Q1 2027 Medtronic PLC Earnings Call
Speaker #3: During today’s program, many of our statements will be forward-looking, and actual results may differ materially as explained in our SEC filings. We undertake no obligation to update any forward-looking statements.
Speaker #3: Unless otherwise stated, all comparisons are on a year-over-year basis and revenue comparisons are made on an organic basis, which excludes the impact of foreign currency, first-quarter revenue in the current and prior year reported as other, as well as significant acquisitions, divested shares, or other significant discrete items.
Speaker #3: As a reminder, fiscal '27 is a 53-week fiscal year, with the extra week occurring in the first fiscal month of the first quarter, and is included in our Q1 results.
Speaker #3: References to sequential revenue changes, comparing the fourth quarter of fiscal '26, are made on an as-reported basis. Unless otherwise stated, all references to share gains or losses are on a revenue and year-over-year 52-week basis, comparing our most recently completed fiscal quarter to our competitors' most recently completed calendar quarter.
Speaker #3: Reconciliations of all non-GAAP financial measures can be found in our earnings press release or on our website at investorrelations.medtronic.com. And finally, our EPS guidance does not include any charges or gains that would be reported as non-GAAP adjustments to earnings during the fiscal year.
Speaker #3: With that, I'm now pleased to hand it over to you, Geoffrey.
Speaker #4: Okay, thanks, Ingrid. And good morning, everyone. Thank you for joining us. Look, Q1 represents a strong start to fiscal '27, with revenue of $9.8 billion and adjusted EPS of $1.45, both well ahead of expectations.
Speaker #4: Organic revenue growth was 13.7%, reflecting strong underlying market demand and excellent execution across our businesses. Importantly, these results reinforce our confidence in the durability of our growth.
Speaker #4: Our three largest businesses—CRM, CST, and Surgical—all delivered strong results this quarter. Cardiac Ablation Solutions continues to perform exceptionally well, and we are making progress in Simplicity, AltaViva, and robotics with Hugo.
Speaker #4: And at the same time, our recent acquisitions are contributing to reported growth and strengthening our portfolio for the long term. So, we are executing, and this quarter's results are a clear proof point.
Speaker #4: Our strategic and operational focus is translating into stronger commercial performance and greater consistency. With healthy underlying markets, relentless execution, and multiple growth platforms—all gaining scale—Medtronic is increasingly well positioned to deliver on our fiscal '27 targets and our long-term revenue and earnings trajectory.
Speaker #4: So, with that, let's get into the details of the quarter, starting with Cardiac Rhythm Management, which delivered an outstanding quarter with global growth of 15%.
Speaker #4: Performance reflected strength across both high-power and low-power therapies, with contributions from EVICD, Micra, and conduction system pacing, including Omnia Secure. At more than $5.5 billion in annual revenue, CRM is one of our largest businesses and has been a longstanding source of strength for the company.
Speaker #4: As an example, Micra, which launched more than a decade ago, continues to grow at a healthy double-digit rate. This underscores the lasting impact of meaningful innovation within CRM.
Speaker #4: And we're not standing still. We are further advancing innovation across pacing, defibrillation, and diagnostics, supported by a strong pipeline and excellent execution from our teams.
Speaker #4: Look, CRM is a flagship business for Medtronic, and we continue to view this business as a key source of innovation—one that will drive durable growth for years to come.
Speaker #4: Cranial and spinal technologies was another Q1 highlight, delivering 13% growth, including 14% in the U.S. and 10% internationally. Our Able ecosystem continues to resonate with customers as it connects technologies that have traditionally operated in silos.
Speaker #4: By bringing together AI-driven planning, imaging, navigation, robotics, implants, and outcomes data across the surgical journey, Able Health surgeons make more informed decisions, operate with greater precision, and learn from each and every case.
Speaker #4: And our recently launched Stealth Access platform also meaningfully outperformed this quarter. While we're still early in the launch, adoption is building and customer feedback has been very positive.
Speaker #4: With U.S. spine robotics penetration still in the single digits, we see a significant opportunity to drive ecosystem pull-through and extend our leadership position in spine and cranial technologies for years to come.
Speaker #4: Now, moving to Surgical, which delivered another strong quarter with 9% global growth. Surgical is our largest operating unit, with over $6 billion in annual revenue.
Speaker #4: Here, we're leveraging our decades of innovation and operating room partnerships to build a connected surgical ecosystem. We're going to dive deeper into this in just a few minutes.
Speaker #4: In addition to these businesses, our next cycle of large growth opportunities is playing a more significant role in our performance. Cardiac ablation solutions delivered another quarter of excellent performance, further strengthening our position in one of the most attractive markets in medtech.
Speaker #4: In Q1, Cast delivered 88% worldwide growth, reflecting the team's execution and the strength of our platform. Sphere 9 momentum continued, with a 9-point increase in U.S. share during the quarter.
Speaker #4: And I'm pleased to share that we achieved an important commitment this quarter ahead of the timeframe we promised, surpassing the $2 billion mark in trailing 12-month revenue.
Speaker #4: The broader EP space remains healthy, growing in the mid-teens, and we continue to expect CAST to grow at more than 2.5 times the market rate this fiscal year.
Speaker #4: Our U.S. Affera installed base again grew more than 35% sequentially in Q1, demonstrating that we remain in the early innings of this opportunity. And as we look ahead, our runway extends well beyond today’s share gains as we build out a comprehensive EP platform.
Speaker #4: One that spans mapping, ICE catheters, focal ablation, software, and single-shot innovation—positioning ourselves to serve electrophysiologists with more complete solutions and expand the number of patients who can benefit from advanced EP therapies.
Speaker #4: This quarter, we expanded our offering with CE Mark for Sphere 9 for the treatment of ventricular arrhythmias, including ventricular tachycardia, opening the door to a patient population that is notoriously difficult to treat.
Speaker #4: Enrollment in our U.S. VT pivotal trial is also underway. We're only at the beginning for CAST. With a differentiated platform, a growing install base, expanding indications, and a strong innovation pipeline, we are well-positioned to treat more patients, continue to gain share, and further extend our leadership in this large and growing market.
Speaker #4: Now, turning to Simplicity, Q1 was another strong quarter, and we are increasingly encouraged by this market's evolution. Real-world outcomes—well, they just keep getting better.
Speaker #4: As evidenced by the three-year data we recently presented, we are pleased to share that the SPYRAL HTN clinical trial was accepted as a late-breaker at TCT this fall.
Speaker #4: Look, the conversations with clinicians are increasingly shifting from awareness to access, and more hospitals are approaching us about establishing Already-in programs. Here, our key focus areas are on expanding coverage and integrating Already-in into the care pathway.
Speaker #4: Looking ahead for Already in, our transradial catheter remains on track to launch in the second half of this fiscal year. This is an important step forward, as many interventional cardiology procedures are performed via radial access today.
Speaker #4: Making the therapy easier to integrate into existing workflows and potentially improving patient outcomes. These positive signals further reinforce our conviction that simplicity is one of the most compelling long-term growth opportunities in medtech.
