Medtronic (MDT) Q3 2026 Earnings Call Transcript

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DATE

Feb. 17, 2026 at 8 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Geoffrey Martha
• Chief Financial Officer — Thierry Pieton
• Head of Investor Relations — Ryan Weispfenning

TAKEAWAYS

• Total Revenue -- Medtronic (NYSE:MDT) reported $9 billion, up 8.7% reported and 6% organic, marking a 50 basis point acceleration from the previous quarter and exceeding guidance by 50 basis points.
• Cardiovascular Portfolio Revenue -- Increased 11% with US growth of 13%, delivering the highest cardiovascular segment growth in ten years excluding COVID comparables.
• Cardiac Ablation Solutions (CAS) -- Rose 80% year over year, with pulse field ablation (PFA) contributing 80% of segment revenue.
• Peripheral Vascular Health -- Achieved high-single-digit revenue growth, underpinned by broad strength in endovenous products.
• Structural Heart Segment -- Posted low single-digit growth; stronger international results and share gains in Europe were partially offset by US competition and the anniversary of the Evolut FX Plus launch.
• Neuroscience Portfolio -- Gained 3% in revenue, below internal expectations, but cranial and spinal technologies delivered mid-single-digit growth and 8% in Core Spine.
• MiniMed (Diabetes) -- Delivered 15% reported and over 8% organic growth, led by double-digit international strength and accelerating US performance driven by new product launches.
• MedSurg Portfolio -- Gained 3% in revenue; Endoscopy grew 10%, and acute care and monitoring expanded 7% based on blood oxygen management and airway access demand.
• Surgical Business -- Increased 1%, with areas such as Energy, Wound Management, and Hernia offset by expected Stapling softness; first US installations of the Hugo robot reported in Q3 following FDA clearance for urologic procedures.
• Gross Margin -- Adjusted gross margin reached 64.9%, surpassing expectations; mix effects negatively impacted by CAS and early Diabetes ramp-up, while tariff headwind totaled $93 million (110 basis points).
• Operating Profit and Margin -- Adjusted operating profit was $2.2 billion with an adjusted operating margin of 24.1%, exceeding guidance.
• Adjusted EPS -- Reached $1.36, coming in $0.03 above the midpoint of guidance, primarily due to CRM and ACM revenue and offset by higher taxes.
• 2026 Guidance -- Organic revenue growth reiterated at approximately 5.5%; Q4 revenue expected to mirror Q3 at ~6%, and adjusted EPS guidance held at $5.62 to $5.66.
• Gross Margin Outlook -- Fiscal 2026 adjusted gross margin anticipated to increase slightly excluding tariffs, offsetting mix-related headwinds from CAS and Diabetes, but to decrease ~30 basis points including tariffs.
• Planned MiniMed Separation -- Two-step IPO and split process on track for completion by year-end 2026.
• Major Pipeline/Launch Updates -- Stealth Axis Surgical System and Hugo robot secured FDA clearances, with US launches initiated for Stealth Axis in spine and Hugo in urology.
• CAS Commercial Rollout -- 200+ new account openings, with the physician finder now including 150 qualified physicians; direct-to-consumer efforts increased Simplicity Spyral website visits 50-fold compared to Q2.
• Altaviva Launch -- Over 500 physicians trained; early field feedback and consumer activation efforts ongoing for this tibial neurostimulation device.
• SG&A and R&D -- Adjusted SG&A was 32.3% of revenue, 30 basis points lower than the previous year; R&D spend was 8% of revenue, growing 7.4% and outpacing revenue by 50 basis points organically.

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RISKS

• Mix Impact -- CAS and Diabetes contributed to a negative 100 basis points mix impact on gross margin; CAS’s current early-stage mix of lower-margin capital versus higher-margin catheters is "currently impacted" and expected to normalize only as scale increases and Diabetes separation occurs.
• Tariff Headwind -- Tariffs created a $93 million or 110 basis points gross margin headwind in Q3; expected to total $185 million in fiscal 2026 and approximately $300 million in fiscal 2027.
• Higher Tax Rate -- Adjusted tax rate reached 17.3%, about 100 basis points above forecast, due to jurisdictional mix of profits; this higher tax pressure is projected to persist into Q4.
• Structural Heart Segment -- Growth was "a little softer as expected" in Q3, especially in the US; segment continues to face competitive pressure and is a stated area needing portfolio improvement.

SUMMARY

Management highlighted that several major product launches and innovations—including Hugo, Stealth Axis, Simplicity Spyral, and Altaviva—are poised to be significant growth drivers as these businesses scale. CFO Thierry Pieton emphasized margin leverage efforts, noting that current mix headwinds from CAS and Diabetes are expected to improve, and the MiniMed separation is proceeding as outlined. Multiple leading indicators—such as covered lives, physician engagement for Simplicity, and robust early demand for Altaviva—point to pipeline momentum expected to drive accelerating growth in late 2026 and fiscal 2027. The reaffirmed full-year guidance, coupled with the explicit expectation of high-single-digit EPS growth in fiscal 2027, underscores management's confidence in its innovation strategy and operational execution.

• CEO Martha said, "We are well positioned" to capture share in PFA and maintain CAS growth, with key catheter products like Sphere-9 and Sphere-360 progressing through global milestones.
• High consumer engagement for Simplicity Spyral was evidenced by a rise in website visits from 50,000 in Q2 to 2.5 million in Q3, indicating rapidly scaling patient interest.
• The Stealth Axis launch is seen as "meaningfully underappreciated" by the investment community, and is expected to lower robotic adoption barriers and grow Medtronic's share in spine surgery.
• Management described its M&A approach as targeting multiple "tuck-in" acquisitions, often in high-growth areas, with recent deals including CathWorks and an Enteris investment in Structural Heart.
• CFO Pieton noted, "SG&A line will provide leverage" as additional commercial resources for new launches are more than offset by G&A efficiencies.
• The plan to separate MiniMed is explicitly on schedule, with an anticipated initial dilution of $0.01-$0.02 per month until the split is finalized and M&A dilution of $0.04-$0.05 is already included in EPS guidance.
• CAS is characterized as being "slightly dilutive" to gross margin in the near term due to capital-versus-catheter product mix, but "driving significant profitability at the total business level" and expected to deliver positive gross margin contribution from 2027 onward.

INDUSTRY GLOSSARY

• PFA (Pulse Field Ablation): An ablation modality that uses electrical fields to treat cardiac arrhythmias, featured as a core revenue driver for CAS.
• CAS (Cardiac Ablation Solutions): Business unit focused on cardiac electrophysiology devices, including PFA systems and catheters.
• Stealth Axis: Medtronic's integrated navigation, robotics, and AI surgical platform for spine procedures, recently FDA-cleared.
• NeuroGard: Carotid stenting product commercialized by both the neurovascular and peripheral vascular segments.
• Altaviva: Tibial neurostimulation device for urge urinary incontinence, noted for long battery life and MRI readiness.
• Liberant: Mechanical thrombectomy system in full market release under Peripheral Vascular Health.
• MiniMed: Medtronic's diabetes business comprising insulin pumps, continuous glucose monitoring systems (CGM), and related products.
• On X (for MMAE): Neurovascular product receiving expanded indication for middle meningeal artery embolization (MMAE).
• Touch Surgery: AI-powered digital ecosystem for surgical workflow, deployed alongside Hugo robotic procedures.
• Ardian: Medtronic's renal denervation franchise featuring Simplicity Spyral for hypertension treatment.
• VBP (Volume-Based Procurement): China reimbursement policy impacting medical device pricing and volume, cited as a prior headwind for Neurovascular.

Full Conference Call Transcript

Operator: And we look forward to bringing this unique catheter to the US. Beyond CAS, we are also making material progress with Simplicity Spyral for hypertension, and Altaviva for urge urinary incontinence. Simplicity delivers a one-time, durable, minimally invasive treatment for hypertension and represents one of our largest growth drivers. Now this is going to be a contributor for years to come given the 18 million US patients with uncontrolled hypertension. We are seeing strong patient outcomes in the field, and the Ardian value proposition, it resonates with both physicians and patients. Now we have strong and growing clinical data, a broad label, and expanding reimbursement all in hand. Look, we have built the foundation.

Now we are focused on growing this new segment and transforming the hyper treatment paradigm. We have recently activated our direct-to-consumer Go Beyond campaign in key markets around the US, which is resulting in a 50 times increase in website visits versus the prior quarter. So a lot of interest coming in from patients. Building a new market does take time, but that is something Medtronic plc knows how to do exceptionally well. And in parallel to building out this new market, we are innovating for the long term. First with our transradial catheter, which is on track to launch in 2027. And with our Spyral Gemini trial, evaluating multi-organ ablation to further boost efficacy.

Now similarly, we are scaling Altaviva. Our tibial neurostimulation device, Altaviva is a very small device that requires no imaging, no sedation, activates the same day, is MRI-ready, and offers up to 15 years of battery life, the longest in its category. Again, we are receiving great early interest and feedback from both physicians and patients, and we are training doctors. We are educating and supporting hospital staff and investing in omnichannel consumer activation. Look, it is early days for both of these launches, and we are focused on disciplined execution to convert early traction into procedures. Now pivoting to Hugo.

This quarter, our Hugo robot received FDA clearance for urologic surgical procedures, enabling us to begin our purposeful US launch. And today, I am excited to share that we have already completed our first installations and initial cases. As noted in our release this morning, last week we completed our first cases at Cleveland Clinic, where our surgeons echoed the strong feedback we continuously receive on Hugo’s differentiation across multiple areas. This includes its flexibility, portability, open console, and of course, our trusted instrumentation. Hugo is especially compelling when paired with our Touch Surgery digital ecosystem, an AI-powered data, connectivity, and analytics technology that is unique to Medtronic plc.

This quarter, Touch Surgery installations increased over 20% sequentially and have now surpassed 1,000 systems globally. Further, we continue to evolve our Hugo system with the fourth-generation software release and continuous system improvements. We are planning to expand into additional indications in the US like hernia, part of our broader general surgery indication where this system really shines. Customers value, I mean, they really value having a partner that spans the full continuum of surgical care. And Medtronic plc is the only company that has approved offerings across open, laparoscopic, robotic-assisted surgeries, which matters as hospitals build and expand their surgical practices. Now, we are thrilled with these four generational growth drivers.

Our innovation pipeline is far broader, and we are committed to driving sustained innovation across our portfolio and advancing a steady cadence of new technologies across high-need, high-growth categories we are well positioned, like MMA, carotid stenting, thrombectomy, coronary DCB, cardiac rhythm management, spine surgery, as well as many others. And to that point, I am extremely excited to highlight a major milestone in our neuroscience business. Just last week, we secured FDA clearance for our Stealth Axis Surgical System for spinal procedures. Stealth Axis is a new transformative platform that unifies AI-powered planning, robotics, and navigation into one seamless system, elevated by the entire Able ecosystem.

