Medtronic Plc Q2 FY2025 earnings call

• Innovation is driving growth across multiple areas like TAVR, PFA, leadless pacemakers, diabetes, spine, and neuromodulation.
• Hypertension: CMS finalized outpatient transitional pass-through payment for Symplicity, working on standardized coverage.
• Financials: Revenue grew 5%, adjusted EPS $1.26, 8% constant currency EPS growth, diversified revenue sources.
• Pipeline investments: Investing in diabetes manufacturing, hypertension Symplicity procedure, surgical robotics Hugo platform.

Diabetes: Delivered double-digit growth, 11% growth despite comparisons, CGM sales over 20% in US and international, Simplera Sync sensor gaining acceptance. Neuroscience: Mid-single-digit growth, Neuromodulation grew 12%, Pain Stim grew 10%, Brain Modulation grew 17%. Cardiovascular: Mid-single-digit growth, Structural Heart grew high single digits with TAVR, Cardiac Ablation Solutions had supply issues but expected to accelerate, Surgical Robotics investing in Hugo platform. Medical Surgical portfolio: Low single-digit growth, but grew 7% sequentially, expected to return to normalized growth next quarter.

• Raised full-year organic revenue growth to 4.75%-5%, adjusted EPS to $5.44-$5.50.
• Q3 expected mid-single-digit revenue growth, EPS $1.35-$1.37.
• FX had unfavorable impact, but margin improvement expected over time as efficiencies and pricing initiatives take effect.

• Supply chain issues affecting Cardiac Ablation Solutions (third-party component supplier interruption).
• Mix headwinds from new product launches not fully at scale (Affera, Simplera, Hugo).
• Uncertainty around healthcare policies and tariffs under potential administrations.

Q: Larry Biegelsen asked about hypertension reimbursement and coverage for Renal Denervation.

A: Sean Salmon responded on reimbursement progress and coverage efforts, mentioning TPT for Ardian and ongoing coverage discussions with CMS.

Q: Robbie Marcus inquired about margin implications of early-stage growth products like Affera and Hugo.

A: Geoff Martha and Gary Corona discussed mix headwinds, pricing opportunities, and margin improvement through cost reduction and pricing initiatives.

Q: Vijay Kumar asked about Cardiac Ablation Solutions supply issues and Q3 growth expectations.

A: Geoff Martha explained supply issue resolution and confidence in Q3 double-digit growth due to PulseSelect and Affera demand.

Q: Shagun Singh asked about MedTech landscape, tariffs, and China imports.

A: Geoff Martha stated MedTech market is healthy, early on tariffs under potential administrations, and China imports less than 1% of revenue.

Q: Chris Pasquale asked about Diabetes segment FDA submission and Type 2 opportunity.

A: Que Dallara discussed FDA submission progress and Type 2 opportunity within the diabetes ecosystem.

Q: Pito Chickering inquired about 2025 guidance and margin implications.

A: Gary Corona explained margin expectations, FX impact, and guidance alignment with growth initiatives.

Q: Anthony Petrone asked about Renal Denervation patient population and coverage.

A: Sean Salmon provided details on the addressable patient population and ongoing coverage efforts.

Q: Rich Newitter asked about Spine segment growth sustainability.

A: Brett Wall discussed Spine segment growth driven by scale, technology, and market consolidation.

Q: Danielle Antalffy asked about TAVR market state and future.

A: Sean Salmon spoke about TAVR market growth, SMART trial benefits, and future opportunities like asymptomatic patients.

Q: Joanne Wuensch asked about mitral and tricuspid valve programs.

A: Sean Salmon provided updates on Intrepid valve trials for mitral and tricuspid positions.

Q: Matt Miksic asked about Affera timing, diabetes patch pumps, and EPS growth mechanics.

A: Geoff Martha and Gary Corona addressed Affera scaling, diabetes patch dynamics, and FX impact on EPS.

Q: Patrick Wood asked about tuck-in M&A and portfolio repositioning.

A: Geoff Martha discussed tuck-in M&A focus on high-growth areas and active portfolio management for long-term value creation