Speaker #4: Now turning to Pelvic Health. The business delivered strong growth this quarter, increasing 15%, driven by significant progress from InterStim, where procedures doubled sequentially.
Speaker #4: Demand for UltaViva is building, and while we are still early in our launch, UltaViva is gaining traction with physicians as well as the 16 million U.S. patients who still suffer from urge urinary incontinence.
Speaker #4: As we continue to expand training, reimbursement support, and patient awareness, we are really encouraged by the progress we are already seeing. We are confident in UltaViva's ability to become a meaningful contributor to growth for years to come.
Speaker #4: Okay, back to Surgical. We have a strong leadership position in Surgery, built on decades of innovation, trusted technologies, and long-standing partnerships with surgeons worldwide.
Speaker #4: As robotic-assisted surgery continues to expand, we believe our portfolio breadth, our global reach, and our operating room presence uniquely position us to help shape the future of surgery, and extend the benefits of these technologies to more patients around the world.
Speaker #4: Robotic-assisted surgery, or RAS, is one of the most compelling growth opportunities in healthcare, with global penetration still in the single digits and only 1% in emerging markets.
Speaker #4: At the same time, RAS is in high demand, with procedure volumes up approximately 16% per year over the last decade. There is a significant runway here.
Speaker #4: And we expect robust expansion for many years to come. Now, we've established our foundation in soft tissue robotics with Hugo, where we continue to make meaningful progress.
Speaker #4: By the end of the fiscal year, we expect Hugo to surpass 50,000 completed procedures, with procedure growth continuing at more than twice the market rate.
Speaker #4: We're also advancing our platform through new capabilities and new indications, including the expected U.S. expansion into general surgery and gynecology. We are investing in building out a broader surgical ecosystem, just like in CST.
Speaker #4: An ecosystem that integrates robotics, advanced visualization, navigation, instrumentation, and digital technologies—including AI-enabled capabilities like Touch Surgery. Today, Touch Surgery is used in more than 1,500 operating rooms globally, supporting AI-powered insights, collaboration, and workflows.
Speaker #4: And with Touch Surgery™ Aide, unveiled at SRS, we are bringing 300 times more computing power into the operating room and creating a foundation for increasingly advanced AI capabilities over time.
Speaker #4: And now, that brings us to Cornerstone Robotics. As announced this morning, we are further enhancing and expanding our robotic portfolio through a strategic investment and distribution agreement for Cornerstone's Sentier Surgical System in select markets outside the US.
Speaker #4: Sentier complements Hugo by extending our reach into select international markets and broadening the range of customer needs that we can address, as robotic surgery continues to expand globally.
Speaker #4: So, taken together, the platforms Hugo, Touch Surgery Aide, and Sentier, along with our enhanced surgical instrumentation, position Medtronic to build a differentiated global robotics portfolio. By combining advanced robotics, AI, visualization, and instrumentation, we can push the field forward, improve surgical precision and workflow, and serve a broader range of customers and patients around the world.
Speaker #4: Look, Q1 performance further evidences that our strategy is translating into stronger results. We are accelerating growth, advancing innovation, focusing the portfolio, and deploying capital with discipline.
Speaker #4: Overall, our progress this quarter reinforces our confidence in fiscal '27 and in our long-term revenue and earnings growth potential. With that, I'm going to turn it over to Thierry to walk through more detailed business results, our financials, and our updated guidance.
Speaker #4: So over to you, Thierry.
Speaker #2: Hey, thanks, Geoff. And hello, everyone. I appreciate you joining today. Before we begin, I'd like to remind everyone that this quarter benefited from the extra selling week.
Speaker #2: Which we estimate contributed approximately $570 million, or 670 basis points, to total organic enterprise revenue growth. Excluding the impact of the extra week, we delivered our strongest quarterly performance in nearly eight years, excluding COVID comps.
Speaker #2: Revenue this quarter was $9.8 billion, up 13.7% on both a reported and organic basis. Geographically, we saw nearly 16% growth in the U.S. and 12% internationally.
Speaker #2: Cardiovascular delivered 19% revenue growth this quarter, excluding 25% in the US and 14% internationally. Electrophysiology therapies, or EPT, which includes our CRM and CAS businesses, grew 29%, including 41% in the US and 18% internationally.
Speaker #2: Within EPT, cardiac ablation solutions was again a significant contributor, delivering 88% growth—up 139% in the U.S. As Geoff outlined, while we're gaining share rapidly in CAS, this business is still in the early stages of its trajectory.
Speaker #2: In Q2, we expect to outpace the market by more than 3x, with growth rates moderating over the remainder of the fiscal year as we lap increasingly strong comps.
Speaker #2: Cardiac Rhythm Management was up 15% worldwide, including balanced performance between the U.S. and international markets, gaining 80 basis points of global share. Conduction system pacing continues to gain momentum, adding over 200 basis points to CRM in the first quarter.
Speaker #2: As CSP adoption expands across a growing patient population, Medtronic remains the leader with CSP-capable leads in both high- and low-power segments. Our broad portfolio and innovation pipeline position us to extend our leadership in this large franchise.
Speaker #2: Pivoting to interventional cardiology therapies, which includes structural heart, coronary, and renal denervation, ICT grew 7% globally, driven mainly by 11% international growth. Structural heart grew low single digits, similar to Q4.
Speaker #2: US procedure volume trends remain stable. Our internal programs in mitral and tricuspid replacement are on track, and we're taking steps to broaden our opportunity over time through targeted external investments, as evidenced by our strategic investment earlier this year in Antares, as well as PyCardia, announced this morning.
Speaker #2: PyCardia is the first FDA-cleared leaflet modification technology for TAVR procedures for patients at risk for coronary obstruction. It's one of the fastest-growing segments in structural heart.
Speaker #2: Coronary and renal denervation grew 13% globally. Our coronary business was up low double digits, with CathWorks—our AI and advanced computational science platform for angio-based FFR—contributing nearly 300 basis points of organic growth.
Speaker #2: In Ardian, we continue to make progress in the first quarter. Positive trends across access, market development, and adoption reinforce our confidence in this very large opportunity.
Speaker #2: Cardiovascular surgery, which includes our cardiac surgery and aortic businesses, grew 8% globally, and peripheral vascular health was up 11%. Now, moving to Neuroscience, the portfolio grew 9% worldwide, driven...
Speaker #1: By 11% in the U.S. and 7% internationally. Cranial and spinal technologies delivered 13% growth worldwide. Performance was driven by continued strength in core spine, up 14%, and neurosurgery, up 15%, along with strong contribution from Stealth Access.
Speaker #1: Following its first full quarter since commercial launch , Specialty Therapies was up 7% , including 10% in the US and 4% internationally Within specialty , neurovascular grew 4% globally , driven by 9% in hemorrhagic and continued strength across flow diversion .
