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.