MDT - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Medtronic Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. Instructions] [Operator

to Please over go like Vice Ryan the Relations. President-Investor ahead hand would to conference Weispfenning, I sir.

Ryan Weispfenning

call Thank to you. webcast. conference Medtronic's welcome and fiscal year Good XXXX second morning and quarter

questions. Omar the Parkhill, remarks, XXth, the XXXX. on Karen Financial results Ishrak, During our Chief take be hour, Medtronic's and happy quarter, Officer; Medtronic's comments Chief provide will prepared October second After we'll Chairman to Officer of our and Executive on your ended next which

few Earlier financial a and summary. comments. a press release the division issued First, morning, we logistical this by containing statements our revenue

We also earnings provides that outlook. on additional details issued an and our performance presentation

those call, statements forward-looking statement. projected be many earnings statements the considered today's and made may forward-looking results may from in During actual any of materially differ

factors we actual we to filings not other differ information results reports our and that that update in forward-looking Additional cause SEC to do periodic the could contained is statements. and any undertake make with concerning

call, acquisition unless basis, which For revenue the currency our and fiscal quarter to the second currency. for given to year Spine References impact constant we of are exclude foreign rates this Titan organic after a compares and adjusting on say currency. growth, otherwise, XXXX of ranges

financial of release to our or found Reconciliations earnings non-GAAP measures in all press investorrelations.medtronic.com. at on be can the attachement our website

charges during that would gains non-GAAP earnings include be or to year. the fiscal Finally, any our not guidance EPS as adjustments does reported

With Chairman Omar Omar? Ishrak. now that, to Officer, Executive Medtronic and Chief I'm pleased to call the turn over

Omar Ishrak

coming ahead commitments executing focus results and reported our reflecting to morning, with of another solid Street everyone of across on Ryan, for in you expectations, both joining we Thank growth our you, organic EPS revenue to Medtronic. This and quarter thank continued us.

and revenue diabetes. X.X% and RTG, outperformance with constant in grew organic, from MITG X.X% and in first acceleration the quarter currency QX

another growth delivered We in quarter markets. also double-digit of emerging

investments key line points, operating included expectations new product launches. major Our with XX and ahead approximately margin of basis expanded in several adjusted

effectiveness enterprise continue SG&A Our benefit size P&L, our our our and efficiency we to improve the where initiatives to on excellence leverage line. and scale particularly

or increase rate. On diluted the the the quarter our non-GAAP the bottom at in nominal grew from headwind our our of constant our of geographic despite diversification. our demonstrates EPS and and broad-based growth performance of innovation, our tax X% EPS the currency, consistency Overall, the execution, benefit business and this strength line, X.X%

take which posting of of in delivered Therapies Let's our look more slower spine was performance, brain growth, Restorative therapies Strong our therapies. pain RTG a starting sales than basis offset X% drivers Group. organic points XXX performance, and growth in the impressive particularly now with expectations. ahead at quarterly a our

spine which our the division Our exceptional division having combines in surgical an Brain synergy is surgery, strategy implant capital the our on with Therapies in sustained and impact equipment for growth. enabling Spine RTG’s

our resulting as capital surgical our of Core bone growth X.X grew the revenue synergy use in our in Spine hit is strategy, good was Spine acquisition, surgeon X% organic This double-digit graft implants infused increased sales well the in the X.X% years in driven from is a in sales U.S. Our and U.S. as Spine globally organic growth our globally. X.X% start. Spine This Titan with its highest by both early robot in division contribution Mazor particular which where to strong and growth Organic spine our in level Core off equipment organic excludes of

market. our is grew organic, our organic the competitors business division used sales the spine In Spine capital spine with report X.X% spine how spine a sales, from X.X% division Brain with you combine of our our results growing equipment in our are which Therapies U.S. division when fact, that well surgery, robust above our

surgical XX.X% our spine also another which surgery. mentioned, quarter benefiting our Therapies Brain sells of used equipment just delivered synergy in above-market Therapies growth. I Brain the strategy is capital division, As

had Imaging. we double-digit and neurosurgery, offerings, all growth In at Robotics, three of our Navigation

grew Midas U.S. as during fully instruments Rex's double-digits, launched we in Our the the new system Midas Rex MRX the surgical powered also quarter.

Therapies, our both quarter In and market-leading business also Brian stroke. very hemorrhagic neurovascular reflecting growth a strength had high-teens with in strong ischemic

ischemic adoption aspiration catheters. high Solitaire the stroke retriever, Our strong React our stent Riptide business and and grew twenties in system of X

diversion Medtronic system grew quarter leading This earlier Geoff In of drive as double-digits, growth. Pipeline before Flex low we month. Hemorrhagic indications RTG, this taking as was President Martha’s continued stroke, of our last expanded to for over

tenure, a invested and a four-year pipeline. built a named noteworthy Geoff he It successor from that innovative implemented robust Over RTG. group. revitalized also strong in an team strategy, within He the his management is

has X.X% and leading growing we division, Brett strong had outstanding of very of Therapies innovations expectations, performances leadership forward he Group, another played the Invasive surgical by and driven the a job, to has quarter, role Wall our and an vital RTG. look Minimally both his RGR. group. very In done Brain the Therapies turnaround ahead good We in in of

in Surgical growth new our Tri-Staple in by Advanced EEA Advanced grew Tri-Staple stapler products and including circular line, mid-single-digits and re-loads. driven innovations, both Stapling was In we X.X our Stapling Energy. Advanced

LigaSure innovation continuous LigaSure Advanced our in growth Dissector. Franchise, our Energy Exact benefited from including

reflux PillCam Renal The by and sales grew high single-digits GI delivered strong imaging quarter EndoFLIP led systems. another calibration-free Bravo of X.X%. systems GI Solutions system, growing exceptional Respiratory business and

ventilators brain Pulse and Respiratory consumables, strengthening capnography, Nellcor Bennett monitoring laryngoscopes. BIS Microstream on XXX also monitoring Puritan and McGRATH patient video Oximetry, high-single-digits, and grew