Speaker #1: Intracranial embolization, carotid stenting, and access devices. In August, Onyx 12 received US FDA approval for MMA embolization to treat subdural hematomas. All three Onyx viscosities are now approved for one-minute shake time versus the conventional 20 minutes.
Speaker #1: This completed our acquisition of Scientia, which represents an important advancement in navigation, enabling neurointerventionalists to reach areas of the brain that have historically been extremely difficult to access. Pelvic Health delivered 15% growth globally in S and M.
Speaker #1: Medtronic continues to outpace peers and alternative out as performance is now more than offsetting S and M market softness We're pleased with the continued progress in Veeva as physician training expands reimbursement progresses , and physician experience builds We expect pelvic health to become a stronger and stronger contributor to neuroscience in fiscal year 27 and beyond ENT grew 7% worldwide , driven by low double digit growth in the US .
Speaker #1: Neuromodulation was up 3% globally, driven by ongoing FXS market softness and replacement headwinds in DBS. Our neuromodulation position has been strengthened by the acquisition of SPR Therapeutics in peripheral nerve stimulation and through our distribution agreement with Merit Medical, which expands our presence in VNS.
Speaker #1: Both segments are growing over 20% annually . Together , these strategic actions increase our exposure to attractive , high growth markets and reinforce our broader , broader pain portfolio .
Speaker #1: Now , turning to medical Surgical , which had a strong quarter and delivered 10% growth globally with balanced performance in the US and internationally Surgical revenue increased 9% with similar performance across the US and international markets We saw strength in advanced energy and wound management , driven by share gains from our Ligasure vessel sealing and VLC barbed sutures As Jeff mentioned , we're pleased with our launch of Hugo , which had an increase in contribution in the quarter .
Speaker #1: Endoscopy grew high single digits, driven by further momentum of the Endoclip 300 system and of PillCam. Acute care monitoring was up 14% globally, including high teens growth in the US. Results were driven by mid-forties growth in McGrath.
Speaker #1: Video laryngoscopy was in the high 30s, and microstream capnography and high single digits in Nellcor pulse oximetry. This performance was a positive tailwind in the quarter.
Speaker #1: However , we expect ACM to normalize as we move through 2027 . Finally , the diabetes business delivered 15% growth , driven by US acceleration and robust growth internationally Our strategic intent for separation of Med is unchanged .
Speaker #1: Create two focused companies that will allow both MiniMed and Medtronic to execute more effectively, pursue their distinct capital allocation strategies, and align with the investor base that best matches their respective financial profiles.
Speaker #1: Before we shift the PNL guidance , I wanted to spend a moment on what we're seeing in terms of procedure volumes . The Q1 was a very strong quarter for Medtronic , underpinned by healthy underlying procedure volumes across nearly all of our end markets and geographies Importantly , this was broad based and not concentrated in any one therapy region .
Speaker #1: We continue to see resilient demand across chronic disease , high acuity conditions and life saving interventions Areas where Medtronic is particularly well positioned , given our differentiated innovation and strong clinical evidence , what we continue to monitor the broader environment closely .
Speaker #1: As usual, the underlying demand backdrop remains constructive and reinforces our confidence in the durability of our growth. Overall, we're pleased with Q1 performance as well as the widespread contribution to revenue from many operating units.
Speaker #1: Now , moving down the PNL , our adjusted gross margin was 65.2% , up ten basis points year over year Now , let me walk you through the elements that shape gross margin this quarter We've maintained our discipline on pricing , which provided 30 basis points benefits to the quarter net of inflation cost down contributed 50 basis points this quarter , driven primarily by Cogs efficiency programs and strong execution across our portfolios Global operations and supply chain teams .
Speaker #1: In Q1, we rationalized more than 9,000 FCAs, further streamlining our product portfolio to focus on the areas with the greatest customer impact while enhancing supply chain performance and delivering cost efficiencies across the enterprise. Mix was unfavorable by 50 basis points, largely reflective of the diabetes and cath businesses, consistent with prior quarters.
Speaker #1: While the near capital mix continues to impact our gross margin , it's reflective of our strong commercial performance , performance and growing install base , which is expanding our foundation for future pull through of higher margin catheter sales over the long term .
Speaker #1: The tariff related impact was a slight headwind as tariffs paid were largely offset by related related refunds . And finally , the impact from foreign exchange was roughly neutral Adjusted sG&A was 32.4% of revenue and increased 14% year over year We continue to make investments to accelerate the commercialization of growth opportunities .
Speaker #1: While also integrating several recent acquisitions Adjusted R&D was 7.9% of revenue in Q1 , and increased 6% year over year . Here we are focused on driving sustainable growth through investment in innovation , complemented by targeted inorganic opportunities This discipline is reflected in acquisitions like SPR Therapeutics and Scientia , both of which operate in markets with Cagrs exceeding 20% .
Speaker #1: These businesses are demonstrating strong early traction, and while not reflected in our organic growth today, they're expected to contribute over $150 million to inorganic growth in fiscal year '27.
Speaker #1: Our adjusted operating profit was $2.3 billion, an increase of 15% year over year. This resulted in an adjusted operating margin of 23.7%, up ten basis points from the prior year.
Speaker #1: While we continue to invest behind our highest priority growth opportunities , our adjusted tax rate was 17.2% , slightly better than expected . The benefit was mostly timing , and we expect this to be offset later in the year All in our adjusted EPS was $1.45 $0.06 above the midpoint of our guidance range , and off street expectations .
Speaker #1: Now , turning to our guidance as a reminder , our full year guidance includes the diabetes business through fiscal year end on the top line .
Speaker #1: We're pleased with the strong performance in the first quarter and are raising our fiscal year '27 organic revenue growth guidance to 7.25% to 7.75%, which represents a 50 basis point increase from our prior guidance.
Speaker #1: In the second quarter , we're expecting roughly 6% organic revenue growth based on recent recent FX rates , we expect foreign exchange to be a roughly 50 to 150 million headwind for the full year , with approximately 25 to 75 million headwinds in two Q .
Speaker #1: Moving down the PNL and starting with gross margin , we continue to expect pricing and Cogs efficiency programs to offset the current impact of business mix , which is primarily from diabetes and gas This headwind is expected to reduce following the completion of the minimum separation , which we intend to close prior to fiscal year end .
Speaker #1: We continue to make targeted investments that are focused on our highest-priority growth opportunities and are intended to strengthen the durability of our long-term revenue profile. Taken together, we expect fiscal year '27 operating profit to grow approximately 10%, with operating margin expanding approximately 50 basis points year over year. Moving to EPS.
Speaker #1: Given the strength in the first quarter , we're also raising our fiscal 27 guidance range to $5.94 to $6 . For the second quarter , we expect EPS in the range of $1.32 to $1.34 , which includes a roughly neutral impact from foreign exchange at recent rates close , we are well positioned for a strong year I'm encouraged by the strength of our first quarter performance and the continued progress we made against our strategic priorities .