Stealth Axis was designed around navigation, which is paramount to surgeons’ workflow in the OR. Today, navigation, we pioneered and we lead, drives 70% of US spine procedures, and really it just dictates the workflow in the spine OR. So Stealth is really two things. It is about taking share as a new platform with improved functionality, and it brings down barriers for physicians to step into robotics without disrupting their workflow. Now building on our 10,000 unit installed base, we are expanding and opening this segment and extending our leadership. And we are not stopping at Spine. We anticipate pursuing future cranial and ENT indications for Stealth Axis.

This is an important driver for our CST business and an exciting step forward to improve precision, predictability, and personalization of care. And we are executing our M&A strategy as well. With the CathWorks acquisition and CRDN, and we continue to build out our venture and minority investment portfolio with the Enteris investment in Structural Heart. Both transactions underscore our long-term strategy to digitize, enable, and build effective and efficient ecosystems within our core markets. So before I turn it over to Thierry to walk through the details of our business performance, our financials, and the guidance, I would like to close with the following remarks.

At Medtronic plc, we are translating the breadth and the depth of innovation across the portfolio into durable growth. We have businesses at different stages of their growth journey, but the cadence of innovation across our portfolio suggests a steadily improving growth outlook for Total Medtronic plc. We have businesses that are executing exceptionally well today and are positioned to be meaningful contributors for a very long time. This includes CAS with its strong PFA pipeline, CST with Stealth Axis, and of course CRM, a large and steady growth engine with meaningful innovation in defibrillation, and leadless and in conduction system pacing.

We have businesses where the pipeline is now just activating, where we have clear line of sight to meaningful, tangible opportunities that will enhance growth. From CRDN with the ramp of Simplicity, Pelvic Health with Altaviva, Peripheral Vascular Health with NeuroGard and Liberant, and Neurovascular with innovation like Artis, NeuroGuard, and expanding indication for On X into MMAE. And Surgical, where the launch of Hugo in the US is just beginning. These are all real drivers with tangible reasons for improvement and the potential to impact growth in the coming quarters and years.

We also have areas where there is work to do, and we have defined plans underway, like in Structural Heart, where we are taking specific actions to fill out the portfolio and improve the. So with strong contributors delivering today, businesses on the cusp of step-change improvement, and segments where we are taking deliberate actions to strengthen long-term competitiveness, we are confident in our ability to deliver durably. So with that, I will turn it over to Thierry to walk through the details of our business performance. So over to you, Thierry.

Thierry Pieton: Hey. Thanks, Jeff, and hi, everyone. I appreciate all of you joining today. Let us start with our cardiovascular portfolio, where this quarter, we delivered 11% year-over-year revenue growth with 13% growth in the US. This represents the strongest growth we have seen in cardiovascular in the last ten years excluding COVID comps. CAS grew 80% year over year, with PFA accounting for 80% of that revenue. Beyond CAS, the remainder of the cardiovascular portfolio delivered combined mid-single-digit growth. Cardiac Rhythm Management also had a strong quarter. CRM continued to contribute 15% of our total revenue, and it grew a healthy 5%.

This was primarily driven by continued double-digit growth in Micra, mid-teens growth in 3830 CSP lead, and over 70% growth in Aurora EV ICD. In Peripheral Vascular Health, we posted high-single-digit growth, driven by broad strength across our endovenous portfolio. We look forward to the continued launch of NeuroGard IEP carotid stent and the full market release of our Liberant mechanical thrombectomy system. In Structural Heart, Q3 was a little softer as expected, and grew low single digits. We had a stronger quarter internationally, and continued to gain share in Europe. This was partially offset in the US, where we annualized our Evolut FX Plus launch, and saw some competitive pressure.

I will now pivot to our neuroscience portfolio, which grew 3%. Growth was a little below our expectations this quarter, but neuroscience is also where we have one of our broadest pipelines, and some of our most exciting opportunities. Importantly, we expect that pipeline to begin impacting growth in the fourth quarter. Cranial and Spinal Technologies continues to be a powerful engine for Medtronic plc. This large business delivered mid-single-digit growth, including 8% growth from strong pull-through in Core Spine. We are excited to offer customers our new navigation and robotics platform Stealth Axis, which Jeff just mentioned. With FDA clearance achieved, we expect to see Stealth Axis contribute to neurosurgery and CST overall as soon as the fourth quarter.

Specialty Therapies delivered flat results in the third quarter. This is an area where we expect improved performance in the coming quarters given the series of new product developments. Neurovascular has been challenged over the last quarters due to China VBP and to the recall of Vantage, both of which are now mostly behind us. We also have line of sight to a higher level of growth from the contribution of On X’s expanded indication. The NeuroGard carotid stent launch will also contribute as it is being commercialized by both our neurovascular and peripheral vascular businesses. In Pelvic Health, we saw a slightly softer sacral nerve stimulation market environment, but look forward to seeing the increased contribution from Altaviva.

In Neuromodulation, we grew 4%, driven by the continued rollout of our differentiated fully closed-loop technologies Inceptiv SCS and BrainSense ADBS. Next, our MedSurg portfolio grew 3%, ahead of expectations. First, Endoscopy and ACM had strong quarters. Endoscopy revenue grew 10%, led by mid-teens growth in our esophageal portfolio, driven by 300. Acute Care and Monitoring saw 7% growth, led by strength in blood oxygen management and airway access. And finally, our Surgical business grew by 1%. We saw strength in Energy, in Wound Management, and Hernia, with expected softness in Stapling.

The next phase of growth for this business is the rollout of Hugo, and we are thrilled to see our first installations and first cases so swiftly after the US launch. Wrapping up our business performance is MiniMed, our diabetes business, which delivered 15% reported and over 8% organic growth. Performance was led by double-digit strength in international markets, but we also saw acceleration in the US with strong sequential lift driven by Simplera Sync and InPen 780G, which both just launched in December. Our diabetes business continues its strong recent regulatory and pipeline milestones. In addition to introducing Instinct and Simplera to the market, we secured several FDA clearances that further expand 780G’s indications.

We also announced that 780G system is now available through pharmacy, with agreements that cover the majority of commercially insured lives in the US. And we submitted MiniMed Flex to the US FDA and began the US pivotal study for VIVERA, our third-generation fully closed-loop algorithm, which we believe will help maintain our leadership in delivering industry-leading outcomes. Finally, our MiniMed FIT patch pump remains on track, and we intend to submit it to the US FDA by this fall. The planned separation of MiniMed is perfectly on track. Our preferred path continues to be a two-step IPO and split. We continue to expect the separation to be complete by the end of calendar year 2026.

Now turning to the financials. This quarter, revenue of $9,000,000,000 grew 8.7% reported and 6% organic, a 50 basis point acceleration from prior quarter and 50 basis points above our guidance. Geographically, this performance was balanced, led by high-single-digit growth in Western Europe, with mid-single-digit growth across the US and Japan. US growth was 6% year over year, the strongest performance we have delivered since fiscal year 2019 excluding COVID comps. In China, we delivered low-single-digit growth while navigating ongoing but manageable volume-based procurement in a few businesses. Excluding VBP, our growth rate in China was mid-single digit. Our adjusted gross margin was 64.9%, ahead of expectations.

As I have done in the last several quarters, let me walk you through the rough breakout of the components. We realized 30 basis points of benefit from pricing. Net of inflation, cost down was negative 20 basis points, as the third quarter is typically our lowest quarter for generating cost-efficiency savings, and we had some prior-year nonrecurring items. Mix was negative 100 basis points, mostly driven by CAS and Diabetes. As discussed in prior disclosures, with CAS in the early stages of launch, this business is currently impacted by the mix of lower-margin capital to higher-margin catheters, and Diabetes is in its early manufacturing ramp-up of Simplera.

Over time, as you know, we expect this mix dynamic to improve as we scale CAS and separate the Diabetes business. Tariffs impacted the business $93,000,000 or 110 basis points, in line with forecast. And finally, foreign exchange provided an approximate 40 basis points tailwind. Adjusted R&D was 8% of revenue, and increased 7.4%. On an organic basis, this outpaced revenue by 50 basis points. Adjusted SG&A was 32.3% of revenue, which is 30 basis points lower than the third quarter of last year. We continue to fuel our PFA launch and develop and build the markets for Simplicity, Altaviva, and Hugo, but at the same time, we delivered disciplined leverage in G&A.

Our adjusted operating profit was $2,200,000,000, resulting in an adjusted operating margin of 24.1%, ahead of expectations again. Our adjusted tax rate was 17.3%, about 100 basis points higher than forecast, largely due to jurisdictional mix of profits. All in all, adjusted EPS was $1.36, $0.03 above the midpoint of our guidance range. Now turning to guidance. On the top line, we are reiterating fiscal 2026 organic revenue growth guidance of approximately 5.5%. In the fourth quarter, we expect revenue growth similar to Q3, so around 6% off a stronger Q4 2025 comp. Moving down the P&L, we expect our fiscal 2026 gross margin to increase slightly ex tariffs.

Pricing, FX, and COGS efficiency programs are expected to more than offset the negative impacts of business mix primarily from CAS and Diabetes. We anticipate a tariff impact to COGS of approximately $185,000,000, including $75,000,000 in the fourth quarter. Including tariffs, we expect fiscal 2026 gross margin decrease of roughly 30 basis points. We expect fiscal 2026 adjusted operating profit to grow approximately 5% or 7% excluding tariffs. Our fiscal 2026 operating margin is expected to be roughly flat excluding tariffs, and down about 50 basis points including the tariff impact. In totality, we expect these results to deliver gross margin and operating margin leverage ex tariffs in the second half of fiscal year 2026 as we stated last quarter.

Turning to EPS. This quarter, we saw a beat of $0.03. This was largely due to slightly better than expected revenue in the quarter, mainly from CRM and ACM. This was partially offset by the aforementioned tax pressure that we saw in the quarter. As we expect CRM and ACM to normalize and the tax pressure to carry into Q4, we are maintaining our fiscal 2026 EPS guidance in the range of $5.62 to $5.66. Look, we are excited about the quarter, and we think Q4 is going to be another robust quarter, and that we will sustain our growth at a higher level and into the next year.

We are making progress on margin expansion, and the negative mix effect from CAS and Diabetes are going to get better. We are going to continue to invest in growth areas like R&D, sales and marketing, and M&A to capitalize on the opportunities ahead of us. And we will also continue to drive efficiency in functional areas. All told, we are committed to our guidance, and we maintain our expectation for high-single-digit EPS growth fiscal year 2027. Back to you, Jeff. Okay. Thanks, Thierry.

Geoffrey Martha: Now before we go to Q&A, let me close with a few final thoughts. We are encouraged by the progress across the business, as Thierry just said. And we remain committed to stronger, durable revenue and earnings growth. We are progressing on multiple. Our PFA trajectory is strong and we are on billion-dollar opportunities. We are reinforcing our future pipeline and we are committed to organic and inorganic investment to further bolster the portfolio. Bottom line, we are delivering. Now to our Medtronic plc colleagues around the world, thank you for your unwavering commitment to our mission, and to the patients we serve. You are delivering for customers and for patients, and you are turning our strategy into performance.

