Good morning, and welcome to our fiscal 27 first quarter earnings webcast. I'm Ingrid Goldberg, head of Medtronic Investor Relations, and I'm joined by Geoff Martha, chairman and chief executive officer, and Thierry Pieton, chief financial officer. Geoff and Thierry will provide comments on the results of our first quarter, which ended on July 31st, 2026, and our outlook for the remainder of the fiscal year 27. After our prepared remarks, we'll take questions from the sell-side analysts that cover the company. Earlier this morning, we issued a press release discussing our quarterly results and several financial schedules. We also posted an earnings presentation that provides additional details on our performance. The presentation can be accessed in our earnings press release or on our website at investorrelations.medtronic.com. During today's program, many of our statements will be forward-looking and actual results may differ materially as explained in our SEC filings. We undertake no obligation to update any forward-looking statements. unless otherwise stated all comparisons are on a year-over-year basis and revenue comparisons are made on an organic basis which excludes the impact of foreign currency first quarter revenue in the current and prior year reported as other as well as significant acquisitions divestitures or other significant district items as a reminder fiscal 27 is a 53-week fiscal year with the extra week occurring in the first fiscal month of the first quarter and is included in our q1 results References to sequential revenue changes compare the fourth quarter of fiscal 26 and are made on an as-reported basis. Unless otherwise stated, all references to share gains or losses are on a revenue and year-over-year 52-week basis, comparing our most recently completed fiscal quarter to our competitors most recently completed calendar quarter. Reconciliations of all non-GAAP financial measures can be found in our earnings press release or on our website at investorrelations.medtronic.com. And finally, our EPS guidance does not include any charges or gains that would be reported as non-GAAP adjustments to the earnings during the fiscal year. With that, I'm now pleased to hand it over to you, Geoff.