Speaker #1: At the same time , our operational focus has begun translating into our financial results portfolio simplification , SKU rationalization , cost out , and broader supply chain initiatives are beginning to deliver structural efficiencies down the PNL , and we see further opportunity ahead We're putting that discipline with targeted organic and inorganic investment to accelerate innovation and support commercialization and expand our growth platforms .
Speaker #1: We are laser-focused on translating stronger growth and enhanced efficiency into durable earnings leverage. With that, back to you, Jeff.
Speaker #2: Okay . Thanks , Jerry Q1 was a was a strong start to fiscal 27 . And another proof point that our strategy is translating into results What gives us confidence is not simply the strength of the quarter , but also the breadth of our performance .
Speaker #2: This quarter, growth is being driven by several businesses, multiple innovation platforms, and teams who are executing at a high level across Medtronic.
Speaker #2: We look forward to sharing a deeper look at our portfolio and our pipeline, as well as our capital allocation strategy and our long-term growth opportunities at our upcoming Investor Day, scheduled for December 10th and 11th.
Speaker #2: With that , I'd like to thank our Medtronic colleagues around the world . The progress we are making reflects the discipline , focus , and execution of our teams .
Speaker #2: I want to thank you for your hard work and continued commitment to reaching more patients. Together, we bring our mission to life for the people who are counting on us the most. Okay, let's turn to Q&A now.
Speaker #2: And Ingrid, please provide the instructions and queue up the analysts.
Speaker #3: For the sell side: 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 #3: Your lines are currently on mute , and when called upon , you'll receive a request to unmute your line , which you must respond to before asking your question Finally , please be advised that the Q&A session is being recorded .
Speaker #3: We'll now pause for a few seconds to assemble the queue. Our first question comes from Travis Steed at Bank of America. Go ahead.
Speaker #3: Travis .
Speaker #4: Hey , everybody . Congrats on a great quarter . I guess I want to cast is doing really well , but I want to spend a second on kind of the Medtronic business ex Kaz and just kind of the ability to accelerate and improve kind of the base business .
Speaker #4: Ex-Kaz at Medtronic, kind of going forward. We saw Alta, Veeva having an impact. So maybe just spend some time on that.
Speaker #4: And also the investments this morning with the cornerstone deal . When does that show up ? In kind of the base surgery revenue .
Speaker #4: And how does that that contract structured with with cornerstone . And then Terry wanted to also follow up the margin guide . I think ticked down like ten basis points from 50 basis points from 60 to 50 basis points .
Speaker #4: Just wanted to clarify if that's because of some of the investments you've made this year.
Speaker #2: Okay . A couple other questions . Thanks for the questions , Travis . You know , first , on the I'll take I'll start on the first one , just on the business performance and the I say , first of all , that what we like about the quarter is the breadth and the depth of the , of the performance .
Speaker #2: Right . You had , you know , a number of businesses are including our big three perform really well . You cardiac rhythm CFT and improving performance in surgical and on that breadth note , you know a lot of different countries around the world contributed to the growth .
Speaker #2: And then as you point out , you know , we had a number of growth drivers on top of this to give you the depth , right .
Speaker #2: And cast being the biggest one , but also some good progress , you know , in Ulta , Viva , you know , Ardian , Hugo .
Speaker #2: So we've got these growth drivers all moving forward . So look from our perspective , the performance is broad based . And we had strong execution .
Speaker #2: And it's really, as we talked about this last quarter, the compounding impact of a lot of strategic, operational, and cultural changes that we've made.
Speaker #2: So beyond Cass , like you said , you're getting to your question . We have these other growth drivers that we're feeling really good about .
Speaker #2: You know , we can talk about the announcement we made this morning and in structural heart with Picardia , as well as in soft tissue robotics with , with , with Cornerstone Robotics .
Speaker #2: There's a lot to talk about . And already is making is making good progress as well . And Alta Viva is starting to inflect .
Speaker #2: So and on top of that , you've got , you know , stealth access , you know , really doing well in CSC .
Speaker #2: So we feel good about these other growth drivers. But if I go around the horn, I mean, just talk about Neuroscience for a second.
Speaker #2: What's going on there? I mentioned stealth access in CST. We talked about all the Viva — we can get more into that.
Speaker #2: And then in neurovascular we see , you know , an acceleration here in the back half of the year , getting that business to mid-single digit .
Speaker #2: You know , it's partly , you know , the the acquisition of Scientia that's not in our in our organic growth . And on top of that , we'll get to this mid-single digit .
Speaker #2: But it is it is getting us into more cases . And we've got a lot of new products there , more indications for Onyx .
Speaker #2: You know, we've got carotid stenting and we've got PTX. So we've got a number of new products there that are driving.
Speaker #2: Then of course , in pain stim and our Neuromod business , we got the new partnership . That's accelerating as well as SPR , which is moving us upstream .
Speaker #2: And so that business , you know , will benefit from that . So you're going to see a nice acceleration in neuroscience , continued performance in cardiovascular .
Speaker #2: And you're seeing the acceleration in surgery. I don't know if you want to add to that and get to the good question.
Speaker #1: I would say , you know , one thing that I mentioned , you mentioned the different investments that we made in aggregate . You know , we should expect around 150 million worth of revenue in the in the full year from these acquisitions , with that , you know , kind of a partial year impact on it .
Speaker #1: It's in organic for now , but it will turn into inorganic for now will turn it into organic . And all of these investments and acquisitions are in , in areas where the CAGR significantly higher than the rest of the business , right ?
Speaker #1: We're talking segments where the growth is typically north of 20% . So that's further good news down down the road . I think one that that I would mention you talked about neuroscience in neuroscience in every single segment we have meaningful innovation happening .
Speaker #1: So we have stealth access in CST . You talked about Cynthia Onyx , neuro guard Artis in neurovascular . We've got stealth access ENT version for the ENT business and apex cut that's coming out .
Speaker #1: So every franchise there has good news going forward. So, look, I think we've got a lot of good news ahead of us.
Speaker #1: And there was a question on cornerstone , but maybe to talk about the margin question , Travis , there's yeah , it's really the result of of the investments that we're making .
Speaker #1: So just to talk about the guidance for a moment, we're raising the revenue guidance by 50 basis points and slightly raising the EPS.
Speaker #1: The way to think about the EPS raise is , you know , we took we took the upside of the first quarter and then a couple of things .
Speaker #1: I would say part of it, about ascent, is driven by tax, which is timing, which we assume is going to come back the other way for the rest of the year.
Speaker #1: We've embedded now in the guidance the foregone interest that is going to come from the investment that we just made in Cornerstone.
Speaker #1: So it's it's a 700 million investment , and we're going to have some foregone interest on that . And then to your point , what we're doing is we're taking a portion of the upside from a revenue perspective , and a portion only .
Speaker #1: And reinvesting that to accelerate our commercial performance. Now, the last thing I would say is, this is only the first quarter, right?
Speaker #1: And we want to set the business up for success in the remainder of the year. Yeah.
