Speaker Change #108: 780 for repeats for adults for both.

Speaker Change #109: And I guess the question is is that.

Speaker Change #110: Mean that before this this coming fiscal is out there it will start to see some traction with that new sensor in the U S. Thanks.

Geoffrey Straub Martha: Thanks for the questions, Matt. I'll have the subject matter experts answer those. I'll start with Sean on simplicity.

Speaker Change #111: Thanks for the questions, Matt I'll have the subject matter expert to answer those I'll start with shot on simplicity.

Sean M. Salmon: Yeah, thanks, Matt. I think, you know, the most important thing for us to establish is reimbursement. That's the catalyst that starts to make things tick upward for us. We'll look toward the final inpatient rule for outpatient reimbursement. That'll be in the kind of late July time frame to know if that's going to be there. But the vast majority of our procedures are going to occur in the outpatient setting.

Matthew Stephan Miksic: Yes, Thanks, Matt.

Speaker Change #112: Most important thing for us to establish reimbursement, that's the catalyst which starts to make a victim.

Speaker Change #112: <unk>.

Speaker Change #112: Tick upward for US we'll look.

Towards the final.

Speaker Change #112: Inpatient rule for outpatient reimbursement that'll be in the kind of late July timeframe to know if thats going to be there, but the vast majority of our procedures are going to occur in the outpatient setting.

Sean M. Salmon: And we're pursuing both a transitional payment there, as well as, most importantly, national coverage determination, with evidence development, and we're in active conversations with CMS on that and, of course, private payers. So we expect contribution to begin this year, as Jeff said at the outset. You know, paying down timing. It's not like we have statutory dates on these things. It's just when they come through.

Speaker Change #112: We are pursuing both.

Speaker Change #112: Transitional payment there as well as most importantly national coverage determination.

Speaker Change #112: With evidence development.

Speaker Change #112: Conversations with CMS on that and of course take private payors.

So we expect countries to begin this year is just at the outset.

Speaker Change #112: Paying down timing, it's not like we have.

Speaker Change #112: Cacciatore dates on these things it's just when one has come through.

Sean M. Salmon: But suffice it to say, there's a huge effort to get that reimbursement established in place. We're also changing guidelines in Europe. We expect that to happen late this summer, which will help with adoption there. And we've got new approvals, not just in China but also in Canada. Those will be catalyzed. But really, the most important thing is a lock on reimbursement, and that's a full court press for us

Speaker Change #112: Suffice to say there is a huge effort to get that.

Speaker Change #112: Reimbursement established in place, we're also changing guidelines in Europe.

Speaker Change #112: We expect that to happen late this summer, which will help with adoption there.

Speaker Change #112: We've got new approvals, not just China, but also to health Canada.

Speaker Change #112: Catalysts.

Speaker Change #112: It really is the most important thing is unlocking reimbursement and Thats a full court press for us.

Que Thanh Dallara: Okay, Q, do you want to answer the diabetes one? Yes, we filed the...

Speaker Change #114: Q do you want to answer the diabetes, one yes, we filed the Sinclair sync, which is the integrated sensor was 700 atg system in the U S.

Que Thanh Dallara: Yes, we filed the Simplera Sync, which is the integrated sensor with the 780G system in the U.S. In line with expectations, it's hard to comment on the timing with the agency, but we're eagerly awaiting approval for that system. And just to remind everyone that we had a limited launch of the Simplera Sync with 780 in Europe in five countries. That's going very well, and we're looking forward to expanding that to a full commercial launch in the summer.

Speaker Change #115: In line with expectations, it's hard to comment on.

Speaker Change #115: The timing with the agency that would eagerly waiting.

Speaker Change #115: Approval for that system.

Just to remind everyone that we had limited launch all it can play with zinc with 780 in Europe in five countries, that's going very well and we're looking forward to expanding that.

Que Thanh Dallara: And then, of course, Simplera within Penn, we launched late last year. Late last year, it's now in 15 countries and also doing quite well. We anticipate that what we're seeing in the OUS markets will also happen in the US.

Speaker Change #115: On to a full commercial launch in the summer.

Speaker Change #115: And then of course and clearer within pen needlessly late last year.

Speaker Change #115: Late last year and now in 15 countries also doing quite well. So we anticipate that what we're seeing in the U S markets will also happen in the U S.

Speaker Change #116: Excellent. Thank you.

Speaker Change #115: Yeah.

Geoffrey Straub Martha: Yeah, thanks, Matt. Jeff, please go ahead with your closing remarks. Okay, thanks, Ryan.

Jeff Wall: Yes, Thanks, Matt Jeff. Please go ahead with your closing remarks, thanks, Ryan and thanks for the questions everybody. We definitely appreciate your continued interest in Medtronic and we hope you'll join US for our Q1 earnings broadcast, which we anticipate holding on Tuesday August 20th where we'll update you on our progress against all of these strategies and in our commit.

Geoffrey Straub Martha: And thanks for the questions, everybody. We definitely appreciate your continued interest in Medtronic. And we hope you'll join us for our Q1 earnings broadcast, which we anticipate holding on Tuesday, August 20. We'll update you on our progress against all these strategies and our commitments. So with that, thanks for spending time with us today and have a great rest of your day.

Jeff Wall: So with that thanks for spending time with us today and have a great rest of your day.

Jeff Wall: Okay.

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