Medtronic plc (MDT) 5th Annual Evercore ISI HealthCONx Conference (Transcript)

Medtronic plc (NYSE:MDT) 5th Annual Evercore ISI HealthCONx Conference Call Summary Company Overview - Company: Medtronic plc - Date: November 29, 2022 - Participants: Geoff Martha (CEO), Karen Parkhill (CFO), Vijay Kumar (Evercore ISI) Key Points Financial Performance - Medtronic reported a fiscal Q2 topline miss but achieved EPS at the high end of the range, indicating effective cost management despite revenue challenges [4][5] - The company revised its guidance downward for the second half of FY2023 due to slower recovery in procedures and supply chain issues [4][12] Business Transformation and Growth Drivers - Medtronic is undergoing significant changes to its operating model and culture to enhance competitiveness and drive growth [5][9] - Key growth areas identified include: - Cardiac Rhythm Management: Consistently outperforming [8] - Structural Heart: Strong performance noted [8] - Neurovascular, ENT, and Cardiac Surgery: All showing positive results [8] - Diabetes and Surgical Robotics: Positioned for strong growth in the coming years [9][10] Supply Chain and Market Recovery - Supply chain challenges were more prolonged than anticipated, particularly affecting the Surgical Innovations business [12][13] - The company expects normalization of supply chain issues throughout FY2023 [16] - Recovery in elective procedures is uneven across markets, with notable strength in orthopedics and spine [18][19] China VBP Impact - Approximately 15% to 20% of the guidance reduction is attributed to changes in provincial tenders in China, which were expected to occur later [22][24] - The neurovascular business in China is significant, with expectations for future growth despite recent declines [26] Product Pipeline and Innovations - New product launches, including the Evolut FX valve and advancements in robotic surgery, are anticipated to drive growth in the second half of FY2023 [28][29] - The Hugo robotic system is gaining traction, with positive feedback from surgeons and competitive performance noted at recent conferences [34][35] Diabetes Segment - The 780G system is expected to replicate international success in the U.S. market, driven by strong patient feedback and clinical results [53][54] - Medtronic is investing in a robust pipeline for diabetes management, including the Simplera sensor, which is a zero-calibration device [55][57] Financial Outlook and Capital Allocation - FX headwinds are projected to impact FY2024 EPS by approximately $0.36, equating to about 7% growth off current guidance [59] - Medtronic is balancing shareholder returns through dividends and share repurchases while investing in long-term growth drivers [70][72] Strategic Focus - Recent divestitures in non-core areas are part of a strategy to streamline operations and focus on high-growth segments [73][74] - The company aims for a higher level of growth through strategic portfolio management and capital allocation [74] Additional Insights - Medtronic is committed to maintaining a strong balance sheet and dividend during challenging market conditions [5] - The company is focused on enhancing its competitive position through innovation and operational improvements [9][10]