Okay, thanks, Ingrid, and good morning, everyone. Thank you for joining us. Look, Q1 represents a strong start to fiscal 27. with revenue of $9.8 billion and adjusted EPS of $1.45, both well ahead of expectations. Organic revenue growth was 13.7%, reflecting strong underlying market demand and excellent execution across our businesses. Importantly, these results reinforce our confidence in the durability of our growth. Our three largest businesses, CRM, CST, and Surgical, all delivered strong results this quarter. Cardiac Ablation Solutions continues to perform exceptionally well, and we are making progress in Simplicity, AltaViva, and Robotics with Hugo. And at the same time, our recent acquisitions are contributing to reported growth and strengthening our portfolio for the long term. So we are executing, and this quarter's results are a clear proof point. Our strategic and operational focus is translating into stronger commercial performance and greater consistency. With healthy underlying markets, relentless execution, and multiple growth platforms all gaining scale Medtronic is increasingly well positioned to deliver on our fiscal 27 targets and our long-term revenue and earnings trajectory. So with that, let's get into the details of what drove the quarter. Starting with cardiac rhythm management, which delivered an outstanding quarter with global growth of 15%. Performance reflected strength across both high power and low power therapies with contributions from EVICD, MICRA, and conduction system pacing, including Omnia Secure. At more than $5.5 billion in annual revenue, CRM is one of our largest businesses and has been a longstanding source of strength for the company. As an example, Mycra, which launched more than a decade ago, continues to grow at a healthy double-digit rate, which underscores the lasting impact of meaningful innovation within CRM. and we're not standing still. We are further advancing innovation across pacing, defibrillation and diagnostics supported by a strong pipeline and excellent execution from our teams. Look CRM is a flagship business for Medtronic and we continue to view this business as a key source of innovation. One that will drive durable growth for years to come. Cranial and spinal technologies was another Q1 highlight, delivering 13% growth, including 14% in the US and 10% internationally. Our able ecosystem continues to resonate with customers as it connects technologies that have traditionally operated in silos. By bringing together AI-driven planning, imaging, navigation, robotics, implants, and outcomes data across the surgical journey, Able helps surgeons make more informed decisions, operate with greater precision, and learn from each and every case. And our recently launched Stealth Access platform also meaningfully outperformed this quarter. While we're still early in the launch, adoption is building and customer feedback has been very positive. With US spine robotics penetration still in the single digits, we see a significant opportunity to drive ecosystem pull through and extend our leadership position in spine and cranial technologies for years to come. Now moving to surgical, which delivered another strong quarter with 9% global growth. Surgical is our largest operating unit with over $6 billion in annual revenue. Here we're leveraging our decades of innovation and operating room partnerships to build a connected surgical ecosystem. And we're going to dive deeper on this in just a few minutes. In addition to these businesses, our next cycle of large growth opportunities are playing a more significant role in our performance. Cardiac Ablation Solutions delivered another quarter of excellent performance, further strengthening our position in one of the most attractive markets in medtech. In Q1, CAST delivered 88% worldwide growth, reflecting the team's execution and the strength of our platform. Sphere 9 momentum continued with a nine point increase in US share during the quarter. and I'm pleased to share that we achieved an important commitment this quarter ahead of the timeframe we promised, surpassing the 2 billion mark in trailing 12 month revenue. The broader EP space remains healthy, growing in the mid teens and we continue to expect CAS to grow up more than two and a half times the market rate this fiscal year. Our U.S. Zafira installed base again grew more than 35% sequentially in Q1, demonstrating that we remain in the early innings of this opportunity. And as we look ahead, our runway extends well beyond today's share gains as we build out a comprehensive EP platform. One that spans mapping, ice catheters, focal ablation software, and single shot innovation. positioning ourselves to serve electrophysiologists with more complete solutions and expand the number of patients who can benefit from advanced EP therapies. This quarter we expanded our offering with CE Mark for Sphere 9 for the treatment of ventricular arrhythmias, including ventricular tachycardia, opening the door to a patient population that is notoriously difficult to treat. and enrollment in our USVT pivotal trial is also underway. We're only at the beginning for CAS. With a differentiated platform, a growing installed base, expanding indications and a strong innovation pipeline, we are well positioned to treat more patients, to continue to gain share and further extend our leadership in this large and growing market. Now turning to simplicity, Q1 was another strong quarter and we are increasingly encouraged by this market's evolution. Real world outcomes, well, they just keep getting better as evidenced by the three year data we recently presented. And we are pleased to share that the Spiral Affirm clinical trial was accepted for a late breaker at TCT this fall. Look, the conversations with clinicians is increasingly shifting from awareness to access, and more hospitals are approaching us about establishing RDN programs. Here, our key focus areas are on expanding coverage and integrating RDN into the care pathway. Looking ahead for RDN, our trans-radial catheter remains on track to launch in the second half of this fiscal year. This is an important step forward as many interventional cardiology procedures are performed via radial axis today, making the therapy easier to integrate into existing workflows and potentially improving patient outcomes. These positive signals further reinforce our conviction that simplicity is one of the most compelling long-term growth opportunities in med tech. Now turning to pelvic health. The business delivered strong growth this quarter, increasing 15%, driven by significant progress from AltaViva, where procedures doubled sequentially. Demand for AltaViva is building, and while we are still early in our launch, AltaViva is gaining traction with physicians, as well as the 16 million US patients who still suffer from urge urinary incontinence. As we continue to expand training, Reimbursement Support, and Patient Awareness, we are really encouraged by the progress we are already seeing. And we are confident in AltaViva's ability to become a meaningful contributor to growth for years to come. Okay, back to surgical. We have a strong leadership position in surgery, built on decades of innovation, trusted technologies, and a longstanding partnerships with surgeons worldwide. As robotic-assisted surgery continues to expand, we believe our portfolio breadth, our global reach, and our operating room presence uniquely position us to help shape the future of surgery and extend the benefits of these technologies to more patients around the world. Robotic-assisted surgery, or RAS, is one of the most compelling growth opportunities in healthcare, with global penetration still in the single digits and only 1% in emerging markets. At the same time, RAS is in high demand, with procedure volumes up approximately 16% per year over the last decade. There is a significant runway here, and we expect robust expansion for many years to come. Now, we've established our foundation in soft tissue robotics with Hugo, where we continue to make meaningful progress. By the end of the fiscal year, we expect Hugo to surpass 50,000 completed procedures, with procedure growth continuing at more than twice the market rate. We're also advancing our platform through new capabilities and new indications, including the expected US expansions into general surgery and gynecology. We are investing in building out a broader surgical ecosystem, just like in CST. An ecosystem that integrates robotics, advanced visualization, navigation, instrumentation, and digital technologies, including AI enabled capabilities like touch surgery. Today, touch surgery is used in more than 1500 operating rooms globally, supporting AI powered insights, collaboration and workflows. And with touch surgery aid unveiled at SRS, we are bringing 300 times more computing power into the operating room and creating a foundation for increasingly advanced AI capabilities over time. And now that brings us to Cornerstone Robotics. As announced this morning, we are further enhancing and expanding our robotic portfolio through a strategic investment and distribution agreement for Cornerstone's Sentier Surgical System in select markets outside the U.S. Sentier complements Hugo by extending our reach into select international markets and broadening the range of customer needs that we can address as robotic surgery continues to expand globally. So taken together, the platforms, Hugo, TouchSurgeryAid, Sentier, and our enhanced surgical instrumentation position Medtronic to build a differentiated global robotics portfolio, combining advanced robotics, AI, visualization, and instrumentation to push the field forward, improving surgical precision and workflow, and serve a broader range of customers and patients around the world. Look, Q1 performance is further evidence that our strategy is translating into stronger results. We are accelerating growth, advancing innovation, and focusing the portfolio and deploying capital with discipline. Overall, our progress this quarter reinforces our confidence in fiscal 27 and in our long-term revenue and earnings growth potential. With that, I'm going to turn it over to Thierry to walk through more detailed business results, our financials and our updated guidance.