So thank you. With that, let us turn to Q&A. So first, Ingrid, welcome to your first earnings call. And now, can you please provide the instructions and queue up the analysts?

Ryan Weispfenning: Thank you, Jeff. For sell-side analysts that would like to ask a question, please select the participants button and click Raise Hand. If you are using the mobile app, please press More and then select Raise Hand. Your lines are currently on mute, and when called upon, you will receive a request to unmute your line. You must respond to this before asking your question. Finally, please be advised this Q&A session is being recorded. We will now pause to assemble the queue. We will take our first question from Travis Steed at Bank of America. Travis, please go ahead.

Travis Steed: Hi, everybody. Thanks for taking the question. I guess, first, I will start on just the comments on accelerating revenue growth next year and growing earnings high single digits. You think about CAS, obviously, can you hear me okay? Can you hear me okay? There we go. Yeah. Okay. I just wanted to ask about the accelerating revenue growth for next year, and also the commitment to grow earnings high single digits. I guess, you think about the overall portfolio, obviously, CAS is starting to hit tougher comps. And this quarter, Surgical is only growing 1%.

So just trying to think about how you get that business accelerating with Hugo and the commitment to be able to deliver on the commitments that you have laid out for FY 2027?

Geoffrey Martha: Well, thanks, Travis, for the question. I will give it a start then and hand it over to Thierry. I mean, look, on the top line, obviously, as you mentioned, we had a really strong quarter with CAS. We still think that growth is going to continue and become a larger part of the company, obviously. We are well positioned there. And then our other big growth drivers, particularly Simplicity for hypertension and Altaviva for overactive bladder, we see them beginning to kick in here, even in Q4. And then you have a number of other businesses here that are going to start growing faster than they have been here recently. One is CST with the Stealth Axis.

I am sure we will get some questions on that, but I do think this is kind of underappreciated, quite frankly, by the Street. This is not just a new robot, it is not just an extension of Mazor. It is a whole new platform that has a lot of benefits to it. And I think that is going to create growth for the short and long term for CST. And then Neurovascular is going to kick up as well. Neurovascular has a number of new products, like the Onyx indication for MMAE, as well as our carotid stenting product and NeuroGard. And then it anniversaries VBP and a few other things.

So you are going to see a kick up in Neurovascular as well. So I think we feel good about the growth continuing here out, not just in Q4, but

Thierry Pieton: You know, as I mentioned in the comments, the algorithm is key. Right? So we have the accelerated growth. The things are getting better at the gross margin level, in particular in the second half as we will see the mix effect from CAS getting better and the separation of Diabetes. We will continue to drive the leverage on the functional areas, in particular in G&A. And we will then continue to invest in R&D and in M&A. So we are reiterating the high-single-digit EPS growth guidance for 2027. We do have a couple meaningful puts and takes in the number next year, and as we are getting more visibility, we will keep you posted on what the impacts are.

But to name a few, we will have the carryover from the tariffs, the tariffs element going into next year. This year, we had about two and a half quarters of tariffs, and that will carry over into the full year. I think the way to think about that is about $75,000,000 per quarter. So on a full-year basis, it means around $300,000,000 of headwind versus the $185,000,000 we are having in 2026. We will have a little bit of help from the fact that there are 53 weeks in fiscal year 2027 as opposed to 52 usually. And then the Diabetes deal, we fully expect the deal to be accretive.

Between the moment we do the IPO and the moment we do the split, you should expect some dilution to the tune of $0.01 to $0.02 per month. The reason behind that is that most of the Medtronic plc stock retirement that we will do that drives the accretion happens only upon the full separation. And so we will see the accretion later, but initially, we have a little bit of pressure coming from that. And we have also embedded in the guidance 4 to 5 cents of dilution coming from M&A activity. We have already announced CathWorks and Enteris. So we have embedded that in the guidance. So it is all in.

As we get more visibility to the timing of Diabetes and the closing of the M&A deals, we will give you more specifics on the different impacts in the Q4 release. As you can see, we are committed to the growth acceleration. We are committed to the investment with M&A and with R&D. And we are committed to the guidance.

Geoffrey Martha: Yeah. And just on that acceleration,

Travis Steed: Go ahead, Travis. Excluding some of the. Yeah. There is that extra selling week next year. Is that

Thierry Pieton: So that will be part of it. That will be part of it. And

Travis Steed: Is the growth acceleration excluding that extra selling day?

Thierry Pieton: Again, we will give you the details of the impacts as we go into the Q4 announcement.

Geoffrey Martha: When I think about the growth acceleration, you mentioned CAS in Q3. I mean, beyond CAS, you saw our CRM business and our Peripheral Vascular Health business both step up in Q3. Q4, like I said, and beyond, think about CST and Neurovascular starting to accelerate. Then as you get into FY 2027, that is when the Ardian and Altaviva really kick in and also Hugo. So we feel good about that acceleration.

Thierry Pieton: Good.

Travis Steed: Thank you.

Ryan Weispfenning: Our next question comes from Vijay Kumar at Evercore. Please go ahead, Vijay.

Vijay Kumar: Thank you, Ingrid, and welcome to your inaugural earnings call here. Jeff, congrats on a nice sprint. You know, I had one product question and one clarification on the guidance. On the product, you mentioned RDN, Altaviva, those will be growth accelerators in fiscal 2026. How should we monitor the progress? Are there any goalposts that we can look forward to in tracking the launch curves for RDN and Altaviva?

Geoffrey Martha: You know, it is a good question. I think we will start to lay out more concrete goalposts as we go forward. Right now, we have been talking a lot about the leading indicators that we are seeing with both. And we are seeing really strong leading indicators. Like with Altaviva, we talked about training 500-plus physicians, strong demand training 500-plus physicians. And like I said last quarter, these are over the weekend, often traveling. It just shows the commitment here. And then things like in renal denervation, I would say it is things like the opening of new accounts. Like this quarter, we opened over 200 new accounts. Our physician finder is up to 150 physicians.

And remember that is a high bar to get in. You have to do five cases and opt in. So there are a lot more physicians doing cases today. And we will continue to track the covered lives. For Ardian, we are already up to like 100,000,000 covered lives. That is about one third of the population here in the US. So those are all leading indicators, and we will start putting more goalposts out there as this starts to mature a little bit, both of these launches. Do not know if you have anything to add to that, Thierry. Nope.

Vijay Kumar: Great. And just one clarification on the extra week, Jeff. We are looking at exit rates of 6% organic. Right? And let us assume next year is north of 6%. The extra week is almost two points of growth. So are we looking at base organic excluding extra weeks somewhere in the 5% ish range? Or any thoughts on how to think about extra week contribution?

Thierry Pieton: So maybe I will take that one now, and thanks for the question. Look, first, it is a little bit less than two points of growth. And again, we will give you the specific calculations as we close the year. But the way to think of it is there is going to be growth acceleration excluding the extra week. Right? So it should be upside. We should have better growth than we have in fiscal year 2026 in 2027, and the extra week should be on top of that.

Vijay Kumar: Thanks much.

Geoffrey Martha: Is that clear, Vijay?

Vijay Kumar: Crystal clear, Jeff. Thank you.

Ryan Weispfenning: Larry, you are live. Great. And our next question comes from Larry Biegelsen at Wells Fargo. Good morning. Thanks for taking the question. Yeah. Jeff, I wanted to ask about CAS.

Larry Biegelsen: And your growth continued to accelerate this quarter to 80% worldwide, which implies the worldwide EP market grew about 20% in calendar year Q4. So my question is, how are you thinking about the EP market growth in calendar year 2026 and your CAS growth going forward now that you are lapping the Afera US launch? I think to achieve the trailing twelve-month $2,000,000,000 goal, it looks like your CAS growth has to sustain about 80% the next two quarters. Is that directionally accurate? Thanks for taking the question.

Geoffrey Martha: Well, first, I would say we agree with you on the market growth and our fiscal Q3 or Q4 here of around 20%. And we think the market will continue to be like that in the near term and, for our fiscal 2027, we think it is going to be at least high teens, and thereafter a strong double-digit market. So we see the market growth continuing, and then we believe we are really well positioned with our portfolio of catheters that we have as well as mapping. In terms of our business growth, we do see it sustaining here in Q4, and we have not provided guidance beyond that.

But again, I would like to say, I think we are very well positioned here. When you look at the four players in PFA, you get two whose value proposition right now is centered around mapping. And we feel like we are very well positioned against them because we still think the catheter carries the day and we have integrated mapping. Then when you look at our competitor whose value proposition centers around catheters, we believe we have a better portfolio of catheters. Our Sphere-9 is, like I said in the commentary, proven to be quite versatile.

And I know initially our competitor here did a pretty good job of putting out a narrative that Sphere-9 was more of a niche. And I think as that has gotten out there, that has proven not to be true, as it is being used across persistent and paroxysmal, new cases, redos, simple versus complex. It is being used across the board. And then we have got Sphere-360. It has CE Mark, and it is a single-shot catheter and again, that is probably the one catheter that has more excitement than Sphere-9, and we started the US trial. And then of course we are going to have mapping upgrades on a regular basis.

So feeling pretty good about our position today as well as tomorrow. And like I said, the underlying market is really strong.

Larry Biegelsen: Alright. Thanks so much, Jeff.

Vijay Kumar: Thank you, Larry.

Ryan Weispfenning: Our next question comes from Patrick Wood at Morgan Stanley. Patrick, please go ahead.

Patrick Wood: Perfect. Thank you so much for taking the question. I will keep it to one just given so much going on. Obviously, the CathWorks and the Enteris deals, I know you were close to CathWorks for a long time. When we think about capital allocation and M&A, there are a lot of other companies doing very large deals in this space. I am just trying to work out, directionally, do you guys feel still more that it is kind of bolt-on M&A, technology tuck-ins, that kind of things relative to larger deals? And how you think about capital allocation going forward? Thanks.

Geoffrey Martha: Well, thanks for the question, Patrick. And, as we have stated, we are very committed to accelerating M&A, and you are starting to see that with CathWorks and Enteris. And again, it is very focused, tied to our strategy: venture investments that might lead ultimately to M&A and then M&A. And we are focused on more like what we would define as tuck-in deals. They can get up to several billion dollars, but tuck-in or a close adjacency to our existing business. And a number of them though. I mean, that is the other thing. I think it is a fairly meaningful amount of capital among several different tuck-in venture and tuck-in opportunities across our portfolio.

Again, prioritizing maybe the higher-growth areas and in some cases maybe having multiple shots on goal like we did with pulse field ablation, right? We had an organic program, we went out and got Afera. You may see us do that again in some of these high-growth, really must-win markets. But that is how I would say it. Tuck-in across many of our different segments and sub-segments as well as venture.

Patrick Wood: Appreciate it. Thanks for taking the question, guys.

Ryan Weispfenning: Great. So Robbie Marcus from JPMorgan will be our next question. Please go ahead, Robbie.

