Robbie Marcus

Robbie Marcus asked about Medtronic's strategy for reinvesting in SG&A and R&D, including where these dollars are allocated, the expected cadence of increased investment, and the ability to grow operating margin despite higher spending. He also followed up on the company's focus on tuck-in M&A, the current environment, and specific areas of interest.

Answer

CFO Thierry Piéton stated that investments are directed towards maximizing growth drivers (CAST, Ardian, AltaViva, Hugo) and maintaining technological leadership in key franchises (CRM, CST). He expects SG&A leverage in the second half of the year and a leveraged P&L on operating profit in fiscal 2027, driven by sustainable gross margin improvements and overhead leverage. Chairman and CEO Jeff Martha added that improved pricing and cost-down opportunities provide oxygen for these investments. Regarding M&A, Martha emphasized a focus on tuck-ins in higher-growth segments like cardiology and neuroscience, ideally for early-stage or near-market products, with Medtronic Ventures also actively feeding the pipeline.

Robbie Marcus questioned Medtronic's strategy for reinvesting in SG&A and materially increasing R&D, asking where these funds are being allocated, the expected cadence of investment, and how the company plans to grow operating margin despite higher spending. He followed up by asking about the current environment for tuck-in M&A, identifying interesting segments, and how board committees are facilitating speed.

Answer

CFO Thierry Piéton detailed investment allocation to growth drivers (CAST, Ardian, AltaViva, Hugo) and maintaining technology leadership in key franchises (CRM, CST). He projected SG&A leverage in H2 and operating profit leverage in FY27, driven by gross margin improvements and overhead leverage. CEO Jeff Martha added that improved pricing and cost-down opportunities provide "oxygen" for these investments. For M&A, Martha stated a focus on tuck-ins in higher-growth segments like cardiology and neuroscience, leveraging board committees for speed. Piéton also mentioned an active ventures arm for early-stage investments.

Robbie Marcus questioned the over 100 basis point headwind from Alaris in fiscal year 2026, asking about its benefit in fiscal year 2025 and the normalized run rate, and how BD plans to achieve operating margin expansion despite low organic growth.

Answer

EVP and CFO Chris DelOrefice explained that Alaris's relaunch success meant Q1 2026 would be the hardest comp, with a 100 basis point headwind for the full year. Chairman, CEO, and President Tom Polen added that BD would pivot to share gains and leverage the sales team for new launches like Pyxis Pro. Chris DelOrefice further detailed that BD Excellence drives gross margin improvement, offsetting tariffs, and enables reinvestment in the business, leading to underlying operating margin expansion.

Robbie Marcus asked about the expected 100 basis point headwind from Alaris in fiscal 2026, its benefit in fiscal 2025, and the normalized run rate. He also questioned how BD plans to achieve operating margin expansion with low organic growth.

Answer

Chris DelOrefice, Executive Vice President and Chief Financial Officer, and Tom Polen, Chairman, CEO, and President of BD, explained that Alaris's successful relaunch contributed significantly to FY25, with Q1 FY26 facing the hardest comp. They confirmed the 100 basis point headwind for FY26 and noted that beyond FY26, it would be a 200 basis point headwind before normalizing. They attributed operating margin expansion to the power of BD Excellence, driving gross margin improvement, G&A leverage, and the announced cost-out program, despite absorbing significant tariff impacts, allowing for reinvestment in the business.

Robbie Marcus asked about the factors driving Omnipod 5's market success, inquiring whether its form factor, algorithm, or ease of onboarding are key differentiators, and what gives management confidence in sustained strong results amidst increasing market competition.

Answer

Ashley McEvoy (President and CEO) highlighted broad-based, balanced growth, strong science (SECURE-T2D, RADIANT trials, real-world evidence), a beloved and differentiated form factor, unique access and affordability, a resilient supply chain built with over $1 billion in investment, and balance sheet flexibility for innovation.

Robbie Marcus asked about the key drivers behind Omnipod 5's continued success and market leadership, despite increasing competition and market noise, inquiring if it's due to form factor, algorithm, or easier onboarding.

Answer

Ashley McEvoy, President and CEO, explained that Omnipod 5's success is due to broad-based, balanced growth, strong science, a beloved and differentiated form factor, superior access and affordability, a resilient supply chain, and the flexibility of Insulet's balance sheet to invest in innovation.

Robbie Marcus inquired about the primary drivers of new patient growth, asking if it's slowing in Type 1 and Type 2 intensive, and increasingly coming from basal and non-intensive segments. He also asked if market strategies need to adapt for these new patient groups.

Answer

Jereme Sylvain, CFO, stated that strong performance is observed across all Type 2 markets, including intensive, basal, and non-insulin, while Type 1 growth naturally slows due to higher penetration. He confirmed that Dexcom's teams are continuously adapting market strategies, including call points and marketing channels, to effectively drive uptake in these increasingly important patient groups, highlighting the significant opportunity with existing coverage.

Robbie Marcus questioned where Dexcom is seeing the most new patient growth, specifically if it's shifting from Type 1 and Type 2 intensive to basal and non-intensive, and if market strategies need to adapt for these new patient groups.