So over to you Thierry. Hey, thanks, Geoff. And hello, everyone. I appreciate you joining today. Before we begin, I'd like to remind everyone this quarter benefited from the extra selling week, which we estimate contributed approximately $570 million or 670 basis points to total organic enterprise revenue growth. Excluding the impact of the extra week, we delivered our strongest quarterly performance in nearly eight years, excluding COVID comps. Revenue this quarter was $9.8 billion, up 13.7% on both a reported and organic basis. Geographically, we saw nearly 16% growth in the US and 12% internationally. Cardiovascular delivered 19% revenue growth this quarter, excluding 25% in the US and 14% internationally. Electrophysiology therapies, or EPT, which includes our CRM and CAS businesses, grew 29%, including 41% in the US and 18% internationally. Within EPT, Cardiac Ablation Solutions was again a significant contributor, delivering 88% growth, up 139% in the US. As Geoff outlined, while we are gaining share rapidly in CAS, this business is still in the early stages of its trajectory. In Q2, we expect to outpace the market by more than 3x, with growth rates moderating over the remainder of the fiscal year as we lap increasingly strong comps. Cardiac rhythm management was up 15% worldwide, including balanced performance between the US and international markets, gaining 80 basis points of global share. Conduction system pacing continues to gain momentum adding over 200 basis points to CRM in the first quarter. As CSP adoption expands across a growing patient population Medtronic remains the leader with CSP capable leads in both high and low power segments. Our broad portfolio and innovation pipeline position us to extend our leadership in this large franchise. Pivoting to interventional cardiology therapies, which includes structural heart and coronary and renal denervation. ICT grew 7% globally, driven mainly by 11% international growth. Structural heart grew low single digits, similarly to Q4. US procedure volume trends remain stable. Our internal programs in mitral and tricuspid replacement are on track and we're taking steps to broaden our opportunity over time through targeted external investments as evidenced by our strategic investment earlier this year in Anteris as well as Picardia announced this morning. Picardia is the first FDA cleared leaflet modification technology for TAVR procedures for patients at risk for coronary obstruction. one of the fastest growing segments in structural heart. Coronary and renal denervation grew 13% globally. Our coronary business was up low double digits with CathWorks, our AI and advanced computational science platform for angio-based FFR contributing nearly 300 basis points of organic growth. In Ardian, we continue to make progress in the first quarter. positive trends across access, market development and adoption reinforce our confidence in this very large opportunity. Cardiovascular surgery, which includes our cardiac surgery and aortic businesses grew 8% globally and peripheral vascular health was up 11%. Now moving to neuroscience. The portfolio grew 9% worldwide, driven by 11% in the US and 7% internationally. Cranial and spinal technologies delivered 13% growth worldwide. Performance was driven by continued strength in core spine, up 14%, and neurosurgery up 15% along with strong contribution from Stealth Access following its first full quarter since commercial launch. Specialty therapies was up 7% including 10% in the US and 4% internationally. Within specialty, neurovascular grew 4% globally, driven by 9% in hemorrhagic and continued strength across flow diversion, intracellular embolization, carotid stenting, and access devices. In August, Onyx 12 received US FDA approval for MMA embolization to treat subdural hematomas. All three onyx viscosities are now approved for a one-minute shake time versus the conventional 20 minutes. This quarter, we completed our acquisition of Scientea, which represents an important advancement in navigation, enabling neurointerventionalists to reach areas of the brain that have historically been extremely difficult to access. Pelvic Health delivered 15% growth globally, In S&M Medtronic continues to outpace peers and AltaViva's performance is now more than offsetting S&M market softness. We're pleased with the continued progress in AltaViva as physician training expands, reimbursement progresses and physician experience builds. We expect pelvic health to become a stronger and stronger contributor to neuroscience in fiscal year 27 and beyond. The ENT grew 7% worldwide driven by low double-digit growth in the US. Neuromodulation was at 3% globally driven by ongoing SCS market softness and replacement headwinds in DBS. Our neuromodulation position has been strengthened by the acquisition of SPI therapeutics in peripheral nerve stimulation and through our distribution agreement with Merit Medical, which expands our presence in BVNA. Both segments are growing over 20% annually. Together, these strategic actions increase our exposure to attractive high growth markets and reinforce our broader pain portfolio. Now turning to medical surgical, which had a strong quarter and delivered 10% growth globally with balanced performance in the US and internationally. Surgical revenue increased 9% with similar performance across the US and international markets. We saw strength in advanced energy and wound management, driven by shared gains from our ligature vessel sealing and V-lock barbed sutures. As Geoff mentioned, we're pleased with our launch of Hugo, which had an increase in contribution in the quarter. Endoscopy grew high single digits, driven by further momentum of endoflip 300 system and of pill camp. Acute care and monitoring was up 14% globally, including high teens growth in the US. Results were driven by mid 40s growth in McGrath video laryngoscopy, high 30s in microstream capnography, and high single digits in Nalcorg pulse oximetry. This performance was a positive tailwind in the quarter. However, we expect ACM to normalize as we move through 2027. Finally, the diabetes business delivered 