In our launched last quarter well which end. an in quarters, of has as Cardiac replacement the quarter, a DCBs CVG’s sustained we below-trend are Group, through in years in and growth batteries Vascular longer-life given our several as of series believe ago. coming few we with to CVG we CRM LVADs this grew quarters this reflects the challenges X.X% gone and which was the expectations. the headwind line devices,

our affected revenue supply in growth to number In manufacturing high-power. changes CRHF quarter, we processes our which limited line the of product for addition, our and during direct a temporarily implemented

of clear grew seeing quarter-over-quarter. We're DCBs U.S. signs and headwinds. teens both the LVADs these overcoming in

LVADs, step-down we anniversary March. one-year in We DCB of now to anniversary in and have challenges passed the expect the the

With first our grew the time CRT-D and years. both pacemakers devices, in several replacement -- CRM sequentially replacement for

expect growth replacement after to next fiscal to neutral be being CRM We a years CRHF headwind year net growth. impact of several devices a to

we're these in TYRX, revenue. process over of our CVG expect and last strong volumes late Regarding XX% launched new of on we to production in normal Pacing to manufacturing other businesses, pressure levels. areas combined; month CVG growth, return performance represent and CVG including seeing QX which TAVR, Despite

as single-digits Pacing System Transcatheter the grew to Single U.S. in Pacing Chamber mid-single take Our our business Micra and digits globally and continues expand share high the market.

Reactive feature, procedures. Beyond bundle is conventional differential pacing, which feature pacemaker where in unique share and Japan, lead from enable HIS delivery resulted Medtronic branch ATP products Micra, in and reimbursement bundle our as in our of as offers lead left including benefiting unique our the well popularity pacemakers, global such increasing differentiation that

in but implant our the quarter. two grew the expansion weeks some growth final patient business, Driven XXs, in quarter. of low In Evolut procedural volumes the this U.S. launched TAVR late by in mid-XXs we drove system highest had into TAVR the PRO+ our of U.S. the in in we've low-risk population, ever And that the we the the

DCBs, back of replacement LVAD the We of the in in with half our anniversary challenges, launches. fiscal see of sequential year, an new pacemaker and multiple, the accelerating over CVG growth and growth improving benefit important volumes, the improvements profile for CRT-D product

diabetes, expectations. X.X% slightly ahead we In grew of our

competitive challenges, resulted from declined high which is single-digits, business while in the our and await anticipated U.S. Our new products. we

in of in half consumer and that At time resulting not last and demand just XX%. recurring strong diabetes consumables. our drove only launched grew the reimbursement XXXG in This double-digit experiencing is same select which we've which international under is MiniMed growth driving markets. our in double-digit the U.S. represents is The strong it insulin same revenue business, revenue received from CGM in also pumps, international other as growth but demand growth year

and led Salmon record that make to successful has look actively Sean several announced executing Diabetes month, Medtronic. taking including track will Structural an strategies, we our developing Coronary over is Sean on Heart competitive the leadership the division business. Sean impact forward & who and Group. we of in has technologies the excellent launches successfully our last for important of Late the he is new business engaged,

In Now, with in XX% grew turning to we grew XX% from revenue. markets emerging Russia. which emerging XX% China QX, as growth geographies XX% included markets, contributions with our grew of which XX%, Eastern Europe globe. represent the South around Asia

XX%, addition, the America Latin Asia Africa X%. grew Southeast Middle and XX%, and In East

growth strong as drive these channel R&D to and distribution in uncertain localized continue and the optimize we markets manufacturing. markets, We

rapid from important. expansion healthcare We cycles. In markets us economic around typically addition, of breadth the the geographic the in growth our these the insulates across business believe world and is diversified of country-specific markets

a and we growth consistent continued double-digit result, As expect emerging in markets.

year this gone has well, of to we've first The half as better-than-expected commitments delivered our and results. fiscal executed

as ahead. forward, even more excited about we lies Now what we're look

growth As by for investments our to creating our revenue made we've and begin our in pay accelerating value pipeline shareholders. off

just QX. I Evolut a next-generation we valve. our starting And contribution full CVG as we mentioned launched And TAVR expect in earlier, see PRO+ quarter's to

IN.PACT expecting for approval addition, indication. AV U.S. our In Admiral imminent fistula we're

Chrome into Cardiac our and anticipating As Reveal we're we families pacemaker, CRT-Ds, Monitor. our of Micra approval fourth X.X of our look Insertable and the ICDs to AV and and start and launch Cobalt quarter, the XXXX, LINQ U.S. fiscal of next-generation

U.S., Active-fixation thoracic family approvals the catheter we Japanese Quad introductions, lead. our are including of Stability European CRT-P and CRT-P the our also our Valiant Outside for stent Quad graft, product new DiamondTemp multiple [ph] preceptor expecting Attain ablation and launch Navion

later as tissue the our during At sequence this commencing global discussed system first-in-human sales soft with robotic MITG, commercial in of fiscal in we we're launch year. Hartford, use in September starting event our

Next we the fiscal approved, for QX when in IDE allow which well year, clinical in training, submit U.S. for in Mark the we and surgeon first can United for gathering submit as States. begin as system CE will placements data so half, plan approval to

now will our is QX. U.S. be We're introduced Stealth also to this In RTG, year. as earlier, in back-half system Autoguide, cranial in robotic markets the and being platform I Rex to Midas the the fiscal of launched MRA in launch planning international drill mentioned

and we the interest in MRI Pelvic Micra last MRI, our is volume for SureScan leads in XCC our filed with Health, In and PMA InterStim U.S. month supplement which rechargeable. with FDA

our of Vital. a NIM preparing next-generation launch year-end intraoperative ENT, In for system we're monitoring nerve fiscal

In Pain the MiniMed continue the Stimulator to to for In NANS next-generation advanced launch our with we we Spinal hybrid Therapies, loop connectivity. at Conference unveil system in the XXXG, Diabetes, January. Bluetooth prepare plan Cord of our closed

pivotal XXXG be presented in to ATTD expect We at data Conference our February. the

MiniMed a technology program warranty pathway which place next-tech while the the our allows U.S. we’ve technology new-to-pump no before to who therapy cost to a or Earlier is purchase out at when in available additional in next-generation this available. customers it XXXG month, of bridge our time are accessing pump next-generation put becomes

several company. are the preparing our we're that launches some across highlights of These are from more There course for product the pipeline.

While invention, to in continue robust out we and pipeline invest innovation, of disruption. continuous building long-term a

of expect half to the faster As headwinds, I've accelerate with anniversary growth FY launch we as second noted products. XX the we recent growing before, and multiple rate our new first, than

XXXX, top-line And in our expect we to momentum FY accelerate.