Speaker #2: I'm sure we're going to get more questions on , on cornerstone and Picardia . But just high level , you know , I'd say , first on Picardia excited about the investment and it's part of a broader theme in Structural Heart where we're just making doubling down on that space .
Speaker #2: You know , we made the investment a few a few months ago in the space , you know , we're we're investing heavily in tricuspid and mitral got an ecosystem that we're building with Darcy on the sizing as well .
Speaker #2: And now Picardia , here is just another investment in the space . And we're bullish on it . And we're going to keep going there .
Speaker #2: And in terms of Cornerstone, look, we're just really excited about our progress in soft tissue. We've made a lot of progress, and we talked about it in the commentary on Hugo.
Speaker #2: That's our play in the U.S. Cornerstone is really about access and choice. It's a global play for us. It's one of a number of investments we're making in soft tissue.
Speaker #2: But in in particular , you know , it's a global play . It gives customers choice around the world . And we're really excited about it .
Speaker #2: And it just goes with a bunch of other investments we're making . We , you know , our touch surgery platform , our digital platform .
Speaker #2: We believe we're leading, and we've got a nice lead in Touch Surgery. And we're at 1,500, you know, installed base.
Speaker #2: We just rolled out our newest version of that aid, which is like 300 times more computing power in the surgical suite. We're investing in some visualization, robotic instrumentation.
Speaker #2: So there's a lot going on in soft tissue, and we're really excited about our progress there.
Speaker #4: Great. Thanks a lot.
Speaker #3: All right . Great . Thanks , Travis . Our next question comes from Larry Biegelsen at Wells Fargo . Go ahead . Larry .
Speaker #4: Good morning . Thanks for taking the question . I'll keep it . One , Jeff and follow up on cornerstone . Just maybe , you know , expand on the deal rationale .
Speaker #4: I'm going to just ask it head on . Some investors may think this is a signal that you're not confident in . You go , you know , address that and maybe a little bit more in the financial implications .
Speaker #4: And , and , you know , which markets you're going to launch this in and whether it includes , you know , the US and just lastly , is there an option to acquire the company ?
Speaker #4: Thanks for taking the question.
Speaker #2: Well , look , we've got Mike Marinaro on the line here too , from our medical surgical portfolio . I'm going to turn it to him for a second .
Speaker #2: And then maybe Terry can hit some of the financial questions . But on the on the Hugo question , it's just the opposite .
Speaker #2: I mean , we're very excited about the progress that we're making in Hugo . We talked about it in the commentary . You know , we'll be by the end of the fiscal year , over 5000 cases .
Speaker #2: You know , 250 units installed , you know , we're continuing to roll out new . We're getting new and clinical indications . We expect multiple new indications by in the fall here we're investing .
Speaker #2: I was just in the North Haven, Connecticut facility, where we do a lot of the instrumentation, last week. And we've got a host of new instruments coming out.
Speaker #2: We're really bullish about Hugo . You know , that that that is our US play . And in other countries as well . But like I said , does give us you know , it's like a more of a global play gives our customers , it helps us drive up access to robotic surgery , which is very under-penetrated , particularly in emerging markets .
Speaker #2: And , and it gives our customers choice . And maybe I'll call on Mike to provide a little bit more detail and answer some of your questions .
Speaker #2: And we'll go back to you on the financial side.
Speaker #5: Yeah . Thanks , Jeff . And , and Larry , thanks for the question . Jeff . It very well . This is a this is a distribution and partnership that we're very excited about .
Speaker #5: As Jeff mentioned , this is a global play . It's an opportunity for us to build out a full portfolio of robotics , a full portfolio offering , and an ecosystem .
Speaker #5: And it builds on the progress that we've made with Hugo . I think Jeff just spoke to it , but you know , this quarter we've spoken about now our expectations around installs .
Speaker #5: Really pleased to see with Hugo that our procedure volume continues to grow at two times the market rate. And then our digital ecosystem, of course, is now expanding.
Speaker #5: I think , as you've seen as society of robotic surgery , I know you have a prominent presence there . There is a growing suite of capabilities globally , and it's becoming clear to us that , you know , there are going to be , you know , 2 or 3 platforms that will win in the market .
Speaker #5: And this is an opportunity for us to build out , build out a portfolio of offerings that really meets , you know , the customer need and the specifics of the customer situation , you know very well where they sit .
Speaker #5: And so this is, you know, an opportunity for us to take that strategy and expand access in one of the largest markets in medtech.
Speaker #5: That is still highly under-penetrated . And we see it as complementary and , and really just an expression of our confidence in the progress that , that we continue to make , make here with Hugo .
Speaker #5: You know , lastly , I'd say , you know , we're in this to win . You know , this is a critical area for us .
Speaker #5: You know, we are leaders in surgery, and this investment is an investment to build out that portfolio of offerings because we're here to win.
Speaker #5: And we're excited about , you know , this this platform and portfolio that , you know , that will build together between Hugo Cornerstone and our surgery ecosystem .
Speaker #1: And then on the financials . Hi , Larry . Just so so for this year , other than the , the impact of the foregone interest that I mentioned in the previous question , the impact should be minimal .
Speaker #1: Starting in 28 , we should start seeing the impact of the distribution agreement . And this will contribute to the growth , the growth that we're experiencing coming from robotics .
Speaker #1: Generally speaking, with Hugo, and now with Santier making that stronger and stronger. So, we do expect to see a lift in volume and in margins coming into '28 through the distribution agreement.
Speaker #1: The question on the acquisition , look , we on the potential acquisition , we we just made a large a large investment . The investment that we made just provide us some strategic optionality going forward .
Speaker #1: I would say . But the way we're approaching it is similar to what we do in in a lot of these investments . We like to take a position , have a seat on the board , understand how the company is being run , start developing the collaboration .
Speaker #1: And then, once we understand—once we understand what's under the hood, so to speak—we can consider our options. So there's some optionality there.
Speaker #1: .
Speaker #2: And I just Larry , just to reemphasize , just want to make sure we're not mincing any words here . And there's no earnings speak .
Speaker #2: We are doubling down here. We have a lot of confidence and conviction about our position in soft tissue right now. And as Mike said, that's the key.
Speaker #2: We're in it . We're building a winning strategy here . We we feel good about our position , feel good about Hugo . We got confidence and conviction , but there's no arrogance .
Speaker #2: As my college hockey coach used to say , head on a swivel , panther like panther , like stance . There's . There's lots going on here , and we've got to continue to invest and continue to , to execute here .
Speaker #2: We like , you know , our we want to become that meaningful . Number two and gain on the market leader . And we really like the .
Speaker #2: What we believe is a multiyear, you know, head start over the next scaled competitor, which is important.
Speaker #4: Thank you very much
Speaker #3: Thanks , everyone . So , Vijay Kumar , you are next . Vijay , Evercore . Please go ahead .
Speaker #6: Hi , Jeff . Thank you for taking my question and congrats on this morning . I had a two parter for you , Jeff .
Speaker #6: One on a diabetes split-off timing. When you look at Medtronic versus, you see stock prices and minimal stock; it's come off the bottom.