Robbie Marcus: Great. Can you hear me okay? Yep. Yep. Great. Good morning. Thank you for taking the questions. Two for me. Maybe I will ask them just as one. Jeff, or maybe Thierry, as you think about the fiscal 2027 guidance, and especially, I imagine you will have Hugo and renal denervation and tibial spend to support those launches and continued investment in CAS, how do you think about getting to the high-single-digit EPS growth? If you could give us some high-level drivers there. And then second part, the Street is sitting at 8.5% EPS growth. I know traditionally you do something like 6.5% to 9.4% as high single.

Do you think the Street at 8.5% is at a good midpoint of the range to start here? Thanks a lot.

Thierry Pieton: Yeah. Hi, Robbie. Thanks for the question. So again on EPS, the high-level drivers, we talked about the accelerated growth, and obviously that is going to help from a leverage standpoint. If you look at the gross margin line, what you have seen so far is operational improvements in pricing and cost-out that have been offset by the mix effects on CAS and Diabetes. And as I have stated a couple of times already, those are going to get better. So the CAS improvement comes from the mix shifting towards more catheters and less capital equipment, which will help from a margin perspective. And then on the Diabetes side, it comes from the separation. Right?

So Diabetes has a lower gross margin rate than the rest of the business. And so once that business goes away, it will give us a natural lift from a gross margin perspective. If you start looking at overhead, look, we are going to continue to lean into R&D and sales and marketing to develop the franchises that you mentioned. So we are putting resources in RDN. We are putting resources in CAS. We are hiring the mappers that are necessary. We are doing the direct-to-consumer marketing, in particular on renal denervation and Altaviva. And we will continue to do that.

But net-net, the SG&A line will provide leverage because as we are having this quarter, for example, or Q3, what you see is the leverage that we get on the G&A line more than offsets the resources that we are putting from a sales and marketing perspective. So look, that will provide some improvement on operating margin. And then below the line, we will continue to have a little bit of a headwind on the interest line because we are refinancing debt that was contracted almost at 0% four or five years ago with debt that is now at sort of 3.5%, 4%.

And we will continue to have some pressure on tax, but the tax line is kinda getting to where it is going to stabilize now. And then look, I mentioned we have a few puts and takes where we need to understand the timing between now and year-end. One is the timing of the Diabetes separation. And as I said, between the IPO and the split, we get about $0.01 to $0.02 of dilution from the fact that we are losing 20% of the profit of Diabetes, but we do not have the benefit from the share count reduction yet. That share count reduction is calculated on a twelve-month rolling average, so you will see that gradually get better.

And then we will have some dilution coming from M&A. So the guidance is all-in at a high-single-digit EPS growth. Now the second part of your question on the 8.5%, it feels like some of the latter items that I mentioned, so the sort of temporary dilution that we get from Diabetes and some of the M&A dilution, is maybe not fully embedded in what the Street sees right now. As we get more visibility, we will help clarify that.

Robbie Marcus: Thank you very much.

Ryan Weispfenning: Our next question comes from Matt Taylor at Jefferies. Matt, please go ahead.

Matt Taylor: Hi. Thanks for taking the question this morning. I wanted to follow up on the question around capital allocation and TAVR. I guess it was interesting to see the investment in Enteris. I was wondering if you could comment about why you did not just buy the whole company versus invest in it. We also saw over the weekend the results longer-term follow-up for CoreValve published in JACC. And similar to the Edwards trials, there was some late catch-up in mortality. I was wondering if you could comment on that in the TAVR arm.

Geoffrey Martha: Sure. I think on your first call on Enteris, we feel Structural Heart space is one of the spaces we helped pioneer. We have a really strong position, great reputation, but we want to expand in that. We have some organic programs. Obviously we have our Evolut platform. We have got mitral and tricuspid replacement programs, but we still think there is an opportunity here to expand. And in the case of TAVR, the balloon-expandable is the larger piece of the market, and this is an opportunity to get into that market.

Again, we may have multiple shots on goal here, but we think Enteris is a good one to invest in and partner with, and we will see where we go from here there. And then in terms of the JACC article, I would say here that, look, this is an old valve that is no longer commercially available, and it is an old procedural technique that we have provided guidance on. Basically all that reiterates the guidance that we provided back in 2020. And so that is what is happening there. And, like I said, we are collaborating with our physicians to make sure they understand all of this, and moving forward from here.

But bullish on the Structural Heart space, and I would, you know, the Enteris investment and who knows, maybe more following that.

Matt Taylor: Thanks for the color, Jeff.

Ryan Weispfenning: Alright. Our next question comes from Matt Miksic at Barclays. Matt, please go ahead.

Matt Miksic: Great. Thanks so much for taking the question. And congrats on the Enteris investment, by the way. So on CAS, I will just ask one question. You mentioned generator sales are kind of a headwind to gross margins at this point. The mix is maybe a little more towards capital. If you could give us a sense of when that starts to normalize. And then also, in terms of the runway, I think we understand that hiring mappers is maybe the bottleneck here if you want to put it that way. You need more people to open more centers, to get more catheter use.

Any sense of where you are in that continuum, through the academic centers or into the general centers in the US, and some sense of the pace that you are able to maintain for hiring centers? Appreciate you taking the question.

Geoffrey Martha: Matt, on the last part of it, where are we? I still think we are relatively early in our launch here. We still have a long runway to go, which is good, in penetrating some of these high-volume academic centers as well as getting out beyond that. And to your point, hiring mappers has been critical. It is not the topic, if you will, but it is an important topic here. We have been able to stay ahead of it, but it is the thing that we are probably the most focused on right now, continuing to hire mappers.

And a lot of these mappers tend to be pretty dedicated to the space, and they are seeing where the direction of travel is, or to use a Minnesota term, where the puck is going. And so that helps a lot as well. So that is how I would comment on there. And what was the first part of the question?

Thierry Pieton: The first part was on the dilution that comes from the capital equipment and when does the mix turnaround. So first, what I want to say is CAS is a fantastic business from an operating margin perspective. Right? So it is slightly dilutive because of this mix issue at the GM level, but it is driving significant profitability at the total business level, at the operating margin level. When it is going to turn around between equipment and catheters, I want to say it is almost a good problem to have. I hope it turns around as late as possible because as we are building the installed base, it is always going to be good news going forward.

That being said, I think you will start to see an inflection in the second half of next year. The mix is starting to improve with the catheter sales increasing. And year over year, CAS is going to drive gross margin improvement as early as 2027. So look, it is a great business to be in, and it is all good news going forward.

Matt Miksic: Great. Thank you.

Ryan Weispfenning: Our next question comes from Chris Pasquale at Nephron. Chris, go ahead.

Chris Pasquale: Thanks. I wanted to ask about Hugo. Jeff, you talked about the impact of Simplicity and Altaviva really beginning to kick in as soon as next quarter. I do not think you included Hugo in that group. So we would love to hear how you are thinking about the timeline for Hugo to really begin to move the needle within the Surgical business, and any qualitative comments you can make about system pipeline right now?

Geoffrey Martha: Well, first of all, look, super excited about where we are with Hugo. Big quarter for us this past quarter, getting the FDA clearance. We just announced this morning we completed our first cases in the US in February, earlier this month in Cleveland Clinic. We have more scheduled this week, got other centers, and all the leading indicators of Hugo. And by the way, on those cases, we got great feedback in terms of how the system is performing and its future opportunity in the US market. The leading indicators are all positive in terms of the smooth case rate, procedures, procedure growth globally, and utilization. They both continue to be really strong. We watch those every week.

I know the business watches it every day. I see them every week. And we are seeing a pretty meaningful step-up in installations around the world, especially as US kicks in. And so we expect a step-up in Q4. Now the Surgical business is a big business, has some puts and takes. So you may not move the needle on the Surgical business quite yet, but underneath the covers there, Hugo is growing, and growing pretty fast now. And eventually, you will start to see this move that big $6,000,000,000 business. But we like where we sit. Really excited about getting in the US market and the reception that we are getting, and the orders that we have.

Chris Pasquale: Great. Thanks, Jeff.

Ryan Weispfenning: Okay. Next question comes from Danielle Antalffy at UBS. Danielle, you are live.

Danielle Antalffy: Good morning, everyone. Thank you so much for taking the question. Jeff, I was hoping you could talk a little bit more about how we should think about renal denervation, Simplicity, and the market development that you are talking about. We have talked to some referring physicians who have been involved in renal denervation since the very beginning, and she sounds like she is getting a lot of calls from folks. I am just curious what goes into actually developing this market, building out, helping centers build out referral networks, etcetera. And if you can give any color on actual numbers to date, even directionally? Thanks so much. Sorry about that. Thanks, Danielle. I mean, I appreciate that

Geoffrey Martha: question. I mean, first of all, in terms of physicians getting a lot of calls, that is really starting to kick in. Just to give you again, appreciate that it is a leading indicator, it is pretty powerful. So on our direct-to-consumer website around Simplicity, I am just double checking. Last quarter, we had maybe 50,000, or Q2 rather, had about 50,000 visits. In Q3, we had 2.5 million visits. So the consumer demand is really spiking here and we are just getting started. Like I said earlier, we opened up over 200 accounts. The physician finder is up. Reimbursement is strong. We are getting that strong consumer demand. And most importantly, we are getting terrific patient results, patient outcomes.

With the blood pressure coming down meaningfully, it is staying, patients, and it is really resonating with patients. That in and of itself is getting doctors excited. And so what we are doing is we have been hiring a lot of people in terms of market development, and there are several different roles here. One is building that referral pathway from the general practitioners and the hypertensive specialists into the hospital, into that proceduralist. We have a lot of people around health economics, around coding and billing as well, helping the hospitals.

So it is a number of roles like that, health economics, coding, billing, as well as some of the other roles I said in terms of the market development, building those referral pathways. And that is really where things are right now. I would say all the market, like the initial foundational elements, have all been like the chips have turned over green. The FDA approval is breakthrough approval and it is broad. The CMS reimbursement, it is a good number and it is broad. The commercial payers are falling in line. And the competitive dynamics are way better than we thought.

Initially here, we are doing, I saw different analysts over the last couple of years, predictions on the mix between us and the other competitor on the market. We are doing way better than any of those models. And so now we just have to build this market. It is all those things we said, Danielle. But again, we are really excited where you feel the energy. It all starts with those patient outcomes and how this is resonating with consumers. So the other thing we are going to do over time besides building the referral pathway and working with hospitals is building the brand around Simplicity.

So all the 50,000 to 2,500,000 site visits I talked about, that is all about lead development, lead generation. We would also like to build the brand of Simplicity and make it synonymous with hypertension management. So that is going to be an investment that Thierry talked about for FY 2027. So a lot of excitement right now in Ardian. And it will start to, the numbers in FY will be more meaningful in FY 2027 for us, the actual revenue, the lagging indicators. And again, it is very profitable right out of the gate for us.

Danielle Antalffy: Thank you so much.