XXXX of launches As slated well as launch year. FY the we get the to a product increasing next benefit fiscal as product

let second me you take discussion Karen? Karen now to financials. of that, quarter through With ask a our

Karen Parkhill

you. Thank

by As Omar X.X% in driven quarter EPS midpoint the growing our $X.XX growth above operational was second adjusted organic $X.XX our came X.X%. of of We outperformance. revenue guidance, mentioned, we delivered and

reflecting XX.X% was our under margin implement XX We improvement approximately SG&A strong we basis across delivered of the operating approximately and company points, adjusted adjusted of efficiencies Excellence improvements as and Enterprise basis points. improvement in XX Our program. drive

by debt tender profit and XX%, in offset currency negative the our reflecting margin calendar transactions this the successful Our by improvement line China was our interest declines in driven expense foreign earlier year. and operating impact adjusted gross Below of SG&A tariff. declined issuance

priority know, annual free in of offset remains debt you cost company. reform. increase strong As is cash our a the across tax tax an helping flow Generating to rate our reduction U.S. from

Second flow XX% quarter last up cash $X.X billion, from free was year.

XX% XX% capital investment R&D our annual conversion towards deployment, of ratio drive nicely cash growth, our disciplined tracking our to are a returning balancing plus. target with future We free We tuck-in acquisitions remain of of committed full-year flow shareholders. minimum to and to in

shareholder billion cash total of on adjusted returned second generated, quarter, in net over we we XX% XX% earnings. a $X.X or the resulting the payout of In

like Before to back I revenue turn call would the guidance. growth EPS I annual Omar, to our update and

with to For the accelerating the approximately to we revenue expect growth year, continue organic to back revenue X%, first. growth the half in relative

would currency is of basis to a XXX full-year have if currency hold, revenue rates approximately impact exchange basis fluid, the points. of recent While negative foreign XX impact growth point on

surgical across neurovascular, X.X% We several largest TAVR, up we're our grow to for strength to businesses, raising from and to X.X%. we business growth from the neurosurgery three and expect the spine are guidance of our organic seeing With groups. CVG now X% innovations

MITG approval. revenue. grow low of X% XX% to X% sales, we to grow while In RTG diabetes, await X.X% to in groups These competitive pressures to combined X.X% X% to previously. now from X%, U.S. X.X% of growth, our and X% our from contribute expect up we three new product represents which single-digit the reflecting organic up

X.X% and to X%, on quarter, flat down revenue rates. XX of of grow to at to group, organic basis basis. to points expect negative impact all, slightly growth to to with XXX X% recent X.X% MITG By third anticipate to RTG currency organic the an and be having points For diabetes X% we we to basis accelerate a CVG plus a

As Omar year. products, on either and fourth or mentioned, long U.S. building part list are a quarter in early starting we anticipating the approval of into next European the of

Micra Precept nerve stimulator. sacral Deep [ph] InterStim Transcatheter micro XCC pacemaker Our Brain AV Stimulator. PC

begin Intellis advanced hybrid and Cardiac our IN.PACT RF our here. I'm ablation sure, in for family launches. of expect have AV catheter see of I as closed off ICD coming, SCS we of and CRT-D. and MiniMed Admiral as next-generation Cobalt a And left why Insertable can drug-coated early some some growth XXXG the Chrome indication is X.X see, fistula which to Monitor balloon. impact we system, accelerate these DiamondTemp that's we fourth-quarter LINQ lot loop, But for you to

we basis, driven constant by our margins, to a operating points Turning our expand continue on to excellence full-year to expect initiatives. XX by margin currency roughly enterprise basis

For offset improvement headwind. expect the currency would by margin, in third quarter, operating a slight we

second expect for we expense remainder line, non-GAAP the be quarter the similar operating to the year. the quarterly of Below interest our to

nominal the In to to addition, and now we XX.X. XX expect range tax in XX rate quarter quarter, a our of and XX adjusted of be annual third an to range

underlying rate our optimizing on overtime. focused operating remained We tax

We are to $XXX to prior million to $X.XX increase million the range of guidance outperformance, a reflect negative EPS the includes second rates. raising of of a our million. fiscal $XXX XXXX million a quarter's $X.XX to impact currency recent from $XXX year range This $XXX at

$X.XX rates. of EPS expect to $X.XX including currency recent headwind we quarter, at third $X.XX a the For

back Omar. Now, to I will return the call

Omar Ishrak

Thanks. Karen.

Geoff of month. of my and the As I mentioned start And place. I'm year, I Medtronic fiscal at this earlier, will Geoff the Martha as Medtronic. became next company's earlier President retire CEO, as take Geoff excited as will strong with execute can deliver and of Board has our performance, itself people of enhance the the develop culture. next proven who Geoff financial our and leader selection leader a

growth. I together know to levels and very Medtronic take working closely he new will ensure of to performance a transition. smooth We're

Geoff? Q&A, few Before we words. I've a to go the to say Geoff asked

Geoffrey Martha

Omar. Thanks,

Medtronic's company. really next looking forward Board selected While first, leading to great to I it an And want CEO. this been as to what the have is reiterate by honor I'm

quarter's at growth our business, spine our in technology results, see robot. working in this like that with I'm particularly pleased past strong Now strategies Mazor to by driven looking are enabling

the head And with Brett RTG incredibly transition of been as has smooth. the

good officially took QX this in for over down Brett lead RTG. he is month, say RTG the While just Look, that. the I’ll in stretch hands, really earlier execution

Medtronic's about ahead, as I’m look excited future. incredibly Now I

pipeline, many on during on achieve We is year important these could Actually, and and Medtronic to the list strategy momentum thinking our the next Also period, have several delivering that next. you how allowing us is in priorities. transition of our stakeholders, connecting team product of my leadership the launches will build Medtronic committed focused and of about the be coming back assured we up, and I'm into of to entire executing performance. as will head this how fiscal and half evolve with we level that top

for I customers we Omar with coming also I’m leadership over with and of the The beyond lot great. community build strength. other's off a and the is to meet long transition and time going RTG. investment worked listen months. We've starters, how For spending meeting know time, business with together our each to plan to a

executive from this, life am colleagues and a support with like on I transition thrilled continuity easier. the makes the Additionally, the committee. my and a Having Board lot

specifics will still to a strategy our too While it's evolve, early comment like how on to share on initial thoughts. I'd few

thing life. health, mission, one to that alleviate and is on drives First, won't focus technology restore our change us to extend Medtronic use the pain, which

