Medtronic(MDT) - 2026 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The second quarter revenue reached $9 billion, growing 6.6% reported and 5.5% organic, marking an acceleration from the previous quarter and exceeding the midpoint of guidance by 75 basis points [26][27] - Adjusted EPS was $1.36, an increase of 8% and 5 cents above the midpoint of guidance [30] Business Line Data and Key Metrics Changes - The cardiovascular portfolio grew 9%, the strongest growth in over a decade, driven by the PFA franchise, which now constitutes 75% of cardiac ablation revenue [17] - Cardiac rhythm management grew 5%, with notable growth in Micra leadless pacemakers (18%) and Aurora EV-ICDs (nearly 80%) [17] - The neuroscience portfolio returned to mid-single digits growth at 4%, with core spine growing 8% [19] - The diabetes business grew high single digits, particularly strong in international markets (11%) [23] Market Data and Key Metrics Changes - Revenue growth was balanced geographically, with double-digit growth in Japan and mid-single-digit growth in the US, Western Europe, and China [27] - The company is experiencing high demand for its Affera mapping systems, which doubled its installed base during the quarter [8] Company Strategy and Development Direction - The company is focused on accelerating revenue growth through enterprise growth drivers, including PFA for AFib, Simplicity for hypertension, and AltaViva for incontinence [5][10] - There is a commitment to tuck-in M&A and strategic portfolio management to capitalize on market opportunities [5][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in revenue growth acceleration for the back half of the fiscal year, raising full-year revenue guidance to approximately 5.5% [31] - The company is optimistic about the market opportunities presented by new products and is actively investing in R&D and sales to support growth [30][56] Other Important Information - The planned separation of the diabetes business is on track, with a two-step IPO expected to be completed by the end of calendar year 2026 [25] - The company is experiencing a strong innovation cycle in its diabetes business, with new sensors generating significant pre-orders [24] Q&A Session Summary Question: Regarding Simplicity and commercial discussions - Management noted that commercial payers are coming online faster than anticipated, with the Medicare NCD being broader than expected, allowing for physician discretion in patient treatment [39][40] Question: About the second-half guidance and base business confidence - Management highlighted strong order intake and significant investments made to capture growth opportunities, expecting revenue and margin improvements in the second half [41][42] Question: On supply for Affera and potential cannibalization by TBL - Supply for Affera is adequate, and management is optimistic about its market share growth. TBL is expected to be a significant product, potentially taking share from Botox procedures [48][50]