Ryan Weispfenning: Alright. And as we reach the top of the hour here, our last question is going to come from Joanne Wuensch at Citi. And before we move to Joanne, please, of course, email us for any of those we did not reach today. Sorry and thank you, and we will look forward to talking to you soon. But, Joanne, please go ahead.

Joanne Wuensch: Thank you so much, and good morning. I am going to ask the Stealth Axis question and what you can share with us about the product and why you are so excited about it. Thank you.

Geoffrey Martha: Well, thanks, Joanne, for that question. First of all, like I said, I do think this has been meaningfully underappreciated, not so much in the clinical community from spine surgeons, maybe in the investment community. Because look, this robot does two things. First of all, it is not an extension of Mazor. It is a new platform. A ton of new functionality that is going to be very value-added. But the other thing that is really important here is how it fits into the workflow. So today, 70%, I mentioned in the commentary, 70% of procedures in the US are navigated. That is navigation and O-arm, which we invented and we lead by far.

And today robotics does not work well with that workflow. So that is why robotic penetration is a lot smaller than the 70% that we are seeing with navigation. The Stealth Axis fits right into that workflow. So it is one seamless system from the initial imaging to the AI-based surgical planning right into the case, navigation, imaging, and now robotics. One seamless workflow that, trust me, surgeons really have been waiting for. So you have a better robot with more functionality, and then you have a much, much, much better workflow that, as you know, is super important to physicians and health systems. And this is effectively lowering the barriers to step into robotics for spine surgery.

And it is going to grow the market, I believe. And we are definitely going to continue to take share. And this really lengthens or extends our lead, in my opinion, from our primary competitor in this space. The competitive dynamics have dramatically changed over the last couple of years. Our enabling technology and our Able suite is key to winning. And this, like I said, extends our lead over our competitor. And so super excited about that. But in closing here, I would say beyond some of the big generational growth drivers we mentioned, we talked a lot about CAS and Ardian, a little bit about Altaviva and Hugo.

I would add to that robotics piece, I would add Stealth Axis. We have a breadth of innovation right now in Medtronic plc, which is why you are feeling the excitement here. Whether you saw it from this quarter, like I mentioned, from CRM and Peripheral Vascular Health—which we did not get any questions on—their growth has meaningfully improved here from a number of new products like carotid and thrombectomy. We talked about CST accelerating, Neurovascular is accelerating with new products that they have got between the NeuroGard carotid product as well as MMAE, that is a mouthful. And then you have these bigger growth drivers like Ardian and Altaviva and Hugo that are at the very early stages.

So you are starting to see the breadth kick in, which is beautiful to see. I know that in this business, innovation is key and we have a depth of innovation with these big generational growth drivers, but we also have the breadth. And, as Thierry walked through—I think it was Robbie’s question—we are pulling different levers to make sure that we are investing appropriately, whether it is increasing R&D, funding direct-to-consumer, hiring a ton of mappers, and if you are a mapper out there, hit our website. And then kicking in the M&A.

So we are really shifting our stance, moving into more of an offensive footing here, and it is based on just the momentum that we have and the momentum we see coming.

Ryan Weispfenning: Thank you everyone. And I will turn to Jeff for some closing remarks.

Geoffrey Martha: I thought that was the close. Okay. Thank you. Thank you all for joining today and all of your questions, and appreciate your support and continued interest in Medtronic plc. And we hope that you will join us for our Q4 and our full-year fiscal 2026 earnings broadcast, where we are going to update you on the continued progress that we just talked about against our short and long-term strategies. With that, have a great rest of your day. Thank you. And we look forward to bringing this unique catheter to the US. Beyond CAS, we are also making material progress with Simplicity Spyral for hypertension, and Altaviva for urge urinary incontinence.

Simplicity delivers a one-time, durable, minimally invasive treatment for hypertension and represents one of our largest growth drivers. Now this is going to be a contributor for years to come given the 18 million US patients with uncontrolled hypertension. We are seeing strong patient outcomes in the field, and the Ardian value proposition, it resonates with both physicians and patients. Now we have strong and growing clinical data, a broad label, and expanding reimbursement all in hand. Look, we have built the foundation. Now we are focused on growing this new segment and transforming the hyper treatment paradigm.

We have recently activated our direct-to-consumer Go Beyond campaign in key markets around the US, which is resulting in a 50 times increase in website visits versus the prior quarter.

Danielle Antalffy: And

Geoffrey Martha: with our Spyral Gemini trial evaluating multi-organ ablation to further boost efficacy. Now similarly, we are scaling Altaviva. Our tibial neurostimulation device, Altaviva is a simple yet transformational option for treating urinary incontinence, which is a condition that affects 16 million people in the US. Altaviva is a very small device that requires no imaging, no sedation, activates the same day, is MRI-ready, and offers up to 15 years of battery life, the longest in its category. Again, we are receiving great early interest and feedback from both physicians and patients, and we are training doctors. We are educating and supporting hospital staff and investing in omnichannel consumer activation.

Look, it is early days for both of these launches, and we are focused on disciplined execution to convert early traction into procedures. Now pivoting to Hugo. This quarter, our Hugo robot received FDA clearance for urologic surgical procedures, enabling us to begin our purposeful US launch. And today, I am excited to share that we have already completed our first installations and initial cases. As noted in our release this morning, last week we completed our first cases at Cleveland Clinic, where our surgeons echoed the strong feedback we continuously receive on Hugo’s differentiation across multiple areas. This includes its flexibility, portability, open console, and of course, our trusted instrumentation.

Hugo is especially compelling when paired with our Touch Surgery digital ecosystem, an AI-powered data, connectivity, and analytics technology that is unique to Medtronic plc. This quarter, Touch Surgery installations increased over 20% sequentially and have now surpassed 1,000 systems globally. Further, we continue to evolve our Hugo system with the fourth-generation software release and continuous system improvements. We are planning to expand into additional indications in the US like hernia, part of our broader general surgery indication where this system really shines. Customers value—I mean, they really value—having a partner that spans the full continuum of surgical care.

And Medtronic plc is the only company that has approved offerings across open, laparoscopic, robotic-assisted surgeries, which matters as hospitals build and expand their surgical practices. Now, we are thrilled with these four generational growth drivers. Our innovation pipeline is far broader, and we are committed to driving sustained innovation across our portfolio, advancing a steady cadence of new technologies across high-need, high-growth categories we are well positioned like MMA, carotid stenting, thrombectomy, coronary DCB, cardiac rhythm management, spine surgery, as well as many others. And to that point, I am extremely excited to highlight a major milestone in our neuroscience business. Just last week, we secured FDA clearance for our Stealth Axis Surgical System for spinal procedures.

Stealth Axis is a new transformative platform that unifies AI-powered planning, robotics, and navigation into one seamless system, elevated by the entire Able ecosystem. Stealth Axis was designed around navigation, which is paramount to surgeons’ workflow in the OR.

Que Dallara: Today,

Geoffrey Martha: navigation, which we pioneered and we lead, drives 70% of US spine procedures, and really it just dictates the workflow in the spine OR. So Stealth is really two things. It is about taking share as a new platform with improved functionality, and it brings down barriers for physicians to step into robotics without disrupting their workflow. Now building on our 10,000 unit installed base, we are expanding and opening this segment and extending our leadership. And we are not stopping at Spine. We anticipate pursuing future cranial and ENT indications for Stealth Axis. This is an important driver for our CST business and an exciting step forward to improve precision, predictability, and personalization of care.

And we are executing our M&A strategy as well. With the CathWorks acquisition and CRDN, and we continue to build out our venture and minority investment portfolio with the Enteris investment in Structural Heart. Both transactions underscore our long-term strategy to digitize, enable, and build effective and efficient ecosystems within our core markets. So before I turn it over to Thierry to walk through the details of our business performance, our financials, and the guidance, I would like to close with the following remarks. At Medtronic plc, we are translating the breadth and the depth of innovation across the portfolio into durable growth.

We have businesses at different stages of their growth journey, but the cadence of innovation across our portfolio suggests a steadily improving growth outlook for Total Medtronic plc. We have businesses that are executing exceptionally well today in our position to be meaningful contributors for a very long time. This includes CAS with its strong PFA pipeline, CST with Stealth Axis, and of course CRM, a large and steady growth engine with meaningful innovation in defibrillation, and leadless and in conduction system pacing. We have businesses where the pipeline is now just activating, where we have clear line of sight to meaningful, tangible opportunities that will enhance growth.

From CRDN with the ramp up, Simplicity, Pelvic Health with Altaviva, Peripheral Vascular Health with NeuroGard and Liberant, and Neurovascular with innovation like Artis, NeuroGuard, and expanding indication for On X into MMAE. And Surgical, where the launch of Hugo in the US is just beginning. These are all real drivers with tangible reasons for improvement and the potential to impact growth in the coming quarters and years. We also have areas where there is work to do, we have defined plans underway, like in Structural Heart, where we are taking specific actions to fill out the portfolio and improve the.

So with strong contributors delivering today, businesses on the cusp of step-change improvement, and segments where we are taking deliberate actions to strengthen long-term competitiveness, we are confident in our ability to deliver durably. So with that, I will turn it over to Thierry to walk through the details of our business performance. So over to you, Thierry.

Thierry Pieton: Hey. Thanks, Jeff, and hi, everyone. I appreciate all of you joining today. Let us start with our cardiovascular portfolio, where this quarter, we delivered 11% year-over-year revenue growth with 13% growth in the US. This represents the strongest growth we have seen in cardiovascular in the last ten years excluding COVID comps. CAS grew 80% year over year, with PFA accounting for 80% of that revenue. Beyond CAS, the remainder of the cardiovascular portfolio delivered combined mid-single-digit growth. Cardiac Rhythm Management also had a strong quarter. CRM continued to contribute 15% of our total revenue, and it grew a healthy 5%.

This was primarily driven by continued double-digit growth in Micra, mid-teens growth in 3,830 CSP lead, and over 70% growth in Aurora EV ICD. In Peripheral Vascular Health, we posted high-single-digit growth, driven by broad strength across our endovenous portfolio. We look forward to the continued launch of NeuroGard IEP carotid stent and the full market release of our Liberant mechanical thrombectomy system. In Structural Heart, Q3 was a little softer, as expected, and grew low single digits. We had a stronger quarter internationally, and continued to gain share in Europe. This was partially offset in the US, where we annualized our Evolut FX Plus launch, and saw some competitive pressure.

I will now pivot to our neuroscience portfolio, which grew 3%. Growth was a little below our expectations this quarter, but neuroscience is also where we have one of our broadest pipelines and some of our most exciting opportunities. Importantly, we expect that pipeline to begin impacting growth in the fourth quarter. Cranial and Spinal Technologies continues to be a powerful engine for Medtronic plc. This large business delivered mid-single-digit growth including 8% growth from strong pull-through in Core Spine. We are excited to offer customers our new navigation and robotic platform Stealth Axis, which Jeff just mentioned. With FDA clearance achieved, we expect to see Stealth Axis contribute to neurosurgery and CST overall as soon as the fourth quarter.