In place has Medtech fact, lifeblood the to company in of name [ph]. this the emphasis and driven growth. looking is always even game on growth of more we're the been innovation Technology

our We allocation being to Getting will more with organic growth decisive highest rates with getting be aggressive up. tuck-in on and M&A segments. revenue growth the laser-focused capital

WAMGR. All of our market this average or will our weighted growth rate increase

Reinvigorating growing our And huge This to ability I'm has the is back rapidly leverage innovation is space. this diabetes confident priority. also to business strength in a a market to that leading in our get long-term our potential.

with of foundation sensor which pump strong a pipeline the on have and and side. really to the work exciting We a both innovation

I the that he Sean right. Also, committed importantly, really with along get this the the business Most confident rest am experience. will of patient improving to has diabetes

do we to executing our return mode. pipeline, this, product to share-taking along we Now as expect with on

measuring for taking ourselves business our and share the simple. gains fact, on see Grow I like we're portfolio. keep not. we'll Medtronic or share opportunities measure or In WAMGR, we just throughout And performance be our things to whether that.

to we with host And Day priorities Investor when these more plans sharing hear forward next Medtronic's You'll June. I look overtime. you on our full

this I’ll Omar. to it turn at back point, So

Omar Ishrak

Geoff. Thanks

Let's to on now move Q&A.

Mike Presidents your Coyle two In questions. answer and are of here Bob also addition and to Group Karen White our to Geoff,

won't RTG earnings new call of Wall quarter. next roles their Brett join they until diabetes running respectively, to the are the As and Sean and Salmon

Geoff will I today. groups Karen, related two questions to answer and those the

usual, try As as want possible. many as questions we to to get to

to and a please related follow-up. one So help necessary if yourself by us limiting question

additional after have please question questions, the contact please? you If Relations our team Ryan call. Operator Investor and first

Operator

question Lewis line Stanley. with first the David of comes Morgan Your from

David Lewis

quick Good just a morning. for Thanks taking follow-up question, and a one the for Mike. Karen for maybe

here Karen, if second just quarter about, into appreciate of two-part about half your revenue, back updated the back kind diabetes, related the If half in sort for the the for we the in the deceleration back you but thinking half. of had question. nice look think third of acceleration So the you plan of and it's guidance year, I

So other back back half, in anything year, business and why so earnings, non-op on great far sort suggests would than implied the the expansion tailwinds half the of and related got diabetes in much in expansion interest the you've of decelerate it's this not year, tax. and your

little So of conservative, we then looks into up margin the picking kind the the should quick Mike. for line, year, one the bottom back-half because a of a anything top from it be or on

Karen Parkhill

thanks question, the David. Yes, for

question comps what a XXXX little in on me can And know bit happened the be first, cadence alone I What FY the that. comps because is FY Let in the really dictated XXXX. touch there's XXXX misleading. about some FY

was FY Recall and X%. but that Puerto would in a comparison base I X.X% reason, we with the and issues. our that say FY where of XXXX Rico the would X.X% be for X.X%, hurricane, significant, The some IT half transitory first by-quarter double-stack growth XXXX, of and good FYXXXX double-stack faced outage,

our QX. really those pleased upcoming revenue so our have we a we far we to in are because the future were the But reinvest plan little raise comps should of and tax of while and by can related they to this we our year. launches, indicated $X.XX aside, $X.XX were start on our And interest to acceleration do going that fully continuing a year, benefits to FX favorable, more pipeline. able that ensure is you EPS next do our And total back heels seeing we drive half to growth. support that drive And is yes XQ EPS, into what guidance in

David Lewis

in approvals, just to data Karen. helpful differences share any how much. you real for so expansion Mike, make to on about quickly this Okay, is talk want weekend markets, Can Thanks fairing comments prior the that the us low-risk relative you to just suggested me. in very outperformance?

Michael Coyle

overall the globally and growth, were in mid-XXs. low Sure, U.S. of in in growing we terms twenties

space, overall rate So with now market in as well some with in who it slower NCD. of share the the taken presence are U.S. little has that principally another the the was new as modest because onstream the a than centers of ramp competitor the for coming the

So been the around to late in think from we've last we the bounce going accelerated of clearly profile and were of a bit, where we the earlier year. growth part but with little very pleased that's year, part

still out data datasets that datasets. that concentrated And were of [indiscernible] that accounts users at AHA, heavily then digesting the France we're terms the non-randomized These was were product the in of shared those of lines. basically coming were were that

the that they So we were matching did that not we've seen. propensity sure what is to appropriate

datasets size But is, XX I Evolut those [indiscernible] of we where PRO+ not they millimeter were performance the the using Evolut piece into lowest have with addition those we devices have they’re segment. of really think profile PRO certainly the has in not it the pericardial PRO+ using improved PBL now the and and large [Indiscernible] other and Evolut the

multiple been of mortality comparisons, datasets we've and different. not we these randomized there have that have done that that So kind know seen

it to to So going we're just and digest have it. continue to understand

Ryan Weispfenning

David. Thanks

Next question, please Regina.

Operator

next Hopkins of line Bob question Bank the comes Your with of from America

Bob Hopkins

Oh, for thank thanks the you. And taking question. morning, good and

And guidance then could your in half. impact on be and does diabetes, a broadly changed future specifically guess maybe the more has just reduction for driven -- guidance question changed diabetes Thank the focus assumptions little here. more XXXX, Maybe of this diabetes would fiscal a on in XXXX? view does O-U.S. go in Just into on to in the rate the the say I the you what for sense minute. you how U.S. on back specific detail want if growth

Karen Parkhill

await we're Omar fact to facing product in challenges while continues that launches. the we did diabetes, competitive U.S. the grow for new international question, -- growth Bob. in thanks about talk well. the But Yes, We

international continue. saw in results, You expect to strong we that that our and growth

which meantime new U.S. a upgrade to did technology until revenue you the in that defer those patients we'll advertised. may seen pathway, initiate can also have the In we next-tech That Omar means we mentioned some the

that And follow we pipeline in in the of growth that for business robust businesses. future believe our our terms and expect in pipeline will of growth other do acceleration diabetes, many we we that with as