15% growth driven by US acceleration and robust growth internationally. Our strategic intent for the separation of MiniMed is unchanged. Create two focus companies that will allow both MiniMed and Medtronic to execute more effectively, pursue their distinct capital allocation strategies, and align with the investor basis that best match their respective financial profiles. Before we shift to the P&L and guidance, I wanted to spend a moment on what we're seeing in terms of procedure volumes. The Q1 was a very strong quarter for Medtronic underpinned by healthy underlying procedure volumes across nearly all of our end markets and geographies. Importantly, this strength was broad based and not concentrated in any one therapy or region. We continue to see resilient demand across chronic disease, high acuity conditions, and life-saving interventions, areas where Medtronic is particularly well positioned, given our differentiated innovation and strong clinical evidence. While we continue to monitor the broader environment closely as usual, the underlying demand backdrop remains constructive and reinforces our confidence in the durability of our growth. Overall, we're pleased with Q1 performance as well as the widespread contribution to revenue from many operating units. Now moving down the P&L. Our adjusted gross margin was 65.2% up 10 basis points year over year. Now let me walk you through the elements that shape gross margin this quarter. We've maintained our discipline on pricing which provided 30 basis point benefits to the quarter. Net of inflation, cost down contributed 50 basis points this quarter, driven primarily by COGS efficiency programs and strong execution across our portfolios, global operations and supply chain teams. In Q1, we rationalized more than 9,000 SKUs, further streamlining our product portfolio to focus on the areas with the greatest customer impact while enhancing supply chain performance and delivering cost efficiencies across the enterprise. Mix was unfavorable by 50 basis points, largely reflective of the diabetes and cast businesses. Consistent with prior quarters, while the near-term cast capital mix continues to impact our gross margin, it's reflective of our strong commercial performance and growing install base, which is expanding our foundation for future pull-through of higher margin catheter sales over the long term. The tariff-related impact was a slight headwind, as tariffs paid were largely offset by related refunds. And finally, the impact from foreign exchange was roughly neutral. Adjusted SG&A was 32.4% of revenue and increased 14% year-over-year. We continue to make investments to accelerate the commercialization of our growth opportunities while also integrating several recent acquisitions. Adjusted R&D was 7.9% of revenue in Q1 and increased 6% year over year. Here, we are focused on driving sustainable growth through investment in innovation, complemented by targeted inorganic opportunities. This discipline is reflected in acquisitions like SPR Therapeutics and Scientia, both of which operate in markets with CAGRs exceeding 20%. These businesses are demonstrating strong early traction, and while not reflected in our organic growth today, they're expected to contribute over 150 million to inorganic growth in fiscal year 27. Our adjusted operating profit was $2.3 billion and increased 15% year-over-year. This resulted in an adjusted operating margin of 23.7%, up 10 basis points from the prior year, while we continued to invest behind our highest priority growth opportunities. Our adjusted tax rate was 17.2%, slightly better than expected. The benefit was mostly timing and we expect this to be offset later in the year. All in, our adjusted EPS was $1.45, six cents above the midpoint of our guidance range and of street expectations. Now turning to our guidance, as a reminder, our four year guidance includes the diabetes business through fiscal year end. On the top line, we're pleased with a strong performance in the first quarter and are raising our fiscal year 27 organic revenue growth guidance to 7.25% to 7.75%, which represents a 50 basis points increase from our prior guidance. In the second quarter, we're expecting roughly 6% organic revenue growth. Based on recent effects rates, we expect foreign exchange to be a roughly 50 to 150 million headwind for the full year, with approximate 25 to 75 million headwinds in 2Q. Moving down the P&L and starting with gross margin, we continue to expect pricing and COGS efficiency programs to offset the current impact of business mix, which is primarily from diabetes and CAS. This headwind is expected to reduce following the completion of the minimum ed separation which we intend to close prior to fiscal year end. We continue to make targeted investments that are focused on our highest priority growth opportunities and are intended to strengthen the durability of our long-term revenue profile. Taken together, We expect fiscal year 27 operating profit to grow approximately 10% with operating margin expanding approximately 50 basis points year over year. Moving to EPS, given the strength in the first quarter, we're also raising our fiscal 27 guidance range to $5.94 to $6. For the second quarter, we expect EPS in the range of $1.32 to $1.34 which includes a roughly neutral impact from foreign exchange at recent rates. To close, we are well positioned for a strong year. I'm encouraged by the strength of our first quarter performance and the continued progress we made against our strategic priorities. At the same time, our operational focus has begun translating into our financial results. Portfolio simplification, SKU rationalization, cost out and broader supply chain initiatives are beginning to deliver structural efficiencies down the P&L and we see further opportunity ahead. We're pairing that discipline with targeted organic and inorganic investment to accelerate innovation and support commercialization and expand our growth platforms. Look, we are laser focused on translating stronger growth and enhanced efficiency into durable earnings leverage. With that, back to you, Geoff.