Specialty Therapies delivered flat results in the third quarter. This is an area where we expect improved performance in the coming quarters, given the series of new product developments. Neurovascular has been challenged over the last quarters due to China VBP, to the recall of Vantage, both of which are now mostly behind us. We also have line of sight to a higher level of growth from the contribution of On X’s expanded indication. The NeuroGard carotid stent launch will also contribute as it is being commercialized by both our Neurovascular and Peripheral Vascular businesses. In Pelvic Health, we saw a slightly softer sacral nerve stimulation market environment, but look forward to seeing the increased contribution from Altaviva.

In Neuromodulation, we grew 4%, driven by the continued rollout of our differentiated fully closed-loop technologies Inceptiv SCS and BrainSense ADBS.

Que Dallara: Next,

Thierry Pieton: our MedSurg portfolio grew 3%, ahead of expectations.

Que Dallara: First,

Thierry Pieton: Endoscopy and ACM had strong quarters. Endoscopy revenue grew 10%, led by mid-teens growth in our esophageal portfolio, driven by 300. Acute Care and Monitoring saw a 7% growth, led by strength in blood oxygen management and airway access. And finally, our Surgical business grew by 1%. We saw strength in Energy, in Wound Management and Hernia, with expected softness in Stapling. The next phase of growth for this business is the rollout of Hugo. And we are thrilled to see our first installations and first cases so swiftly after the US launch. Wrapping up our business performance is MiniMed, our Diabetes business, which delivered 15% reported and over 8% organic growth.

Performance was led by double-digit strength in international markets. We also saw acceleration in the US with strong sequential lift driven by Simplera Sync and Instinct, which both just launched in December. Our Diabetes business continues its strong innovation cycle, supported by multiple recent regulatory and pipeline milestones. In addition to introducing Instinct and Simplera to the market, we secured several FDA clearances that further expand 780G’s indications. We also announced that 780G system is now available through pharmacy with agreements that cover the majority of commercially insured lives in the US.

And we submitted MiniMed Flex to the US FDA and began the US pivotal study for VIVERA, our third-generation fully closed-loop algorithm, which we believe will help maintain our leadership in delivering industry-leading outcomes. Finally, our MiniMed FIT patch pump remains on track, and we intend to submit it to the US FDA by this fall. The planned separation of MiniMed is perfectly on track. Our preferred path continues to be a two-step IPO and split. We continue to expect the separation to be complete by the end of calendar year 2026. Now turning to the financials.

This quarter, revenue of $9,000,000,000 grew 8.7% reported and 6% organic, a 50 basis point acceleration from prior quarter and 50 basis points above our guidance. Geographically, this performance was balanced, led by high-single-digit growth in Western Europe, with mid-single-digit growth across the US and Japan. US growth was 6% year over year, the strongest performance we have delivered since fiscal year 2019 excluding COVID comps. In China, we delivered low-single-digit growth while navigating ongoing but manageable volume-based procurement in a few businesses. Excluding VBP, our growth rate in China was mid-single digit. Our adjusted gross margin was 64.9%, ahead of expectations.

As I have done in the last several quarters, let me walk you through the rough breakout of the components. We realized 30 basis points of benefit from pricing. Net of inflation, cost down was negative 20 basis points, as the third quarter is typically our lowest quarter for generating cost-efficiency savings, and we had some prior-year nonrecurring items. Mix was negative 100 basis points, mostly driven by CAS and Diabetes. As discussed in prior disclosures, with CAS in the early stages of launch, this business is currently impacted by the mix of lower-margin capital to higher-margin catheters, and Diabetes is in the early manufacturing ramp-up of Simplera.

Over time, as you know, we expect this mix dynamic to improve as we scale CAS and separate the Diabetes business. Tariffs impacted the business $93,000,000 or 110 basis points, in line with forecast. And finally, foreign exchange provided an approximate 40 basis points tailwind. Adjusted R&D was 8% of revenue, and increased 7.4%. On an organic basis, this outpaced revenue by 50 basis points. Adjusted SG&A was 32.3% of revenue, which is 30 basis points lower than the third quarter of last year. We continue to fuel our PFA launch and develop and build the markets for Simplicity, Altaviva, and Hugo, but at the same time, we delivered disciplined leverage in G&A.

Our adjusted operating profit was $2,200,000,000, resulting in an adjusted operating margin of 24.1%, ahead of expectations again. Our adjusted tax rate was 17.3%, about 100 basis points higher than forecast, largely due to jurisdictional mix of profits. All in all, adjusted EPS was $1.36, $0.03 above the midpoint of our guidance range. Now turning to guidance. On the top line, we are reiterating fiscal 2026 organic revenue growth guidance of approximately 5.5%. In the fourth quarter, we expect revenue growth similar to Q3, so around 6% off a stronger Q4 2025 comp. Moving down the P&L, we expect our fiscal 2026 gross margin to increase slightly ex tariffs.

Pricing, FX, and COGS efficiency programs are expected to more than offset the negative impacts of business mix primarily from CAS and Diabetes. We anticipate a tariff impact to COGS of approximately $185,000,000, including $75,000,000 in the fourth quarter. Including tariffs, we expect fiscal 2026 gross margin decrease of roughly 30 basis points. We expect fiscal 2026 adjusted operating profit to grow approximately 5% or 7% excluding tariffs. Our fiscal 2026 operating margin is expected to be roughly flat excluding tariffs, and down about 50 basis points including the tariff impact. In totality, we expect these results to deliver gross margin and operating margin leverage ex tariffs in the second half of fiscal year 2026 as we stated last quarter.

Turning to EPS, this quarter, we saw a beat of $0.03. This was largely due to slightly better than expected revenue in the quarter, mainly from CRM and ACM. This was partially offset by the aforementioned tax pressure that we saw in the quarter. As we expect CRM and ACM to normalize and the tax pressure to carry into Q4, we are maintaining our fiscal 2026 EPS guidance in the range of $5.62 to $5.66. Look, we are excited about the quarter, and we think Q4 is going to be another robust quarter and that we will sustain our growth at a higher level and into the next year.

We are making progress on margin expansion, and the negative mix effect from CAS and Diabetes are going to get better. We are going to continue to invest in growth areas like R&D, sales and marketing, and M&A to capitalize on the opportunities ahead of us. And we will also continue to drive efficiency in functional areas. All told, we are committed to our guidance and we maintain our expectation for high-single-digit EPS growth fiscal year 2027. Back to you, Jeff.

Geoffrey Martha: Okay. Thanks, Thierry. Now before we go to Q&A, let me close with a few final thoughts. We are encouraged by the progress across the business, as Thierry just said. And we remain committed to stronger, durable revenue and earnings growth. Our PFA trajectory is strong and we are progressing on multiple billion-dollar opportunities. We are reinforcing our future pipeline and we are committed to organic and inorganic investment to further bolster the portfolio. Bottom line, we are delivering. Now, to our Medtronic plc colleagues around the world, thank you for your unwavering commitment to our mission, and to the patients we serve. You are delivering for customers and for patients, and you are turning our strategy into performance.

So thank you. With that, let us turn to Q&A. So first, Ingrid, welcome to your first earnings call. And now, can you please provide the instructions and queue up the analysts? Thank you, Jeff.

Ryan Weispfenning: For sell-side analysts that would like to ask a question, please select the participants button and click Raise Hand. If you are using the mobile app, please press More and then select Raise Hand. Your lines are currently on mute. And when called upon, you will receive a request to unmute your line. You must respond to this before asking your question. Finally, please be advised this Q&A session is being recorded. We will now pause to assemble the queue. We will take our first question from Travis Steed at Bank of America. Travis, please go ahead.

Travis Steed: Everybody, for taking the question. I guess, first, I will start on the comments on accelerating revenue growth next year and growing earnings high single digits. You think about CAS, obviously, can you hear me okay? Can you hear me okay? There we go. Yeah. Okay. I just wanted to ask about the accelerating revenue growth for next year, and also the commitment to grow earnings high single digits. I guess, you think about the overall portfolio, obviously, CAS is starting to hit tougher comps. And this quarter, Surgical is only growing 1%.

So just trying to think about how you get that business accelerating with Hugo and the commitment to be able to deliver on the commitments that you have laid out for FY 2027.

Geoffrey Martha: Well, thanks, Travis, for the question. I will give it a start then and hand it over to Thierry. I mean, look, on the top line, obviously, as you mentioned, we had a really strong quarter with CAS. We still think that growth is going to continue and become a larger part of the company, obviously. We are well positioned there. And then our other big growth drivers, particularly Simplicity for hypertension and Altaviva for overactive bladder. We see them beginning to kick in here, even in Q4. And then you have a number of other businesses here that are going to start growing faster than they have been here recently. One is CST with the Stealth Axis.

I am sure we will get some questions on that. But I do think this is kind of underappreciated, quite frankly, by the Street. This is not just a new robot, it is not just an extension of Mazor. It is a whole new platform that has a lot of benefits to it. And I think that is going to create growth for the short and long term for CST. And then Neurovascular is going to kick up as well. Neurovascular has a number of new products, like the Onyx indication for MMAE, as well as our carotid stenting product and NeuroGard. And then it anniversaries VBP and a few other.

So you are going to see a kick up in Neurovascular as well. So I think we feel good about the growth continuing here out, not just in Q4, but out into FY 2027.

Thierry Pieton: And on the EPS side, as I mentioned in the comments, the algorithm is clear. Right? So we have the accelerated growth, the things are getting better at the gross margin level, in particular in the second half as we will see the mix effect from CAS getting better and the separation of Diabetes. We will continue to drive the leverage on the functional areas, in particular in G&A. And we will then continue to invest in R&D and in M&A. So we are reiterating the high-single-digit EPS growth guidance for 2027. We do have a couple meaningful puts and takes in the number next year.

And as we are getting more visibility, we will keep you posted on what the impacts are. But to name a few, we will have the carryover from the tariffs, the tariffs element going into year. This year, we had about two and a half quarters of tariffs, and that will carry over into the full year. I think the way to think about that is about $75,000,000 per quarter. So on a full-year basis, it means around $300,000,000 of headwind versus the $185,000,000 we are having in 2026. We will have a little bit of help from the fact that there are 53 weeks in fiscal year 2027 as opposed to 52 usually.

And then the Diabetes deal, we fully expect the deal to be accretive. Between the moment we do the IPO and the moment we do the split, you should expect some dilution to the tune of $0.01 to $0.02 per month. The reason behind that is that most of the Medtronic plc stock retirement that we will do that drives the accretion happens only upon the full separation. So we will see the accretion later, but initially, we have a little bit of pressure coming from that. And we have also embedded in the guidance. So 4 to 5 cents of dilution coming from M&A activity. We have already announced CathWorks and Enteris.

And so we have embedded that in the guidance. So it is all in. As we get more visibility to the timing of Diabetes and the closing of the M&A deals, we will give you more specifics on the different impacts in the Q4 release. As you can see, we are committed to the growth acceleration. We are committed to the investment with M&A and with R&D. And we are committed to the guidance.