Omar Ishrak

very I our in our an just about the we're wanted promises get We've this be the product. to in of submitted XXXG outstanding that it for for The pivotal to clear excited pipeline. very trial. approval progress We're already next-generation making terms FDA. good hardware enrollment with

pressure And with on through to so we're in going track. the that period whole some pipeline go U.S. patients And of a new is especially

should and from enthusiasm into what look, no future pipeline doubt in this diabetes. see our But there about we the be

As this an in. of win focus our one area Geoff pointed earlier, is and we for will us that

Bob Hopkins

confidence China they just -- wanted to follow-up And outlook to And just a while make for one-off, in gauge for growth growth sounded another we on is, just your you your the ask this like little China. for outlook the business. pricing the Omar I a quick I company medical the that and quarter device bit And subject devices got being pressured more than for your opinion of a sure one it just Great. anticipated. wanted about in China talked in in reason is then for

Omar Ishrak

we these expect big commoditized confident out products are some in continue very some which that on growth place, Look into clinically. about continue terms of about And the that there consistent line which China. different tenders. been are product government There the in, had of depend to these We've we majority has put and and we're products more processes and of separated coming most to one are China. of really but around very feel in of play that is to purchasing we results our double-digit thoughtful

In any through case situations cover we channel the those can in can we which are there that. optimizations do even distribution in

we're about that our about growth, maintain very quarter-after-quarter confident has growth completely The we're we in performed China. look, our confident can consistent and in there So that. fashion team a pretty

Ryan Weispfenning

Okay. Bob. Thanks,

please Regina. question, Next

Operator

Marcus the Your of next with Robbie question from line comes JPMorgan.

Robert Marcus

Karen, you Thanks on I year. wondering and was nice if the a touch of growth back part the on the cadence congrats quarter. in of could

in back You third that In plus about topline accelerating talked quarter? half about for you percent does four What fourth talked of imply quarter. growth the press the the release, in year.

Karen Parkhill

Yes.

for quarter the question. as thanks to continue growth November, sit fourth when. to expect exactly acceleration products hit We launch It's products. the here do know So Robbie which in in we will new hard important and

so, they approval have some in holding doctors maybe and also important DBS. some the possibility that some And you like as await pipeline patients for things our

do we'll third So see to pin to and view get down better growth fourth-quarter we quarter. But acceleration in predict at it's from hard a to this we February. the that the expect call point. when have And in meantime, know just

Robert Marcus

I business impressive growth here. in hoping spine came rate the And was it. Got very

data a pull-through going has sort think we the you more are so base of about Thanks. your give If of percentage Any about a centers here? could buying robotic us, detail just could What you points talk little what into could forward? placements, robot?

Geoffrey Martha

power I'll long it’s best first of the surgical we've this, take in strategy, one value really take staying has results franchises. intrinsic seen which Yes, the here spine long direct real spine business, Robbie. I'll this is which result meaningfully of the Geoff. a has the the and time. our improved a synergy in long It

us. placements the pull-through model and pointed both It's the differentiation the significant sales implants. nice great equipment, for navigation, the placements you and a it's out, created business of spine As and Mazor O-arm competitive capital a really

more last specifics giving it's like you, the but we're Mazor And, many how can on look not tell the placements, than quarters competition. I several meaningfully

you to, you have momentum has And of an meaningfully lot is of quarter-after-quarter-after-quarter stack installed competition, base here. our in a gotten when big. And so placements pretty the And more got we've like this that when it's get and on momentum going going kind the organization capabilities to this focused somebody RTG continue. the if like this that something it's resources with like of with you can organization

about good very feel So it. we

Robert Marcus

very much. you Thank

Ryan Weispfenning

Thanks Robbie.

Next question please Regina.

Operator

with comes line Your of Fargo. Biegelsen the next Larry question from Wells

Larry Biegelsen

Mike question. and morning. for question CVG taking One, for for Good Pain the one two-part question Stim Thanks on Geoff.

on in confidence AV, Marvel Mike, on based So data. first X Micra the approval your

product sounds that Just this for you the here? quarter. you, the but from it important does that's And growth your sustainability that could potentially like on accelerate an comments small of TAVR dataset. second, It based saw

the lastly the Thanks market and for Geoff, do think taking corner the just you business the we've your for turned Stim question. And Pain market? on

Michael Coyle

Thanks Larry.

X Synchrony had were median pacemakers we a see AV very with what AV, which system. levels Micra the to Marvel essentially close pleased data AHA. with would were you pretty standard of We is at the On XX% that shown

obviously all at from leads very pocket the no complication will AV benefits get in that of trade-off So little the no terms coming on we reduction Synchrony. are

So think seen. We the be wanted fully very believe helpful. consistent the to dataset with has is what going that's FDA to and we see

now we've submitted. So

the we so confidence have the of in the degree in product a high quarter. this available marketplace of in And having U.S. fourth

the market growth of that in maintain the overall billion market. with calendar And market of the in we terms dataset. in I we were into expectation an we the say, saw as for the acceleration we low-risk XXXX. TAVR of to that Obviously, be the very TAVR still $X pleased of range sustainability growth headed would

that expected comfortable have very last over in years. several we're to we of So the tracking terms everything is happen how it

about for that growth time. next the And period of so engine we for us good feel

Geoffrey Martha

Okay.

the on Larry, will Stim it pieces. – I into it’s Pain Geoff business. split the two On

the then performance. our and market, Here there's

reported to from you obviously markets the it larger it's short-term in that see have be it's call as come I flattish. On going our and think can the I'll down, the market, competitors

growth we next high Over market SCS it a been, getting has back this we're the or I'd do here the for say to two. mid-single anticipating in space. flattish single-digit But and to medium see longer-term quarter the

And next-generation terms our and space do in it the about things in can done segment. Intellis. position very payers, we're but innovation-driven is better I be SCS with an -- to And excited of there's short-term that think

in be well, January. over about we'll last we're have As we you know year the first-generation rolling did already next-generation the and which the out at very talking plus when NANS

We're seen sales as trialing of as have evaluations our over our implants the well. seeing excited, well have quarters, and and strong the So sales. Intellis we quarter grown we're as last last Intellis couple

So see a bit. the it getting back right here high way, to in trending picking see We I don't single-digits do but up. it is for it the

Larry Biegelsen

the Thanks questions. for taking

Ryan Weispfenning

Larry. Thanks

Next question, please.