Answer

Jereme Sylvain, CFO, stated that growth remains strong across all Type 2 markets (intensive, basal, non-insulin), with Type 1 naturally seeing slower growth due to higher penetration. He confirmed that Dexcom's teams continuously evaluate go-to-market strategies, including sales force focus and marketing channels, to drive uptake in these increasingly important patient groups, highlighting significant opportunities.

Robbie Marcus of JPMorgan Chase & Co. inquired about the utilization, reorder rates, and patient trends for Type 2 non-intensive and basal patients, both for insured and cash-pay users.

Answer

CEO Kevin Sayer and CFO Jereme Sylvain responded, noting very good retention and utilization in these populations, especially when reimbursed. Sayer highlighted that Stelo users are reordering regularly. Sylvain added that while utilization is lower for non-covered patients, Stelo is seeing strong uptake in that group.

Robbie Marcus asked about global procedure volumes, the health of the equipment market, and the specific puts and takes on capital equipment globally, noting strong ortho and CapEx but some medical softness.

Answer

Kevin Lobo, Chair and Chief Executive Officer, confirmed healthy procedure volumes and strong capital markets, citing robust MEKO purchases. He noted variability in Medical's quarterly performance but expected a strong full year despite ongoing supply chain disruptions in emergency care. Preston Wells, CFO, explained the expected Q4 margin step-up, driven by higher sales and continued margin improvement, partially offset by increased tariff impacts.

Robbie Marcus asked about global procedure volumes, the health of the equipment market, and capital equipment trends, specifically noting some softness in the medical segment.

Answer

Kevin Lobo (Chair and CEO, Stryker) confirmed healthy procedure volumes and strong capital markets, highlighting significant Mako purchases. He explained that variability in the medical segment is normal, with a strong Q4 expected despite ongoing supply chain disruptions in emergency care. Preston Wells (CFO, Stryker) detailed the Q3 to Q4 margin step-up, attributing it to higher sales and continued margin improvement efforts, partially offset by second-half weighted tariff impacts.

Robbie Marcus from JPMorgan Chase & Co. inquired about CEO Andrew Heider's initial vision for Baxter, the perceived health and trajectory of the business, and any anticipated future changes to 'right the ship.' Marcus also asked for insights into the lower Q4 outlook and the potential for top and bottom-line growth in 2026, considering the Q3 EPS was boosted by a favorable tax rate.

Answer

President and CEO Andrew Heider outlined three key focus areas: stabilizing the business through improved execution, strengthening the balance sheet for future investment and shareholder value, and driving a culture of continuous improvement via the new Growth and Performance System (GPS). Heider confirmed an Investor Day in 2026 for a deeper dive into long-term strategy and financial outlook, and expressed anticipation for growth in 2026, aiming to outpace markets.

Robbie Marcus asked Andrew Heider about his vision for Baxter, initial learnings, the health and trajectory of the business, and expected future changes. He also inquired about the implications of the lower Q4 outlook for 2026, specifically regarding potential positive top and bottom-line growth.

Answer

President and CEO Andrew Heider outlined his focus on stabilizing the business through improved execution, strengthening the balance sheet for future investment, and driving a culture of continuous improvement with the new GPS system. He deferred detailed strategic insights to a 2026 Investor Day but anticipated growth, aiming to outpace markets.

Robbie Marcus from JPMorgan Chase & Co. inquired about the Boston Scientific WATCHMAN device's role as a primary growth driver, seeking insights into expected growth trajectory and financial contribution, particularly in light of positive CHAMPION trial data and increasing concomitant procedure adoption.

Answer

Chairman and CEO Mike Mahoney highlighted WATCHMAN as a "gem" for Boston Scientific, emphasizing its market-creating clinical evidence and strong future portfolio. He noted that concomitant procedures continue to exceed expectations, with 25% of WATCHMAN procedures anticipated to be concomitant by year-end 2025, driven by the trusted FARAPULSE and WATCHMAN combination. Mahoney reiterated confidence in a 20% market CAGR over the long-range plan, supported by an underserved patient population, global expansion (including China's FLX Pro approval), and ongoing investment in portfolio enhancements and clinical evidence.

Robbie Marcus asked about Watchman's role as a key growth driver, the acceleration from concomitant procedures and Option data, and the expected growth and dollar contribution, especially with the upcoming Champion data and the market's low penetration.

Answer

Chairman and CEO Mike Mahoney highlighted Watchman as a 'gem' for Boston Scientific, driven by strong clinical evidence, a robust future portfolio, and the Champion trial readout in H1 2026. He noted concomitant procedures are exceeding expectations, projected to reach 25% of Watchman procedures by year-end 2025, and reiterated a comfortable 20% market CAGR over the long-range plan due to the underserved patient population and globalization efforts, including the Watchman Flex Pro approval in China. Chief Medical Officer Dr. Ken Stein added that the 20% growth projection is 'conservative' given the underpenetrated indicated population and clarified that the Closure AF trial is not a strong read-through for Champion, while Alone AF/OCEAN data supports Therapulse growth without materially impacting concomitant Watchman procedures.