Geoffrey Martha: Yeah. And just on that acceleration, Go ahead, Travis. Excluding selling day. Yeah. There is that extra selling week next year. Is that

Travis Steed: Is the growth acceleration excluding that extra selling day?

Thierry Pieton: So that will be part of it. Will be part of it. And again, we will give you the details of the impact as we go into the Q4 analysis.

Geoffrey Martha: When I think about the growth acceleration, you mentioned CAS in Q3. I mean, beyond CAS, you saw our CRM business and our Peripheral Vascular Health business both step up in Q3. Q4, like I said and beyond, think about CST and Neurovascular starting to accelerate. Then as you get into FY 2027, that is when the Ardian and Altaviva really kick in and also Hugo. We feel good about that acceleration.

Que Dallara: Good.

Travis Steed: Thank you.

Que Dallara: Alright. Our next

Ryan Weispfenning: question comes from Vijay Kumar at Evercore. Please go ahead, Vijay.

Vijay Kumar: Thank you, Ingrid, and welcome to your inaugural earnings call here. Jeff, congrats on a nice sprint. You know, I had one product question and one clarification on the guidance. On the product, you mentioned RDN, Altaviva, those will be growth accelerators in fiscal 2026. How should we monitor the progress? Are there any goalposts that we can look forward to in tracking the launch curves for RDN and Altaviva.

Geoffrey Martha: You know, it is a good question. I think we will start to lay out more concrete goalposts as we go forward. Right now, we have been talking a lot about the leading indicators that we are seeing with both. And we are seeing really strong leading indicators like with Altaviva, we talked about training 500-plus physicians. You have strong demand training 500-plus physicians. And, like I said, last quarter, these are over the weekend, often traveling. It just shows the commitment here. And then things like in renal denervation, I would say it is things like the opening of new accounts. Like this quarter, we opened over 200 new accounts.

Our physician finder is up to 150 physicians, and remember that is a high bar to get in. You have to do five cases and opt in. So there are a lot more physicians doing cases today. And we will continue to track the covered lives. For Ardian, we are already up to like 100,000,000 covered lives. That is about one third of the population here in the US. So those are all leading indicators, and we will start putting more goalposts out there as this starts to mature a little bit, both of these launches. Do not know if you have anything to add to that, Thierry. Nope.

Vijay Kumar: Great. And just one on the extra week, Jeff. We are looking at exit rates of 6% organic. Right? Let us assume next year is north of 6%. The extra week is almost two points of growth. So are we looking at base organic excluding extra weeks somewhere in the 5% ish range? Or any thoughts on how to think about extra week contribution

Thierry Pieton: So maybe I will take that one now, and thanks for the question. Look, first, it is a little bit less than two points of full growth. And we will give you the specific calculations as we close the year. But the way to think of it is that there is going to be growth acceleration excluding the extra week. Right? So it should be upside. So we should have better growth than we have in fiscal year 2026 in 2027, and the extra week should be on top of that.

Que Dallara: Thanks.

Vijay Kumar: Much.

Geoffrey Martha: Is that clear, Vijay?

Vijay Kumar: Crystal clear. Yeah. Thank you.

Ryan Weispfenning: Great. And our next question comes from Larry Biegelsen at Wells Fargo. Larry, you are live.

Larry Biegelsen: Good morning. Thanks for taking the question. Yeah. Jeff, I wanted to ask about CAS. And your growth continued to accelerate this quarter to 80% worldwide, which implies the worldwide EP market grew about 20% in calendar year Q4. So my question is, how are you thinking about the EP market growth in calendar year 2026? And your CAS growth going forward now that you are lapping the Afera US launch. I think to achieve the trailing twelve-month $2,000,000,000 goal, it looks like your CAS growth has to sustain about 80% the next two quarters. Is that directionally accurate? Thanks for taking the question.

Geoffrey Martha: Well, first, I would say we agree with you on the market growth and our fiscal Q3 or Q4 here of around 20%. And we think the market will continue to be like that in the near term and, for our fiscal 2027, we think it is going to be at least high teens, and thereafter a strong double-digit. So we see the market growth continuing, and then we believe we are really well positioned with our portfolio of catheters as well as mapping. In terms of our business growth, we do see it sustaining here in Q4 and we have not provided guidance beyond that.

But again, I would like to say, I think we are very well positioned here. When you look at the four players in PFA. I think we, you get two whose value proposition right now is centered around mapping. And we feel like we are very well positioned against them because we still think the catheter carries the day and we have integrated mapping. Then when you look at our competitor, that is really their value proposition centers around catheters. We believe we have a better portfolio of catheters. Our Sphere-9 is, like I said in the commentary, proven to be quite versatile.

And I know initially, our competitor here did a pretty good job of putting out a narrative that

Larry Biegelsen: that,

Geoffrey Martha: that Sphere-9 was more of a niche. And I think as that has gotten out there, that has proven not to be true, as it is being used across persistent and paroxysmal, it is new, new cases, redos. It is simple versus complex. It is being used across the board. And then we have got Sphere-360, it is CE Marked. And it is a single-shot catheter, and again, that is probably the one catheter that has more excitement than Sphere-9. And we started the US trial. And then of course we are going to have mapping upgrades on a regular basis. So, feeling pretty good about our position today as well as tomorrow.

And like I said, the underlying market is really strong.

Que Dallara: Alright. Thanks so much, Jeff. Thank you, Larry.

Ryan Weispfenning: Our next call, our next question comes from Patrick Wood at Morgan Stanley. Patrick, please go ahead.

Patrick Wood: Perfect. Thank you so much for taking the question. I will keep it to one just given there is so much going on. Obviously, the CathWorks and Enteris deals, I know you were close to CathWorks for a long time. We think about capital allocation, M&A? There is a lot of other companies doing very large deals in this space. I am just trying to work out, directionally, do you guys feel still more that it is kind of bolt-on M&A, technology tuck-ins, that kind of things relative to larger deals? And how do you think about cap allocation going forward?

Que Dallara: Thanks.

Geoffrey Martha: Well, thanks for the question, Patrick. And, as we have stated, we are very committed to accelerating M&A and you are starting to see that with CathWorks and Enteris. And again, it is very focused, tied to our strategy venture investments that might lead ultimately to M&A and then M&A. And we are focused on more like what we would define as tuck-in deals. They can get up to several billion dollars. But tuck-in or a close adjacency to our existing business. And a number of them though. I mean, that is the other thing. I think it is a fairly meaningful amount of capital among several different tuck-in venture and tuck-in opportunities across our portfolio.

Again, prioritizing maybe the higher growth areas, and in some cases, maybe having multiple shots on goal like we did with pulse field ablation, right? We had an organic program. We went out and got Afera. You may see us do that again in some of these high growth, really must-win markets. But that is how I would say it. Tuck-in across many of our different segments and sub-segments as well as venture.

Patrick Wood: Appreciate it. Thanks for taking the question, guys.

Ryan Weispfenning: Great. So Robbie Marcus from JPMorgan will be our next question. Please go ahead, Robbie.

Geoffrey Martha: Great. Can you hear me okay? Yep. Yep. Great. Good morning. Thank you

Robbie Marcus: Two for me. Maybe I will ask them just as one. Jeff, or maybe Thierry. As you think about the fiscal 2027 guidance, and especially, I imagine you will have Hugo and renal denervation and tibial sphen to support those launches and continued investment in

Que Dallara: CAS.

Robbie Marcus: You know, how do you think about getting to the high-single-digit EPS growth. If you could give us some high-level drivers there. And then second part, the Street is sitting at 8.5% EPS growth. I know traditionally you do something like 6.5% to 9.4% as high single. Do you think the Street at 8.5% is at a good midpoint of the range to start here? Thanks a lot.

Thierry Pieton: Yeah. Hi, Robbie. Thanks for the question. So again, on EPS, the high-level drivers. We talked about the accelerated growth and obviously, that is help from a leverage standpoint. If you look at the gross margin line, what you have seen so far is operational improvements in pricing and cost out that have been offset by the mix effects on CAS and Diabetes. And as I have stated a couple of times already, those are going to get better. So the CAS improvement comes from the mix shifting towards more catheters and less capital equipment, which will help from a margin perspective. And then on the Diabetes side, it comes from the separation. Right?

So Diabetes has a lower gross margin rate than the rest of the business. And so once that business goes away, it will give us a natural lift from a gross margin perspective. If you start looking at overhead, look, we are going to continue to lean into R&D and sales and marketing to develop the franchises that you mentioned. So we are putting resources in RDN. We are putting resources in CAS. We are hiring the mappers that are necessary. We are doing the direct consumer marketing, in particular, on renal denervation and Altaviva. And we will continue to do that.

But net-net, the SG&A line will provide leverage because as we are having this quarter, for example, our Q3, what you see is the leverage that we get on the G&A line more than offsets the resources that we are putting from a sales and marketing perspective. So look, that will provide some improvement on operating margin. And then below the line, we will continue to have a little bit of a headwind on the interest line because we are refinancing debt that was contracted almost at 0% four or five years ago with debt that is now at sort of 3.5%, 4%.

And we will continue to have some pressure on tax, but the tax line is kinda getting to where it is going to stabilize now. And then look, I mentioned we have a few puts and takes where we need to understand the timing between now and year-end. One is the timing of the Diabetes separation. And as I said, between the IPO and the split, we get about $0.01 to $0.02 of dilution from the fact that we are losing 20% of the profit of Diabetes, but we do not have the benefit from the share count reduction yet. That share count reduction is calculated on a twelve-month rolling average, so you will see that gradually get better.

And then we will have some dilution coming from M&A. So the guidance is all in at high-single-digit EPS growth. Now second part of your question on the 8.5%, it feels like some of the latter items that I mentioned, so the sort of temporary dilution that we get from Diabetes and some of the M&A dilution is maybe not fully embedded in what the Street sees right now. As we get more visibility, we will help clarify that.

Robbie Marcus: Thank you very much.

Ryan Weispfenning: Our next question comes from Matt Taylor at Jefferies. Matt, please go ahead.

Matt Taylor: Hi. Thanks for taking the question this morning. I wanted to follow-up on the question around capital allocation and TAVR. I guess it was interesting to see the investment in Enteris. I was wondering if you could comment about why did not just buy the whole company versus invest in it. We also saw over the weekend the results longer-term follow-up for CoreValve published in JACC. And similar to the Edwards trials, there was some late catch-up in mortality. I was wondering if you could comment on that in the TAVR arm.

Geoffrey Martha: Sure. I think, on your first call on Enteris, it is just we feel Structural Heart space is one of the spaces we helped pioneer. We have a really strong position, great reputation. But we want to expand in that. We have some organic program, obviously we have Evolut platform. We have got mitral and tricuspid replacement programs, but we still think there is an opportunity here to expand. And in the case of TAVR, the balloon-expandable is the larger piece of the market. And this is an opportunity to get into that market. Again, we may have multiple shots on goal here, but thinking Enteris is a good one to invest in and partner with.