Operator

from comes Evercore with of Your Kumar Vijay next ISI. the question line

Vijay Kumar

guys, seems any parse FDA program other competitors upgrade seeing perspective? share is because MITG from you on share the much thanks would organic Maybe my in how Sequentially question. flattish. revenue the more your the out And of seem loss of then that taking for here. one a moderate you upgrade in on side versus assume why any -- that Hey curious, I'm impact? you seeing XQ the seems you’re to deferring maybe delays the Are new, the assuming issues diabetes having are to be versus are guidance which flat-to-downs be diabetes, a importantly one recognition okay loss to segment. program approvals regulatory be you flat-to-down, comp on

Karen Parkhill

Thanks for the questions Vijay.

half. from a very in strong that see share to back quarter first see a with we had and did we're XQ the the MITG still competitor second have we'll pleased if We a strength going So and some not strong in We recall MITG continues. gains quarter quarter in that on extrapolate and in onto we're stapler very MITG, strength.

is the we quarter, put is of third and XXXG's us an impact In terms in in upgrade the base of terms installed particularly increasing, we program in for share, our as as market diabetes, Europe.

And increase with we're base let and an product installed that. then we're comment. I'll launches, of So pleased terms Omar seeing in

Omar Ishrak

we product into on I earlier, And the Europe next-generation like XXXG. we've now, for We've submitted I with look in approval I our launches, FDA. the completed and we said, launch The we're enrolment initial to delta trial most hardware have the No results important as Meeting track. in mentioned expect at the is the ATTD product already see think right February. pivotal

the first And FDA. like [ph] be anything signal we or up to to no timing the expect will that. delayed approval exact Pete unnecessarily us that. things delta Look and There's will that is approval follow

far have normal. their progressing through as things we we are as and as this process. see normal So can go They questions

the there. So I ordinary out of anything

Vijay Kumar

just That's SG&A. quick one helpful, on Omar. one And

management. trends like comments are the Some sustainable. OpEx It on made you these looks of

just on forward? So OpEx curious trends going

Karen Parkhill

Yes thanks Vijay.

XX this to points improvement expect deliver and changed. basis that hasn't We have margin said that we of year fiscal

a been and we've change. margin in pressure that FX, but improvement drive You've gross mainly shouldn't and this deliver committed. year throughout SG&A some by we've seen to and We've margin us greater continue that had driven offsetting expansion that the

Vijay Kumar

guys. Thanks

Ryan Weispfenning

Thanks, Vijay.

Regina. please question Next

Operator

comes Your Matt line with of next the from question UBS. Taylor

Matthew Taylor

little think what you'd taking of talked of as priorities characteristics I was some bit a for kind that if those you aggressive you M&A. right being little for kind tuck-ins, Question questions. tuck-in guess, bit are do? really would the you in the wondering that talked and a like on could you a thank we of should I look have that for and you more pivot areas about the growth about that and really and view if expand Geoff, for deals to you on morning Good

Geoffrey Martha

want pivot. focus to a growth know on driven pipeline the of so, on more so and up or if the pipeline no execution. building here year towards the for it’s more all, focused company don't innovation [Indiscernible] First I and whole I the call got of last

isn't the capital to more through that that's [Indiscernible] new company. for is our on is segments, done the that increase it executing on before the that investments first I've tuck-in the growth pipeline built. closely including goal a that foremost level, M&A that are that's and priority group and we've that top Sean done and strategy, with allocation highest the of the to then, necessarily is to balance through been working group, sheet granular group a leaders And our group at level, our to So at using moves R&D Brett and

at to the when to comment it'd to our groups going M&A, that going the whether within so And groups be it's even grow looking that not segments, adjacencies be or going I'm we're tuck-in WAMGR. to areas are those on specific but

that’s about it. that's, so And

Matthew Taylor

you ischemic on this that a quarter. the had stroke follow-up just market And seem to results have strong really

One slowdown are about gaining dynamics you of you that shares, in talked market. a about talk your Are any you or competitors can there? the slowdown seeing

Geoffrey Martha

pretty say has growing I'd But little the the slightly and the it’s grown less having a comes still than broad those with having our the that's in space. breadth a few recent across strong. performance coming. down little strategy over areas, know matters all on retriever, top better bit, driving Stacy recently that's new market of last side, aspiration Brett on of portfolio stent it's you that hemorrhagic competition. a our of with catheters, bit, products And we [ph] that strategy It Maybe and both than it quarters. launched good new ischemic to and the been And top system, you to off, our the of maybe is the performance the combine paying the and side our that is the what's and put space, two ischemic place on results. the really portfolio in the Well

forward. about strong a just right this the And their I I robust them a go very the U.S. ministers U.S. it get little as outside in very outside health now. less so the It's how mean past. for stroke, everywhere market the going yes, the bit see in build the help in can and market world every, have you has out asking U.S. us than asked system. we every, you segment grew still about We a

Matthew Taylor

for thanks thoughts. Okay, the great

Ryan Weispfenning

Thanks, Matt.

Next question please.

Operator

with comes line from the Josh question next Your Jennings Cowen. of

Josh Jennings

ask Thanks morning. good a for Omar, questions question letting for you. me the Hi, just

took us how you a economic the trajectory the difficulty] been slower creation -- your value-based has give system? trajectory the healthcare and if when evolution think little the creating bit seated of than you system the years of value the the to delivery evolution [technical Can you in on can will, expected. healthcare delivery of you term I and view

then And trial presented at asymptomatic the just recovery the date for AHA just weekend. question over was TAVR Mike, of

recovery Thanks less little on for and of the you read the your competitors Can an asymptomatic been taking vocal with You've platform? plans on then with for a asymptomatic your bit Evolut the give any one the us trial data through Evolut than opportunity. questions. trial