OK, thanks, Thierry. Q1 was a strong start to fiscal 27 and another proof point that our strategy is translating into results. What gives us confidence is not simply the strength of the quarter, but also the breadth of our performance this quarter. Growth is being driven by several businesses, multiple innovation platforms, and teams who are executing at a high level across Medtronic. We look forward to sharing a deeper look at our portfolio and our pipeline and our capital allocation strategy as well as our long-term growth opportunities at our upcoming investor day scheduled for December 10th and 11th. With that, I'd like to thank our Medtronic colleagues around the world. The progress we are making reflects the discipline, focus, and execution of our teams. I want to thank you for your hard work and continued commitment to reaching more patients. Together, we bring our mission to life for the people who are counting on us the most. OK, let's turn to Q&A now. And Ingrid, please provide the instructions and queue up the analysts.

For the sell side analysts that would like to ask a question, please select the participants button and click raise hand. If you're using the mobile app, press the more button and select raise hand. Your lines are currently on mute, and when called upon, you'll receive a request to unmute your line, which you must respond to before asking your question. Finally, please be advised that the Q&A session is being recorded. We'll now pause for a few seconds to assemble the queue. Our first question comes from Travis Steed at Bank of America. Go ahead, Travis.

Hey everybody, congrats on a great quarter. I guess I want to, CAS is doing really well, but I want to spend a second on kind of the Medtronic business ex-CAS and just kind of the ability to accelerate and improve kind of the base business ex-CAS at Medtronic kind of going forward. We saw AltaViva having an impact. So maybe just spend some time on that. And then also the investments this morning with the Cornerstone deal. When does that show up in kind of the base surgery revenue and how does that contract structured with with Cornerstone and then Thierry wanted to also follow up the the margin guide I think took down like 10 basis points from 50 basis points from 60 to 50 basis points just wanted to clarify that if that's because of the some of the investments you've done this this year okay a couple other questions there but thanks for the the questions Travis you know first on the I'll take I'll start on the first one just on the business performance and and get it x cast I say first of all

What we like about the quarter is the breadth and the depth of the performance. You had a number of businesses, including our big three, perform really well. Cardiac Rhythm, CST, and improving performance in surgical. and on that breadth note you know a lot of different countries around the world contributed to the growth and then as you point out you know we had a number of growth drivers on top of this to give you the depth right the cast being the biggest one but also some good progress you know in in Alta Viva Ardian, Hugo. So we've got these growth drivers all moving forward. So look, from our perspective, the performance is broad based and we had strong execution. And it's really, as we talked about this last quarter, the compounding impact of a lot of strategic operational and cultural changes that we've made. So beyond CAS, like you said, you're getting to your question. Like I said, we have these other growth drivers that we're feeling really good about. We can talk about the announcement we made this morning and in structural heart with Picardia, as well as in soft tissue robotics with Cornerstone Robotics. There's a lot to talk about. And Ardine is making good progress as well. And AltaViva is starting to inflect. And on top of that, you've got Stealth Access really doing well in CST. So we feel good about these other growth drivers. But if I go around the horn, I mean, just talk about neuroscience for a second. Lots going on there. I mentioned Stealth Access in CST. We talked about AltaViva. We can get more into that. And then in Neurovascular, we see an acceleration here in the back half of the year, getting that business to mid-single digit. It's partly the acquisition of Scientia. That's not in our organic growth. And on top of that, we'll get to this mid-single digit. But it is getting us into more cases, and we've got a lot of new products there. More indications for Onyx. We've got Carotid Stenting, and we've got RT. So we've got a number of new products there. They're driving in, of course, in pain stim in our neuromod business. We've got the new BVNA partnership that's accelerating, as well as SPR, which is moving us upstream. And so that business will benefit from that. So you're going to see a nice acceleration in neuroscience. continued performance in cardiovascular, and you're seeing the acceleration in surgery. I don't know, Thierry, if you want to add to that and get to the guide question.