We will see where we go from here there. And then in terms of the JACC article, I would say here that, look, this is, I just want to emphasize that this is an old valve that is no longer commercially available. And it is an old procedural technique that we have provided guidance. So basically all that communication did is reiterate the guidance that we provided back in 2020. And so that is what is happening there. And, like I said, we are collaborating with our physicians to make sure they understand all of this. And moving forward from here.

So that is, if you have anything to add there, But bullish on the Structural Heart space and I would, you know, the Enteris investment and, you know, who knows maybe more following that.

Matt Taylor: Thanks for the color, Jeff.

Ryan Weispfenning: Alright. Our next question comes from at Barclays. Matt, please go ahead.

Matt Miksic: Great. Thanks so much for taking the question. Congrats on the Enteris investment, by the way. So on CAS, I will just ask one question. You mentioned generator sales are kind of a headwind to gross margins at this point, the mix is maybe shifting a little more towards capital. If you could give us a sense of when that starts to normalize, and then also in terms of the runway, I think we understand that hiring mappers is maybe the bottleneck here if you want to put it that way. You need more people to open more centers, to get more catheter use.

Any sense of where you are in that continuum, through the academic centers or into the general centers in the US, and some sense of the pace that you are able to maintain for hiring centers? So helpful color. Appreciate you taking the question.

Geoffrey Martha: Matt. On the last part of it, where are we? I still think we are relatively early in our launch here. We still have a long runway to go, which is good. In penetrating some of these high-volume academic centers, as well as getting out beyond that. And, to your point, hiring mappers has been critical. It is not the topic, if you will, but it is an important topic here. We have been able to stay ahead of it, but it is the thing that we are probably the most focused on right now, continuing to hire mappers.

And a lot of these mappers tend to be pretty dedicated to the space, and they are seeing where the direction of travel is, or use a Minnesota term, where the puck is going. And so that helps a lot as well. So that is how I would comment on there. And the what was the first part of the question?

Thierry Pieton: The first part was on the dilution that comes from the capital equipment and when does the mix turnaround. So first, what I want to say is CAS is a fantastic business from an operating margin perspective. Right? So it is likely dilutive because of this mix issue at the GM level. But it is driving significant profitability at the total business level, at the operating margin level. When it is going to turn around between equipment and catheters, I want to say it is almost a good problem to have. So I hope it turns around as late as possible because as we are building the installed base, it is always going to be good news going forward.

That being said, I think you will start to see an inflection in the second half of next year. The mix is starting to improve with the catheter sales increasing, and look, year over year, CAS is going to drive gross margin improvement as early as 2027. So look, it is a great business to be in, and it is all good news going forward.

Matt Miksic: Great. Thank you.

Ryan Weispfenning: Our next question comes from Chris Pasquale at Nephron. Chris, go ahead.

Chris Pasquale: Thanks. I wanted to ask about Hugo. Jeff, you talked about the impact of Simplicity and Altaviva really beginning to kick in as soon as next quarter. I do not think you included Hugo in that group. So we would love to hear how you are thinking about the timeline for Hugo to really begin to move the needle within the Surgical business, and any qualitative comments you can make about the system pipeline right now?

Geoffrey Martha: Well, first of all, look, super excited about where we are with Hugo. Big quarter for us this past quarter. Getting the FDA approval. We just announced this morning we did, we completed our first cases in the US in February, earlier this month in Cleveland Clinic. We have more scheduled this week, got other centers, and all the leading indicators of Hugo. And all the way, on those cases, we got great feedback in terms of how the system is performing and its future opportunity in the US market. The leading indicators are all positive in terms of the smooth case rate, procedures, procedure growth globally, and utilization. They can both continue to be really strong.

We watch those every week. I know the business watches it every day. I see them every week. And we are seeing a pretty meaningful step up in installations around the world, especially as US kicks in. And so we expect a step up in Q4. Now the Surgical business is a big business, has some puts and takes. So you may not move the needle on the Surgical business quite yet. But underneath the covers there, Hugo is growing and growing pretty fast now. And eventually you will start to see this move that big $6,000,000,000 business. But we like where we sit. Really excited about getting in the US market, and the reception that we are getting.

And the orders that we have.

Chris Pasquale: Great. Thanks, Jeff.

Ryan Weispfenning: Okay. Next question comes from Danielle Antalffy at UBS. Danielle, you are live.

Danielle Antalffy: Good morning, everyone. Thank you so much for taking the question. Jeff, I was hoping you could talk a little bit more about how we should think about renal denervation, Simplicity, and the market development you are talking about. We have talked to some referring physicians who have been involved in renal denervation since the very beginning. And she sounds like she is getting a lot of calls from folks. I am just curious what goes into actually developing this market, building out, helping centers build out referral networks, etcetera. And if you can give any color on actual numbers to date? Even directionally? Thanks so much. Sorry about that. Sure. Thanks, Danielle. I mean, I appreciate that question.

Geoffrey Martha: I mean, first of all, in terms of physicians getting a lot of calls, that is really starting to kick in. Just to give you

Que Dallara: again,

Geoffrey Martha: appreciate that it is a leading indicator, it is pretty powerful. So on our direct-to-consumer website around Simplicity, I am just double checking. Last quarter, had maybe 50,000, or Q2 rather. Had about 50,000 visits. In Q3, we had 2.5 million visits. So the consumer demand is really spiking here and we are just getting started. Like I said earlier, we opened up over 200 accounts. Physician finder is up. Reimbursement is strong, we are getting that strong consumer demand. Most importantly, we are getting terrific patient results, patient outcomes, right? With the blood pressure coming down meaningfully, it is staying, patients and it is really resonating with patients. That in and of itself is getting doctors excited.

And so what we are doing is we have been hiring a lot of people in terms of market development. And there are several different roles here, right? One is building that referral pathway from the general practitioners, and in the hypertensive specialists into the hospital, into that proceduralist. We have got a lot of people around health economics, around coding and billing as well. Helping the hospitals. So it is a number of roles like that, health economics, coding, billing, as well as some of the other roles I said in terms of the market development, building those referral pathways. And that is really where things are right now.

I would say all the market, like the initial foundational elements have all been like the chips have turned over green, right? The FDA approval is breakthrough approval, it is broad. The CMS reimbursement, it is a good number and it is broad. We are, the commercial payers are falling in line. And the competitive dynamics are way better than we thought. Initially here we are doing, I saw different analysts over the last couple of years, predictions on the mix between us and the other competitor on the market. We are doing way better than any of those models. And so now we just have to build this market. It is all those things we said, Danielle.

But again, we are really excited where you feel the energy. It all starts with those patient outcomes and how this is resonating with consumers. So the other thing we are going to do over time besides building the referral pathway and working with hospitals, is building the brand around Simplicity. So the 50,000 to 2,500,000 site visits I talked about, that is all about lead development, lead generation. We would also like to build the brand of Simplicity and make it synonymous with hypertension management. So that is going to be an investment that Thierry talked about for FY 2027. So a lot of excitement right now in Ardian.

And it will start to, the numbers in FY will be more meaningful in FY 2027 for us, the actual revenue, the lagging indicators. And again, it is very profitable right out of the gate for us.

Que Dallara: Thank you so much.

Ryan Weispfenning: Alright. And as we reach the top of the hour here, our last question is going to come from Joanne Wuensch at Citi. And before we move to Joanne, please, of course, email us for any of those we did not reach today. Sorry and thank you, and we will look forward to talking to you soon. But, Joanne, please go ahead.

Joanne Wuensch: Thank you so much, and good morning. I am going to ask the Stealth Axis question and what you can share with us about the product and why you are so excited about it. Thank you.

Geoffrey Martha: Well, thanks, Joanne, for that question. You know, first of all, like I said, I do think this has been meaningfully underappreciated in me. Not so much in maybe in the clinical community from spine surgeons, but maybe in the investment community. Because look, this robot does two things. First of all, it is not an extension of Mazor. It is a new platform, a ton of new functionality. That is going to be very value-added. But the other thing that is really important here

Que Dallara: is

Geoffrey Martha: how it fits into the workflow. So today, 70%, I mentioned in the commentary, 70% of procedures in the US are navigated. That is navigation and O-arm, we invented and we lead by far, and today robotics does not work well with that workflow. So that is why robotic penetration is a lot smaller than the 70% that we are seeing with navigation. The Stealth Axis fits right into that workflow. So it is one seamless system from the initial imaging to the AI-based surgical planning, right into the case, navigation, imaging, and now robotics. One seamless workflow that, trust me, surgeons really have been waiting for.

So you have got a better robot with more functionality, and then you have got a much, much, much better workflow that, as you know, is super important to physicians and health systems. And this is just effectively lowering the barriers to step into robotics for spine surgery. And it is going to grow the market, I believe. And we are definitely going to continue to take share. And this really lengthens or extends our lead, in my opinion, from our primary competitor in this space. The competitive dynamics have dramatically changed over the last couple of years. We are enabling technology and our Able suite is key to winning.

And this, like I said, extends our lead over our competitor. And so super excited about that. But in closing here, I would say beyond some of the big generational growth drivers we mentioned, we talked a lot about CAS and Ardian, a little bit about Altaviva, and Hugo, I would add to that robotics piece, I would add Stealth Axis. We have a breadth of innovation right now in Medtronic plc, which is why you feel we are getting the excitement here.

Whether you saw it from this quarter, like I mentioned, from CRM and Peripheral Vascular Health, which we did not get any questions on—their growth has meaningfully improved here from a number of new products like carotid and thrombectomy. We talked about CST accelerating, Neurovascular is accelerating with new products that they have got between the NeuroGard carotid product as well as MMAE, that is a mouthful. And then you have got these bigger growth drivers like Ardian and Altaviva that are at the very, very, and Hugo that are at the very early stages. So you are starting to see the breadth kick in, which is beautiful to see.

I know that in this business, innovation is key and we have a depth of innovation with these big generational growth drivers, but we also have the breadth. And, as Thierry walked you through, I think it was Robbie’s question.

Que Dallara: We are

Geoffrey Martha: pulling different levers to make sure that we are investing appropriately. In these organically, whether it is increasing R&D, funding direct to consumer, hiring a ton of mappers, and if you are a mapper out there, you know, hit our website up. And then kicking in the M&A. Right? So we are really shifting our stance, moving into more of an offensive footing here. And it is

Que Dallara: based

Geoffrey Martha: on just the momentum that we have and the momentum we see coming.

Que Dallara: All right.

Ryan Weispfenning: Thank you everyone, and I will turn to Jeff for some closing remarks.

Geoffrey Martha: I thought that was the close. Okay. Thank you. Thank you all for joining today, and all of your questions, and appreciate your support and continued interest in Medtronic plc, and we hope that you will join us for our Q4 and our full-year fiscal 2026 earnings broadcast, where we are going to update you on the continued progress that we just talked about, against our short and long-term strategies. With that, have a great rest of your day. Thank you.

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