Speaker #6: You know what ? Why not ? You know , what is the in in announcing the split off in one or not cash .
Speaker #6: I want to make sure I heard this correctly. I think your prior comment was, you know, about twice the rate of market growth.
Speaker #6: And I think today you said two and a half times the rate of market growth. So, did underlying cash assumptions improve?
Speaker #6: And now, what is driving this confidence? Thank you.
Speaker #2: Well, thanks for the question. Maybe I'll start with the cash question, and then Thierry can take the diabetes question. Yeah.
Speaker #2: We did say for the balance of the fiscal year that we would grow two and a half times the market . And we think the markets mid-teens in Q3 or Q2 rather , it might even be higher than that .
Speaker #2: So look , we're just there's a lot going on in CAS . I'd say , you know , first of all , there's still room to run on sphere nine , right ?
Speaker #2: We're , you know , still relatively early in that launch , as evidenced by the the 35% sequential growth over the prior quarter .
Speaker #2: It tells you we're still early . You know , in sphere nine remains kind of one of a kind in that , you know , dual energy point to point space .
Speaker #2: And it's with a lot of different features and benefits that that physicians like . And it continues to grow . And we're getting more clinical indications there or on the , you know , we took out a CE mark for , you know , we're geographic expansion .
Speaker #2: We're just launching in Japan . So it's just a lot of room to run on that one . Then we're , you know , we're starting to see progress in sphere 360 in Europe and , and we're going to keep going here .
Speaker #2: We're building out an ecosystem that's a trend here at Medtronic . You saw it in CST . This procedural or surgical ecosystem , we're doing that in soft tissue and we're now doing it in various areas of cardiology cast being one .
Speaker #2: We talked about two investments and ice technology last quarter , and we're going to keep going . So again , not too dissimilar from from soft tissue .
Speaker #2: I mean , we like our position on this one . You know , we're further ahead and and marching towards that market leadership .
Speaker #2: But you got to keep investing here , not just in the therapy itself , but also the ecosystem around it . And I forgot about mapping to the integrated mapping , you know , continued to kind of drive mapping upgrades every year .
Speaker #2: So there's a lot going on in CAS, and that's driving our plus you've got a great, you know, a market, right?
Speaker #2: The market is growing fast, so all of that is giving us the confidence and conviction. And then I'll turn it over to you on...
Speaker #1: And on . Just on Cass . It's you're right . It's two and a half times the the market on the full year .
Speaker #1: We expect it to be north of three times the market in the second quarter, so expect another good quarter in Q2, despite comps that are getting tougher and tougher on diabetes.
Speaker #1: Look , first , as you mentioned , it's great to see that the stock has come come back up and we're encouraged to see that .
Speaker #1: I think it's a testament to the fact that the business is performing right. So, they had a good fourth quarter last year.
Speaker #1: As you can see in the print here . And chat . And Q will give you more details a bit later . They have they had a good first quarter .
Speaker #1: So growth is accelerating and particularly in the US , they have a ton of favorability from an innovation perspective . You know , every single launch is happening ahead of schedule , which is great news .
Speaker #1: So it's super encouraging going forward . There's no hesitation on our side . So no change in schedule or anything like that . We had mentioned that we would do the separation when we think the economics are optimal for , for our shareholders and for our stakeholders .
Speaker #1: Generally speaking , and we stick to that position . So no hesitating , no hesitation going forward with the separation . Just when the time is right .
Speaker #7: Thank you .
Speaker #3: All right . Great . Next question comes from Mike Kratky at Leerink . Mike , go ahead .
Speaker #8: Awesome. Can you hear me? All right.
Speaker #2: Yep .
Speaker #7: Yep .
Speaker #8: Great . So congrats on the strong quarter . Thanks very much for taking our question . Yeah , really encouraging to see the 35% sequential growth for your US affair .
Speaker #8: Installed base after 40% last quarter. So, can you provide any additional color on utilization trends in centers after they've added an Affera system?
Speaker #8: How quickly are you seeing your PFA market share shift in those centers? And where are you seeing your share kind of stabilize over time?
Speaker #8: There
Speaker #2: Well , we're seeing let me see here . I'm going with my notes here . Well , so first of all , 75% of our US installed base are at high volume centers , right ?
Speaker #2: So right now we're still concentrated in these high volume centers , which is not a bad thing . But it also tells us we got room to run in the in the lower volume centers across across the US , 30% of our accounts are doing 70% of the ablations , right ?
Speaker #2: These are high volume centers . That's the 300 plus ablations a year . That's what we define as a high volume center And then , you know , many of these large accounts have only , you know , 1 or 2 systems there and asking for more .
Speaker #2: So we're seeing like once affair goes in there , most of our experience , Mike , is in these high volume accounts , right .
Speaker #2: And once our system gets in there , the utilization is high . We're seeing them , you know , you know , add systems .
Speaker #2: And so we're , we're that's all a good sign that utilization number is something we're watching every quarter . And like I said , so we're focused on those high volume centers .
Speaker #2: And we've got a lot of room to run in centers outside of these high-volume centers. If you have anything to add there.
Speaker #1: I think I'm glad you picked up on the 35% because it's 35% in Q1 , 40% in Q4 . So if you think of just the mathematical impact of what that means from a pull through perspective , it's just super encouraging .
Speaker #7: And for a variety of reasons.
Speaker #2: I won't go through all the list of benefits . It's , you know , fair is becoming the workhorse in these centers . And that bodes well .
Speaker #2: And then we've got sphere 360 coming up , which which as I mentioned earlier , goes right at the heart of the largest , our largest PFA competitor .
Speaker #2: So feeling , feeling , you know , bullish on , on cash right now .
Speaker #8: Understood. Thanks very much.
Speaker #3: All right. Great. Next question comes from Anthony Patron at Mizuho. Please go ahead, Anthony.
Speaker #9: Thanks and congratulations on a solid quarter . I'll I'll stick to one . And maybe , you know go back to Vijay which is maybe capital allocation .
Speaker #9: And diabetes—it will be a pretty significant hole in the portfolio. It’s also growth accretive based on the quarterly numbers for this fiscal quarter.
Speaker #9: Diabetes growing 15%, excluding the week, you're at roughly 7%. So maybe, how will the capital allocation change post-diabetes being completely separated? Will the cadence of tuck-in deals accelerate?
Speaker #9: Will you consider scale deals ? Is a buyback ? You know , you know , in the cards here as well , considering that med tech valuations are off the bottom , but are still , you know , certainly not at multi-year highs .
Speaker #9: So, just looking ahead to what the capital allocation program looks like post-Diabetes. Thanks again.
Speaker #2: Well thanks , Anthony , for the question . I can comment on the on the financial impact here . But but on the growth side , you know , at the Medtronic level , it's about 20 basis points , right ?
Speaker #2: It's not , you know , and with our growth accelerating , you know , we're very comfortable . And as , as we , you know , project forward , we're comfortable with losing that 20 basis points and , and from a profitability standpoint , from a gross margin standpoint , it's a big step up here .
