EPS Guidance and Earnings Power
Q: How will you achieve your EPS guidance and restore earnings power?
A: Management is implementing programmatic structural changes made over the past years, such as aggressive global operations and supply chain transformation, improving pricing, and exiting non-core businesses like ventilation and dialysis. " They focus on delivering mid-single-digit top-line growth, investing in high-priority growth drivers, and driving operating leverage, particularly in SG&A, to deliver high single-digit EPS growth. " They expect high single-digit actual or reported EPS in the back half of FY'25 and aim to maintain this growth beyond FY'25. "

Operating Margin Expansion
Q: How should we think about your operating margin outlook for fiscal '25?
A: Management expects operating margins around 26% in FY'25 on a reported basis, up from prior levels. " This will be achieved through programmatic changes already made, driving operating leverage in SG&A via disciplined headcount management, focus on discretionary expenses, increased automation, and structural changes like eliminating the respiratory interventions operating unit. " " Gross margins are expected to be flat year-over-year on a constant currency basis, with cost reductions and pricing offsetting inflation. "

Revenue Growth Acceleration
Q: What are the key drivers of your accelerating revenue growth?
A: Multiple product launches and approvals across businesses are contributing to growth. " In Cardiovascular, products like Evolut FX in Structural Heart, PulseSelect in PFA, Micra AV2 and VR2 in leadless pacemakers, and EV-ICD are expected to drive growth. " In Neuroscience, Spine growth is expected to continue due to implants, AiBLE technology, and AI integration, outperforming competitors by growing 9% versus their 3%. " Diabetes growth is propelled by the 780G system. " Supply chain improvements, reduced backorders, and diminishing impact of VBP in China support confidence in sustained mid-single-digit revenue growth. "

Spine Business Growth and M&A Impact
Q: Is the strong growth in Spine sustainable, and how is recent M&A affecting you?
A: The growth is considered very durable, with Medtronic growing 3x their nearest competitor in the space. " " They are recruiting top sales reps and leveraging their technology system with AiBLE, which is changing spine surgery. " The industry shift towards capital equipment and enabling technology means providers are investing in Medtronic's ecosystem, reducing competition from smaller players. " " Contributions from competitive conversions due to recent M&A in the spine industry are already being seen and are expected to continue over the next several quarters. "

Emerging Markets and China Growth
Q: What are your expectations for growth in emerging markets, especially China?
A: Emerging markets, representing nearly 20% of revenue, grew double digits in FY'24. " Management expects sustainable growth as fundamentals return, with most VBP headwinds (about 80% resolved) behind them. " China, comprising almost 40% of emerging market revenue, is showing strong recovery with double-digit growth in recent quarters. " While some VBP impacts remain, they anticipate mid-single to double-digit growth in China moving forward. " Investments in local manufacturing and products, along with empowering emerging market leaders, contribute to this positive outlook. " "

Current Quarter Margin Pressures
Q: Why was operating margin softer this quarter due to SG&A pressures?
A: Top-line outperformance led to incremental incentive accruals for sales compensation in the quarter. " Additionally, management purposely invested in strategic growth drivers to commercialize new innovations heading into FY'25. " Despite these factors, they absorbed the incremental costs while still delivering on financial commitments and beating the bottom line. "

Affera Launch and AF Business Outlook
Q: What is the outlook for the AF business before the Affera U.S. launch?
A: The AF Solutions business is performing exceptionally well, with significant sequential growth in demand and interest spurred by new technologies and the Affera data. " Pulsed field ablation is advancing rapidly in the U.S., and Medtronic is scaling up manufacturing and capacity. " Recent clinical data for Affera showed excellent results, narrowly missing superior efficacy compared to the market leader. " Management is ensuring that capital acquisition will not hinder progress, offering solutions like placing capital and leasing catheter costs. "

Hugo Robot Launch Timing
Q: When can we expect the Hugo robotic system to launch in the U.S.?
A: Medtronic is nearing completion of the trial for the urology indication but did not specify a submission or launch date. " They have initiated indication work for gynecology and hernia, aiming to have a series of launches across multiple indications to capture larger market segments. " Good early execution in these studies positions them well as they move toward market entry. "

Ardian and Diabetes Pipeline Progress
Q: When will Ardian and new diabetes products impact results?
A: For Ardian (Symplicity), establishing reimbursement is the key catalyst, with efforts focused on securing outpatient reimbursement and national coverage determination. " Contribution is expected to begin this year, with European guideline changes and approvals in China and Canada serving as additional catalysts. " In diabetes, Medtronic filed the Simplera Sync integrated sensor with the 780G system in the U.S. and is awaiting FDA approval. " Positive results from limited launches in Europe suggest similar success is expected in the U.S. once approved. "

Product Launches in China
Q: Are there upcoming product launches in China we should be aware of?
A: Medtronic recently received approval for Ardian (Symplicity) in China and expects it to perform well once fully introduced to hospitals. " They are launching local versions of key technologies like the Mazor robotic system and StealthStation navigation for the CST business. " Additionally, they have started local manufacturing of cardiology products, including a locally produced pacemaker, enhancing competitiveness in the Chinese market. "