I would say one thing that I mentioned, you mentioned the different investments that we made. In aggregate, we should expect around $150 million worth of revenue in the full year from these acquisitions. Thank you very much. I think one that I would mention, you talked about neuroscience. In neuroscience, in every single segment, we have meaningful innovation happening. So we have Stealth Access in CST. You talked about Scientia, Onyx, NeuroGuard, Arteas in neurovascular. We've got Stealth Access ENT version for the ENT business, an apex cut that's coming out. So every franchise there has good news going forward. So look, I think we've got a lot of good news ahead of us. And there was a question on Cornerstone, but maybe to talk about the margin question, Travis. Yeah, it's really the result of the investments that we're making. So just to talk about the guidance for a moment. So we're raising the revenue guidance by 50 basis points and slightly raising the EPS. The way to think about the EPS raise is we took the upside of the first quarter, and then a couple of things. I would say part of it about ascent is driven by tax, which is timing, which we assume is going to come back the other way for the rest of the year. We've embedded now in the guidance the foregone interest that is going to come from the investment that we just made in Cornerstone. So it's a $700 million investment, and we're going to have some foregone interest on that. and then to your point what we're doing is we're taking a portion of the upside from a revenue perspective and a portion only and reinvesting that to accelerate our commercial performance. The last thing I would say is this is only the first quarter right and we want to set the business up for success in the remainder of the year.

I'm sure we're going to get more questions on Cornerstone and Picardia, but just high level. I'd say first on Picardia, excited about the investment. And it's part of a broader theme in Structural Heart where we're just making, doubling down on that space. We made the Interis investment a few months ago. in the TABR space. We're investing heavily in Tricuspid and Mitral. We've got an ecosystem that we're building with Dossie on the sizing as well. And now Picardia here is just another investment in the space. We're bullish on it and we're going to keep going there. And in terms of Cornerstone, look, We're just really excited about our progress in soft tissue. We've made a lot of progress. We talked about it in the commentary on Hugo. That's our play in the US. Cornerstone is really about access and choice. It's a global play for us. It's one of a number of investments we're making in soft tissue. But this one in particular, it's a global play. It gives customers choice around the world. And we're really excited about it. And it just goes with and a bunch of other investments we're making. Our touch surgery platform, our digital platform, we believe we're leading and we've got a nice lead in touch surgery. And we were at 1,500 installed base. We just rolled out our newest version of that aid, which is like 300 times more computing power in the surgical suite. We're investing in visualization, robotic instrumentation. So there's a lot going on in soft tissue and we're real excited about our progress there.

Great. Thanks a lot.

All right, great. Thanks, Travis. Our next question comes from Larry Beagleson at Wells Fargo. Go ahead, Larry.

Good morning. Thanks for taking the question. I'll keep it at one, Jeff. you know follow up on cornerstone just maybe you know expand on the deal rationale i'm going to just ask it head on some investors may think this is a signal you're not confident and you go you know address that and maybe a little bit more on the financial implications and and you know which markets um you're going to launch this in and whether it includes uh you know the us and just lastly is there an option to acquire the company thanks for taking the question

Well, look, we've got Mike Marinero on the line here, too, from our medical surgical portfolio. I'm going to turn it to him for a second, and then maybe Thierry can hit some of the financial questions. But on the Hugo question, it's just the opposite. I mean, we're very excited about the progress that we're making in Hugo. We talked about it in the commentary. We'll be, by the end of the fiscal year, over 50,000 cases, 250 units installed. We're continuing to roll out new. We're getting new clinical indications. We expect multiple new indications in the fall here. We're investing. I was just in our North Haven Connecticut facility where we do a lot of the instrumentation last week. And we've got a host of new instruments coming out. So we're really bullish about Hugo. you know that that that is our U.S. play and in other countries as well but you know Cornerstone like I said does give us you know it's like a more of a global play gives our customers it helps us drive up access to robotic surgery which is very under penetrated particularly in emerging markets and and it gives our customers choice and maybe I'll call on Mike to provide a little bit more detail and answer some of the other questions and we'll go back to Thierry on the financial side.

Yeah, thanks, Geoff. And Larry, thanks for the question. I think Geoff covered it very well. This is a distribution and partnership deal that we're very excited about. As Geoff mentioned, this is a global play. It's an opportunity for us to build out a full portfolio of robotics, a full portfolio offering and an ecosystem. and it builds on the progress that we've made with Hugo I think Jeff just spoke to it but you know this quarter we've spoken about now our expectations around installs really pleased to see with Hugo that our procedure volume continues to grow at two times the market rate and then our digital ecosystem of course is now expanding I think as you've seen uh at society robotic surgery I know you have a prominent presence there There is a growing suite of capabilities globally and it's becoming clear to us that there are going to be two or three platforms that will win in the market. And this is an opportunity for us to build out a portfolio of offerings that really meets the customer need. and and the specifics of the customer situation you know very well where they sit so this is a you know an opportunity for us to take that strategy and expand access in one of the largest markets in medtech that is still highly under penetrated and we see it as complementary and uh and really just an expression of our confidence in the progress that that we continue to make uh make here with hugo you know lastly i'd say you know we're in this to win you know this is uh a critical area for us you know we are leaders in surgery and this investment is an investment to build out that portfolio of offerings because we're here to win and we're excited about you know this this platform and portfolio that you know that we'll build uh together between hugo cornerstone and our touch surgery ecosystem