Omar Ishrak

is that when purchasing our with was me doing first go Okay, call healthcare on we started create economic other while area value our needed providers true the but that that of to products at, we're the outside understood translated that lot the focused that first I what value. In clinical what how so themselves devices. value-based how to was words, we were a and quickly an value of we value created that let into for understand looked knew we we economic the economic system. who stuff. And on It's really,

be led those of in a And unknowns the that realize be in very and focused so, put on lot had the the technology of a impact being that, models to and understand of to system. -- we end, value try lots There's this direct that areas creation we we directs on stakeholders biggest been that. to And example continues by good. they they've continue we've And and in successful, most place and process there's successful through here. in where this this the

it of And point these stakeholder possible. look the got complete in that That's, on on like and of not its going this There's I've the at healthcare that's just a take of that alignment. In future, that own. move probably clear Medtronic broader to that some But it's have no for doubt needs models, paying leadership alignment said, one based evolution some terms value. not time. the models something needs I do lot can direction. in to to that's requires

because where direct and and that prepared have direct take be have, we risk-based can In proves the to we've that clinical relationship to those and technology control of we’ll those the successful. have value meantime, evidence understanding continue between models we go risks, into our been

Michael Coyle

a view for was recovery this with earlier we And it Obviously stenosis outcome then Saber your management. obviously case as about [ph] trial. Josh conservative to that question mortality in benefit positive showing news aortic there in versus good in the intervention, response intervention

good that's for space in the So overall we intervention. terms think of

ICDs example driven We for based have pool asymptomatic the over really just little a the prevalence the of of had into group -- years by a with cooler lot where idea opposed using on market incidence we've pool. the experiences was on as been to investment

to in more a patients the is so when come little a And availability bit they're the asymptomatic of of question.

overall driver growth. relatively smaller as this done we've market we work, when viewed TAVR of So it a

we fact, In market growth. in our don't overall for the include it estimates

after to are trial our of this go call And mitral, large into These this good repair. only of of work dollars the we'll as doing process. we're as use well. to here head like going mitral news. planning to the would be as that we're for normal at replacement in sort that continue best asymptomatic, period the plan again, spaces requirements we part look So clinical Is operating make

Ryan Weispfenning

Thanks Josh.

question Next please.

Operator

line of next comes the Credit Suisse. Matt from question with Miksic Your

Matthew Miksic

the taking thanks Hi, questions. for

based on one TYRX Just and your just one on Mike Mitral. follow-up comment last on

in if So the could talked give guidelines was you for there or had an potential any reimbursement little things the us you of year wondering about or update, uptake I TYRX related plans mentioned to manufacturing. enhanced you earlier Rapid? that a that an

Michael Coyle

Creek were where TYRX here have Minnesota move in experience of we that facility we from drug part combinations. the quarter that past the manufacturing we facility this manufacturing of into the of device in in in extensive so acquisition as the Yes, New acquired Jersey side completing Rice

growth where of we ramping we that, and in were we ramp began out the to in had rapid QX We to significantly see the relative yields obviously wanted being them. quarter's not to it As mid-XXs. last results

processes And move. were so with associated that we re-engineering

a business, now offline, of have verification that That sure capacity our warning very you original at and we work. took know robust completed this we some facility has that month. last under place, which careful taking making letter, the being was very As so we're end manufacturing validation activities did been while of about

our I three. these where terms implemented production and processes here think we're of nicely for is normalized expectation. in production full a point back have ramping new we're the to That's to certainly We quarter

now growth. driving So us. we're And that's behind

we in to societies us to we guidelines, of second to of we'll of the helped Rapid the evidence robust terms we But about saw has availability to and continue continue decisions able expect will work came valuable with in from really as have of more terms technology half the is guidelines. to that the be there a drive In here as being professional QX. rollout. beyond. clearly, say And that around us in adoption And I that

Matthew Miksic

your you're and spots Heart replacement then picking great. and sort That's you Structural in mitral investment And Mike, of mentioned and repair.

Just any if fronts or those of either on update you would? color

Michael Coyle

have mitral obviously of we valve locked we our to a terms Well in And we leadership design, the system continue in approval think in fact, that in we market. the replacement position have have down now and feasibility transfemoral space. for IDE

we're prosecuting to so clinical trials. certainly those be And going

on us that investing others we internally in repair going interesting in very do to publicly. investments discuss to where those But that complementary there some We're in important are have We think yet the space. are prepared not space. space would opportunities for really that be

that in space is the indications been of enrollment example we in obviously bicuspid that labeling completed, or indications for continue and pursuing labeling restrictions removal has area. for will market be then labeling TAVR to we rollout And the

And regard around So probably other plan. things a have about the doing part said, that more time year's of looking in for -- sort we're work as operating preparation, in to I Analyst our of number the in Meeting we'll next to say of with preparation as plan at June. the we're of

Matthew Miksic

Great. Thank you.

Ryan Weispfenning

next question please Regina. Thank you Matt,

Operator

the from comes question Matthew O'Brien next of line Your with Jaffray Piper

Matthew O'Brien

for the Good morning. questions. taking Thanks

here two Just together.

introduction as InterStim are me products aggressive seems on the is expected, a Sounds that bit but like little lot the II. one of to a schedule for

hear that you product love just So confident the are in would coming timing so why to out. of

TAVR side of Mike on And things. the then secondly,

impact level just less was more that than inline kind be helpful? you Thank You you. there of of expected, than would any of color impact expected little bit competitively, a you mentioned kind

Michael Coyle

mean Matt know sure, we not I'm one, both? or Microstream so II I have Yes, Microstream. the II and InterStim – you on first InterStim you did or

Matthew O'Brien

Yes, any color. Thanks.

Michael Coyle

Right.

that's our II will this XCC proven on that then Microstream fully this It is with Again, -- our to XXXX platform. is chemistry on labeling our InterStim overdrive which Microstream the believe we've body submitted platform. MR is -- rechargeable track mid-calendar And be rechargeable approval. battery full device, first as there. will our the FDA be So we the a three a and we also for that's we our announced,

our So product. device come have our will II going the which great That's Microstream. then to this labeling time. will next-generation cell with MR is device. the of same primary mid-calendar be is have a which is our XXXX. that recharge-free The will InterStim out And around improved, That that

So we're feeling.

and recharge-free that submissions full feeling FDA recharge really review. based and our will about timing normal portfolio of the of Here on have good a and the we both

Geoffrey Martha

product terms into competitor market. then Obviously TAVR it your that entry And the in question the third about March the competitive was came space. to of

plan that presence third little they somewhere so And line X% we'd and our maybe entrant. had the put than now a marketplace, good product, is now certainly we for together have estimate operating but we job when expect in think the quarter face we're into about and of a trialing we market in that There's expected X% And their share competitor. positions their our securing of the at going would in done on to and share. the the continue, in lower we between we've

Ryan Weispfenning

next question the take please. We’ll Matt. Thanks

Operator

comes Danielle of with question Antalffy the next Leerink. from SVB Your line

Danielle Antalffy

Hi question. much guys. taking so good morning, for the Thanks

XXX acceleration driving growth over U.S. you what's wondering I Thanks few maybe basis sustainable comp on much. the how to quarters on about CVG? you and that think point if piece talk I sort coming the so on of question was looks strong. a next have could that, look follow-up out we as is of a like the and basis. It one quick almost points business. Just pretty was adjusted that We're of you

Michael Coyle

were Look me the let U.S. we take Okay with line growth. in overall, what it’s expecting.