Speaker #2: You can walk , walk through that , you know , look , the diabetes business is it is fundamentally different from from the rest of the Medtronic .
Speaker #2: That's why we made this decision . It's more consumer based . There's a number of other reasons , but financially also that industry is is lower .
Speaker #2: You know , margin business , right on its best day , material lower than the rest of Medtronic . And so getting that capital allocation , capital allocation question , you know , I wouldn't say anything's changed .
Speaker #2: We've already made that switch, and you're seeing it in our performance. We've made that switch to allocating our capital to the highest-growth opportunities in MedTech—the highest growth, but also those in which we have confidence that they're going to be big.
Speaker #2: So, high growth, large patient pools. And the third thing is where we feel like we have a right to win.
Speaker #2: We've got strong commercial presence , a good reputation . We understand the clinical nature of it . We understand the technologies , etc. and that's where our capital allocation is focused .
Speaker #2: We are much more prioritized in these high-growth areas. There's much more of a top-down approach at our leadership team level, allocating that capital.
Speaker #2: And you're seeing the uptick in M&A already . Okay . That's broad based , organic and inorganic . And on the M&A you've seen over the last 18 months , we've been working on this for probably three years to get that pipeline of M&A going .
Speaker #2: And it is it's not the scale deals . It's the tuck in deals . And it's not just it's venture an uptick in venture investing , an uptick in structured deals .
Speaker #2: You know , where you make an investment and then you have strategic optionality later . And then just flat out acquisitions . You're seeing it across the board , prioritizing those high growth areas .
Speaker #2: And , you know , we announced two more investments today . So you're going to see that continue in those areas of cardiology , neuroscience and our medical surgical area .
Speaker #1: I don't know what to add yet . Jeff . That was a pretty complete answer . Just a of numbers . I mean , you know , Jeff said it's about 20 basis points of growth .
Speaker #1: It is lower margin. So when we deconsolidate Diabetes, our gross margin will go up about 50 basis points. Our operating margin will go up about 100 basis points.
Speaker #1: You know, typically the R&D as a percentage of revenue is about double in diabetes, compared to what the rest of the business is.
Speaker #1: So it does give us an opportunity to reallocate capital to the other the other segments of the company where we typically get better returns , as Jeff said , it's this is not a going forward .
Speaker #1: When we deconsolidate . It's something that we've already started doing . So if you look at the last the last 12 months or so , we went from , you know , doing about 2.8 billion of R&D and half a billion of acquisitions to almost three in R&D and 2 billion acquisitions .
Speaker #1: And so our investments . So we , we more than doubled the investment in innovation . And that's something that we intend to continue doing , going forward .
Speaker #1: So so that's the recipe . And and again , diabetes . The separation gives us some flexibility to do more of that from a buyback perspective .
Speaker #1: You know , no specific plans in that area , but , you know , never , never close to if the conditions are right , doing it for tactical reasons .
Speaker #2: And just to kind of further emphasize the point and get into our mindset, just go back and look at some of our actions, right?
Speaker #2: In terms of prioritizing these high growth areas . We had to take cash , right ? Which we just talked about AFib ablation .
Speaker #2: We had an organic , we have an organic program . Paul select . And at the same time , we thought the space was so important .
Speaker #2: We decided to go out and invest $1 billion in an inorganic platform—so, multiple shots on goal. And here we are today, announcing these types of results.
Speaker #2: We picked up another nine points of share in the highest growth . You know , one of the highest growth segments in medtech .
Speaker #2: I mean , we want to put together these decisive winning strategies . And then we talked about soft tissue . You know , soft tissue surgery .
Speaker #2: Again , a lot of investments organically . And Hugo and and that ecosystem around it , like the digital platform with touch surgery .
Speaker #2: And then here we go today, announcing an inorganic investment again, doubling down on these high-growth spaces where we believe we have a right to win and putting together winning strategies.
Speaker #1: There's just one thing I want to add because it's important. You know, you might have seen the numbers this morning. Our free cash flow performance for the first quarter was very strong.
Speaker #1: Cash conversion is improving . You know , we were at 70% in the first quarter , which is good . But we think we have a strong path to getting to 80% .
Speaker #1: We've got a strong balance sheet. So, independently of the diabetes deal, we've got a lot of firepower to go do this investment.
Speaker #1: So, we look forward to continuing to deploy capital.
Speaker #9: Thank you. Excellent quarter.
Speaker #1: Thank you .
Speaker #3: Okay , great . Matt O'Brien at Piper Sandler , you are up next . Go ahead . Matt
Speaker #5: Great , thanks .
Speaker #10: Can you hear me ? Okay ? Yep , yep . Okay . So just real quick , I know we're running long on on renal denervation .
Speaker #10: I just want to be sure I'm clear on the message here, because obviously the CAST is doing really well. So, how are you thinking about the trajectory of that business now?
Speaker #10: The market opportunity? Any updates on what you're thinking in terms of the market? And then, do you really need transradial to accelerate that?
Speaker #10: That franchise over the next several years ? Is it a reimbursement thing ? You know , what's really the clear message on on renal denervation here ?
Speaker #10: As we get this update here in Q1, thank you so much.
Speaker #2: Well , thanks for the question , Matt , on already . And I still we have confidence and conviction that this is going to be one of the biggest things in med , right ?
Speaker #2: It is, and there are three things driving it. You touched on some of them. You know, one is the improving clinical evidence, which I'll touch upon.
Speaker #2: The other is broader reimbursement coverage . And the third is market development in terms of the evidence , right ? The real world outcomes just keep getting better .
Speaker #2: I don't know what else to say that we had great three year data at KRE where you saw like a 18/18 point reduction in the office .
Speaker #2: Over a 13-point reduction in the ambulatory setting. I mean, these are materially higher — like 2x, 3x, 4x higher than the clinical trial.
Speaker #2: And then we put in the commentary today spiral affirm was accepted as a late breaker . TCT so more data coming out . It's a thing that's full six month data coming out in a in a very visible conference .
Speaker #2: So, what you're seeing is the difference from the trial is material in terms of the improved results. And we're also seeing really strong durability of these results, especially versus something like ultrasound.
Speaker #2: So this is driving the conversation is shifting , right ? The coals are and hospitals are coming to us to really get some of these programs going as they see this continued improvement in , in clinical evidence .
Speaker #2: Also driving that would be more improvement in reimbursement coverage, right beyond the national coverage decision for CMS. We're seeing these commercial payers continue to jump on board.
Speaker #2: And this quarter , we had a number of them . You know , particularly we had some bigger ones like Highmark . So we're seeing that reimbursement coverage improve .
Speaker #2: And then the market development , that's where a lot of the focus is now . And look , as you I know , Matt , you get out there , you talk to a lot of the coals and you know , we're out there talking to them as well as the hospital C-suite and the conversation , like I said , is shifting the enthusiasm there .