And then on the financials, hi, Larry. So for this year, other than the impact of the foregone interest that I mentioned in the previous question, the impact should be minimal. Starting in 28, we should start seeing the impact of the distribution agreement. and this will contribute to the growth that we're experiencing coming from robotics, generally speaking, first with Hugo and now with Centyre, making that stronger and stronger. So we do expect to see a lift in volume and in margins coming into 28 through the distribution agreement. The question on the acquisition, on the potential acquisition, we just made a large investment. The investment that we made does provide us some strategic optionality going forward, I would say. But the way we're approaching it is similar to what we do In a lot of these investments, we like to take a position, have a seat on the board, understand how the company is being run, start developing the collaboration, and then once we understand what's under the hood, so to speak, consider options. So some optionality there.

Larry, just to re-emphasize, I just want to make sure we're not mincing any words here and there's no earning speak. We are doubling down here. We have a lot of confidence and conviction about our position in soft tissue right now. and as Mike said that's the key we're in it that we're building a winning strategy here we we feel good about our position feel good about Hugo got confidence and conviction but there's no arrogance as my college hockey coach used to say head on a swivel panther like panther like stance there's there's lots going on here and and we've got to continue to invest and continue to uh to execute here. We want to become that meaningful number two and gain on the market leader. And we really like what we believe is a multi-year head start over the next scaled competitor, which is important. Thank you very much.

Thanks, everyone. So Vijay Kumar, you are next. Vijay at Evercore. Please go ahead.

Hi, Geoff. Thank you for taking my question. Congrats on a nice sprint this morning. I had a two-parter for you, Geoff. One on diabetes split-off timing. When you look at Medtronic versus stock prices and minimum stock, obviously it's come off the bottom. What is the hesitancy in announcing the split-off? And one on CAS. I want to make sure I heard this correctly. I think your prior comment was you know grow about twice the rate of market growth and I think today you've said two and a half x the rate of market growth so did underlying cast assumptions improve and now what is driving this confidence thank you

Well, thanks, Vijay, for the question. Maybe I'll start with the CAS question, and then Thierry can take the diabetes question. Yeah, we did say for the balance of the fiscal year that we would grow two and a half times the market. And we think the market's mid-teens. And in Q3, or Q2, rather, it might even be higher than that. So look, there's a lot going on in CAS. First of all, there's still room to run on Sphere 9. We're still relatively early in that launch, as evidenced by the 35% sequential growth over the prior quarter. It tells you we're still early. you know it's fear nine remains kind of one-of-a-kind in that you know dual energy point-to-point space and it's with a lot of different features and benefits that that physicians like and it continues to grow and we're getting more Clinical indications there. We took out a C mark for VT. Geographic expansion, we're just launching in Japan. So it's just a lot of room to run on that one. And then we're starting to see progress in Sphere 360 in Europe. and and and we're going to keep going here we're building out an ecosystem that's a trend here at Medtronic you saw it in CST this procedural or surgical ecosystem we're doing that in soft tissue and we're now doing it in various areas of cardiology CASP being one we talked about two investments in ice technology last quarter and we're going to keep going so again not too dissimilar from from soft tissue I mean We like our position on this one. You know, we're further ahead and marching towards that market leadership. But you got to keep investing here, not just in the in the therapy itself, but also the ecosystem around it. And I forgot about mapping to the integrated mapping, you know, continue to kind of drive mapping upgrades every year. So there's a lot going on in CAS and that's driving our plus you got a great market, right? The market is growing fast. So all that is giving us the confidence and conviction. and then I'll turn it over to you on diabetes.

Yeah, and just on Cas, you're right Vijay, it's two and a half times the market on the foyer. We expect it to be north of three times the market in the second quarter, so expect another good quarter in Q2 despite comps that are getting tougher and tougher. On diabetes, look, first, as you mentioned, it's great to see that the stock has come back up, and we're encouraged to see that. I think it's a testament to the fact that the business is performing, right? So they had a good fourth quarter last year. As you can see in the print here, and Chad and Q will give you more details a bit later, they had a good first quarter, so growth is accelerating, in particular in the U.S., They have a ton of favorability from an innovation perspective. Every single launch is happening ahead of schedule, which is great news. So it's super encouraging going forward. There's no hesitation on our side, so no change in schedule or anything like that. We had mentioned that we would do the separation when we think the economics are optimal for our shareholders and for our stakeholders, generally speaking, and we stick to that position. So no hesitation going forward with the separation, just when the time is right. Thank you.