Robbie Marcus inquired about the impressive 20% procedure volume growth, its sustainability, and the extent to which Da Vinci 5's introduction contributed to this uptick in both U.S. and international markets. He also asked about the strategy for refurbished Xi systems, their potential to open new channels and countries, and where client interest is highest for these units in 2026 and beyond.

Answer

Jamie Samath, CFO, detailed the U.S. Da Vinci procedure growth trends, noting strong performance in after-hours surgery, acute care, and specific benign general surgery procedures, while acknowledging anecdotal evidence of procedure acceleration in July/August. Dave Rosa, CEO, added that Da Vinci 5's design intent for ease of learning and use is being validated by customer adoption, supporting utilization. Samath further specified 67,000 Da Vinci 5 procedures in Q3. Regarding refurbished Xi systems, Dave Rosa, CEO, explained their role in expanding the portfolio for cost-sensitive customers and alternative sites of care, both domestically and internationally. Jamie Samath, CFO, mentioned 20 refurbished Xi systems sold to date and highlighted their flexibility for segmentation, including U.S. ambulatory surgery centers.

Robbie Marcus inquired about Abbott's diabetes business, specifically U.S. versus international growth dynamics, the impact of the ketone sensor, and potential CMS coverage for non-intensive type 2 diabetes. He also asked for an update on the Volt PFA catheter's early feedback in Europe and its expected ramp in the U.S. for electrophysiology.

Answer

Robert Ford, Chairman and CEO, clarified that U.S. diabetes growth was 19% in Q3, with year-to-date at 25%, attributing earlier higher growth to shelf restocking. He expects strong U.S. growth in 2026 driven by the dual analyte sensor and continued basal segment penetration (currently 20% U.S., <5% international). Ford sees potential for CMS coverage of type 2 non-insulin next year but it's not in the 2026 forecast. For EP, he noted accelerating growth, positive European feedback for Volt PFA (efficacy, safety, N-Site integration enabling conscious sedation), and Abbott's comprehensive portfolio (PFA and LAA) positioning it well for 2026.

Robbie Marcus inquired about the preliminary outlook for 2025, asking if the current Wall Street consensus for high single-digit revenue growth and 10% EPS growth is a reasonable starting point.

Answer

Robert Ford, Chairman and CEO, agreed that the consensus estimates for 2025 are a 'very reasonable starting point.' He highlighted that Abbott enters 2025 with strong momentum, attractive market positions, a productive pipeline, and the benefit of not having the 'COVID cloud' to obscure underlying base business growth, which should support continued margin expansion.

Representing Robbie Marcus, Lily from JPMorgan Chase & Co. asked about the drivers behind softer-than-expected capital sales and potential impacts from hospital budgets. She also questioned ConMed's orthopedic market share position given ongoing supply disruptions.

Answer

President & CEO Patrick Beyer explained that while general hospital capital demand is strong, ConMed's results were impacted by tough prior-year comparisons and internal supply chain challenges. He acknowledged a loss of orthopedic market share due to these constraints but highlighted that innovation like BioBrace keeps the company well-positioned for a recovery.

An analyst on behalf of Robbie Marcus questioned if 2025 would be the year for a return to accelerated top-line growth and asked for an update on the previously mentioned smoke evacuation quality issue.

Answer

CEO Curt Hartman deferred specific 2025 growth guidance to the January call but highlighted strong underlying Q3 performance in adjusted EPS, cash flow, and leverage reduction. EVP and CFO Todd Garner confirmed the smoke evacuation quality issue was a transitory Q2 event that is now resolved, with Q3 showing improvement but not a full return to normal trends.

Robbie Marcus sought to understand the lowered guidance, asking how much was based on results seen so far versus future expectations or conservatism. He also asked about the margin progression for the remainder of the year on the lower revenue guide.

Answer

President & CEO Albert White explained the guidance revision is a combination of actual market data (4% growth in calendar Q1), observed channel inventory pressure, and a degree of conservatism. CFO Brian Andrews added that the margin improvement story remains intact, expecting gross and operating margins to be up year-over-year in the second half due to efficiency gains and disciplined cost management.

On behalf of Robbie Marcus, an analyst asked why the consistent top-line sales upside throughout the year has not translated into raised adjusted EBITDA guidance.

Answer

CEO Brenton L. Saunders and CFO Osama Eldessouky both explained that the lack of EBITDA flow-through is a direct result of a strategic decision to make significant investments during what they termed an 'investment year.' These funds are being used to support the most robust launch cycle in the company's history, including products like Miebo, Xiidra, new IOLs, and Daily SiHy lenses, to ensure their long-term success.

Questioned the optimism for 2025 performance, asking why newer reps and the current portfolio would drive improvement, and inquired about the timeline and plan to achieve positive cash flow.

Answer

The company expects 2025 to improve due to territory expansion with newly promoted reps, continued ramping of the SI joint business, and the start of the IPG replacement cycle. Achieving positive cash flow is delayed by the lower revenue outlook, but they believe they are not far off and need more revenue growth.