Speaker #2: And we're really partnering with them to build out these programs on the back of the clinical evidence, on the back of more insurance coverage, building out those referral pathways and driving consumer slash patient awareness on these.
Speaker #2: So again , you know , we thought we made a good progress on a number of those leading indicators , and it bodes well for the ramp here over the next , you know , quarters and years to come
Speaker #3: All right. I think we have time for two more. So the next question comes from Ravi Marcus at J.P. Morgan.
Speaker #11: Oh, great. Congrats on the nice order. Terri wanted to ask about margins this quarter. It came in just a bit above the Street.
Speaker #11: On on operating margin . How are you thinking about reinvesting this top line upside versus driving margin expansion ? Both in the first quarter and for the rest of the year .
Speaker #11: And then a quick follow up . You talked about tariffs , rebates , offsetting tariffs , paid . Do you have the tariff rebate number .
Speaker #11: So we can all keep track of that as some some of the the one time benefits in the quarter . Thanks a lot .
Speaker #1: Yeah . Thanks , Rob . So I'll start with with rebates with the tariff . Sorry . So the refunds in the first quarter were such that we were knights at slight net negative on the impact from tariffs .
Speaker #1: So they almost compensated before tariffs going forward for the year . Just to be clear , we have not embedded future refunds . So you we wanted to remain prudent going forward .
Speaker #1: So we're we have construction for the remainder of the year . That doesn't bank on any any refunds happening . We are continuing to submit to submit refunds .
Speaker #1: So there are potential potential upside coming from that . From a margin expansion perspective . Look , you know , we're in growth mode .
Speaker #1: So, we're taking a portion of the upside that we're seeing from our revenue perspective and reinvesting in the growth areas—and only a portion.
Speaker #1: And so the construction that we've got on a four-year basis today still calls for an operating margin that should be up about 50 basis points on a four-year basis, which should put us at a non-GAAP profit up about 10%.
Speaker #1: So significantly higher than our our revenue growth . So look , we're going through , you know , all the different parts of , of the company , right ?
Speaker #1: Cost of goods sold, the manufacturing efficiency, the relationships with the suppliers. We're looking at logistics costs, and we're looking at overhead, and we're really looking at how we can drive efficiency at every level.
Speaker #1: And it's starting to pay off. You've seen some of it in the first quarter, and on a full year, we're going to deliver a leverage P&L.
Speaker #11: Appreciate it. Thanks a lot.
Speaker #3: All right. I'm waiting for my cue up here on our last question. It should come from, perfect, Rick Wise at Stifel.
Speaker #3: All right. Thanks, Rick. Please go ahead.
Speaker #2: Rick , are you there
Speaker #1: You might be on mute, Rick.
Speaker #2: You want to do the next one? Yeah.
Speaker #3: All right . Rick . Well , we'll get you on the on the next one , please . The next question is going to come from Joe .
Speaker #3: Then Joanne at Citi .
Speaker #12: Good morning. Thank you so much for taking the question, and really nice quarter to wrap it up. I think I'll ask about Charlotte, North Carolina, and why are we going there, and what can we expect from the analyst meeting?
Speaker #12: And my second question sort of probably ties to that one for a while . I used to think of Medtronic , or we used to think of Medtronic as sort of a mid single digit revenue grower , high single digit EPS has that formula shifted ?
Speaker #12: Thank you
Speaker #2: Well , look , I'll I'll start with your last question . The back half of the question and let Terry pile on there .
Speaker #2: But look , Terry mentioned between , you know , the strong cash flow that we're generating , we're you know , our cash flows improving here continues to improve .
Speaker #2: It's always been good , but it's improving . Had a really strong quarter . We're going to continue to focus on that . And then our focus on gross margin and operating margins are going to allow us to invest more both organically and organically and ramping up our organic tuck in acquisitions , combining that with our organic , you know , you're seeing effectively a doubling of our investment in innovation .
Speaker #2: And we've been doing this for a while. And now you're seeing that growth tick up, and clearly, we have aspirations for higher growth than we've done historically.
Speaker #2: You've seen over the last couple of years , we've gotten the growth to mid-single digits , but we're not satisfied with that . That's why the more investments and the focus on execution , we have , I can't describe in words the sense of urgency on , on , on the investments and the execution to continue seeing in the last two quarters a bit of an inflection of growth .
Speaker #2: And we want to , you know , kind of stay continue , continue with that . So before I get to the the Charlotte , the Taieri , any other comments on that ?
Speaker #1: No , look , I think you said it also clearly at an inflection from a growth perspective . And and we're working the PNL , as I just said , you know , we're continuing to make progress in pricing .
Speaker #1: We're continuing to make progress in cost out . We're reinvesting in innovation , but we're , you know , we're getting leverage from an overhead perspective , right ?
Speaker #1: So , you know , we're really focused on , on driving the , on the income statement as well . And , and it's one of the things that we'll talk about in Charlotte .
Speaker #2: And so , Charlotte , why are we going there ? So look , the Ircad facility there in Charlotte is an impressive facility .
Speaker #2: You know, IRCAD, it is mainly, historically, outside of this physician training, outside the US. This is their first North American site.
Speaker #2: And we're where we have a big presence in that site . And it's a good way , Joanne , to actually see , especially a lot of our technology now is .
Speaker #2: Or more and more of it is capital. So, you've got our Able platform and Stealth Access. You have all of our soft tissue technology, which we keep adding to.
Speaker #2: You have the digital piece. It really helps to see it in action. And IRCAD is set up so that you can actually see it.
Speaker #2: We'll have physicians there, walking you through it and describing how they're using it. And these are physicians that also use our competition.
Speaker #2: We all have our weak moments. They'll be able to provide, you know, I think, a good balance of how we stand up versus the competition.
Speaker #2: And we'll talk about where we're going with these technologies as well . And then the other thing , look on these earnings calls and some of our other events that we do , the different , you know , banking meetings , we don't get a chance to go in depth with some of the other parts of our growth pipeline .
Speaker #2: And so, there's a lot that we haven't talked about that we're going to talk about. And, in addition to that, you're going to go down a layer into the org below.
Speaker #2: My leadership team, along with some of the business unit leaders and the experts in these specific areas, will be speaking. And you're going to hear it from them as well.
Speaker #2: So physicians , plus the business unit leaders themselves , new growth , new growth investments that we haven't talked about . And then going way deeper into some of these big areas like these surgical ecosystems and a , in a showcase space that is built for this .
Speaker #2: And so December 10th and 11th , please mark your calendar . It's we're , we're really excited to share . And I know the team is as well .
Speaker #2: So, thanks for the question, Joanne.
Speaker #3: Great . Well , that wraps up the call . So thank you , everyone very much for joining . I appreciate your support and continued interest in Medtronic .
Speaker #3: And Jeff, if you have any other additional prepared remarks, please.
Speaker #2: I mean , look , thanks for for thanks as always . Thanks for joining today . Really appreciate the engagement . Appreciate the support and the , and the continued interest in , in Medtronic .