U.S. growth As many by in before, innovation. is times we've driven particularly the mentioned

new pipeline the got And consistent. procedures they the we InterStim the to all we consistent, of products dynamic the have, about. procedures Insulin all are that future whenever remains the So of expect growth. of we lots when growth we the stuff that the pump rate as don't get we remains we've entries looking product And to that growth all to talked up, continue. and and product with track comes for reasons. that and right other new Micro a pretty Micra increases way all pretty and that Then drives in, exciting baseline dynamic that on expect have pacemaker from AV number we we've the that the clear and The expect that and that into to change XXXG the

launched up those will that. in gains of the All were U.S. a market we'll as of share get drive the result things and

So the that's the way I really U.S. look at market, it’s innovation-driven.

Danielle Antalffy

of upside start what's could it. driving DCB maybe to some point the Okay on little but CVG, really stabilize, I the I comps to back in the the modest in could should back curious the got of And to then year. if bit CVG? half that guess hoping what's like in it you so anniversary tough year just feels start of their driving otherwise half much. Thanks guide was talk higher LVADS the Mike you about a

Michael Coyle

LVADS that talked you QX market behind that the headwinds now of at one anniversaried we've sort in that about especially change clearly is us ago. The the Danielle. that step year end happened of Sure. a in

to will significant in been as really terms helps XX% we one-year basically not those in see reintervention saw for showed confidence comps. now in that just you overall the DCB is have are with as AV the more which begun fistula availability see we available. data this the rates with address the that that that patient was AV mentioned not question, reintervention data the of in DCB, population, SFA that signal fistulas, And the than the markets, very datasets CIRSE signal basically which sequential year in in fistula did think but that reductions the to also meeting, about going prior help we us shown position. at been we help NAV And mortality So obviously datasets, which help we've expands raised. reductions of obviously and more That growth expecting safety has

So those becoming mitigated basically helpful. headwinds is

and as the devices with is to begun biggest especially in a traditional even has we segment though pacemakers well. mitigate still replacement single in are see that CRT-D pacemakers replacement CRT-D the the and market. We component these pressure ICD headwinds our cycle component associated in also obviously big And of have

the market the to allows we of benefits significant are our impact which new of products turn we are into So as into or whereas very beginning the head to years we've had a into last couple the on that see coming growth growth us overall headwinds, that market trends, XXXX FY see neutral then of

Obviously Evolut we talked the about indication. PRO+ low-risk and the

introducing our are feature family launch Galaxy new we'll also indication officially expecting Admiral We for going platform, which the be which chrome numerous ICD the on about to as In.Pact product the benefits eminently add the cobalt will that we product. and set are talk lines

fourth about. We was AV market in talking end fourth-quarter that also most with the important help the products Karen which the of that us and here have that link the Micro but those year, probably moving as we expect the the get is to we X quarter into of have to should acceleration

Danielle Antalffy

you much. so Thank

Ryan Weispfenning

more one Thanks, We’ll Danielle. Regina. take please question

Operator

from the will with come Your Jefferies. line final Raj question of Denhoy

Raj Denhoy

couple Thank you. Maybe a questions. Good of morning.

tariffs. if out, because I each tariffs in curious get there? reduced but for currency, gross Karen, that or was of could of because parse any you what you there view to think to any described also margins decline if in maybe what decline you is China gross relief in those is, any you of improvement First the the know know margins, and the And I'm is contributing

Karen Parkhill

in to we offset where margin relatively in going that And the Raj. smaller to was then And expansion. question impact. about a gross We today be it to see And as gross from improvement the anticipate margin drive XX expect the points we the impact basis with going for stable margin. second gross quarter the thanks significant Yes on we SG&A continuing China most further forward. FX. of was did forward, margin terms It tariffs is

Raj Denhoy

I some year. I recovery, developments delivery Okay, your on into on know going guess, in from you they're as one well. growth just landscape the lastly returning But move And appreciate and And there's thinks you systems competitors automated that's helpful. as about the competitive next maybe be to to confidence insulin diabetes, diabetes. when

need to the that so can go question get and you in really confident where side order And improvements XXXG see whether need still particularly you is are to of how have that you and the improving to CGM you results? on business

Michael Coyle

anyone algorithm or Yes, of anything will has I in think that it from what we see can differentiates over the way and us actually the a us long XXXG terms projecting. take

hybrid that us separate so really advanced system And the closed-loop is going dimension. to from

think in the of I with fingersticks, And to take progress, sensor we continue that's think going but be we I number where work going have a area, reducing to longer, to to do. that's still the little make the expect there an we benefits many the are benefit algorithm, but in XXXG we that other for not area year, from. of of next into in terms its terms that pressure even going capabilities only will but of

resolved. a to The to it. is make but going area So at longer little We'll take that's that's incremental the longer. a way to little progress, look sensor take I'd completely going

Raj Denhoy

you. Thank Great.

Ryan Weispfenning

any Omar, final Raj. Thanks, words.

Omar Ishrak

questions Well support listen. entire you on in you progress continued currently the February anticipate on on Medtronic. our we to and interest like forward holding Thank behalf I'd our thank team, your all to We XXth. and earnings on again look for your Tuesday call, you management for updating QX of which

you very all thank So much.

Operator

Ladies and Thank you And does you disconnect. for may this gentlemen, joining. now conclude all call. today's

Medtronic (MDT) 19 Nov 192020 Q2 Earnings call transcript