All right, great. Next question comes from Mike Crackey at Lear Inc. Mike, go ahead.

Awesome. Can you hear me all right? Yep. Yep. Great. Congrats on the strong quarter. Thanks very much for taking our question. Really encouraging to see the 35% sequential growth for your U.S. affair install base after 40% last quarter. So can you provide any additional color on utilization trends in centers after they've added an affair system? How quickly are you seeing your PFA market share shift in those centers? And where are you seeing your share kind of stabilize over time there?

well we're seeing um let me see here i'll go in my notes here uh well so first of all 75 percent of our US installed base are at high volume centers. So right now, we're still concentrated in these high volume centers, which is not a bad thing. But it also tells us we've got room to run in the lower volume centers across the US. 30% of our accounts are doing 70% of the ablations. These are high volume centers. That's the 300 plus ablations a year. That's what we define as a high volume center. and then you know many of these large accounts have only you know one or two systems and they're and they're asking for more so we're seeing like once the affair goes in there we most of our experience mike is in these high volume accounts right and and once our system gets in there the utilization is high we're seeing them you know you know add systems uh and and so we're we're

that's all good time that utilization number is something we're watching every quarter and like I said so we're focused on those high volume centers and we've got a lot of room to run in in centers outside of these high volume centers everything to add there no I think I'm glad you picked up on the 35 because it's 35 in q1 after 40 in q4 so if you think of just the mathematical mechanical impact of what that means from a pull-through perspective it's just super encouraging

and for just a variety of reasons I won't go through all the list of benefits it's you know fair is becoming the workhorse uh in in these centers uh and that bodes well and then we've got sphere 360 coming uh which which like as I mentioned earlier goes right at the heart of the largest our largest PFA competitor so feeling feeling you know bullish on on CAS right now understood thanks very much

all right great next question comes from Anthony Patron at Mizuho please go ahead Anthony uh thanks and uh congratulations here on a solid quarter i'll stick to one and maybe you know go back to vj which is maybe capital allocation and diabetes it will be a pretty significant hole in a portfolio it's also growth accretive based on the quarterly numbers for this fiscal quarter diabetes going 15 excluding the week you're at roughly seven percent so maybe how the capital allocation will change post diabetes uh being completely separated will the cadence of tuck-in deals accelerate will you consider scale deals is a buyback you know you know in in in the cards here as well considering that medtech valuations are are off the bottom but are still you know certainly not at multi-year highs so just looking ahead to what the capital allocation program looks like post diabetes thanks again

Well, thanks, Anthony, for the question. Thierry can comment on the financial impact here. But on the growth side, at the Medtronic level, it's about 20 basis points, right? And with our growth accelerating, we're very comfortable as we project forward We're comfortable with losing that 20 basis points. And from a profitability standpoint, from a gross margin standpoint, it's a big step up. Thierry can walk through that. Look, the diabetes businesses, it is fundamentally different from the rest of Medtronic. That's why we made this decision. It's more consumer based. There's a number of other reasons. But financially, also that industry is a lower margin business on its best day. and so getting that capital allocation question, I wouldn't say anything's changed. We've already made that switch and you're seeing it in our performance. We've made that switch to allocating our capital to the highest growth, Thank you all for joining us. We understand the technologies, et cetera. And that's where our capital allocation is focused. We're much more prioritized in these high growth areas, much more of a top down at our leadership team level allocating that capital. And you're seeing the uptick in M&A already. That's broad base, organic and inorganic. And on the M&A, you've seen over the last 18 months, we've been working on this for probably three years, to get that pipeline of M&A going. And it's not the scale deals. It's the tuck-in deals. And it's not just an uptick in venture investing, an uptick in structured deals, where you make an investment and then you have strategic optionality later, and then just flat-out acquisitions. You're seeing it across the board. Prioritizing those high growth areas. And we announced two more investments today. So you're going to see that continue in those areas of cardiology, neuroscience, and our medical surgical area.

I don't know what to add, Geoff. Geoff, that was a pretty complete answer. Just a couple of numbers. I mean, Geoff said it's about 20 basis points of growth. It is lower margin. So when we deconsolidate diabetes, our gross margin will go up about 50 basis points. Our operating margin will go up about 100 basis points. Typically, the R&D as a percentage of revenue is about double in diabetes what the rest of the business is. So it does give us an opportunity to reallocate capital to the other segments of the company where we typically get better returns. As Geoff said, this is not a going forward when we did consolidate. It's something that we've already started doing. So if you look at the last 12 months or so, we went from you know doing about 2.8 billion of r d and half a billion of acquisitions to almost three in r d and two billion acquisitions so or or investment so we we more than doubled the investment in innovation and that's something that we intend to continue doing going forward So that's the recipe. And again, diabetes, the separation gives us some flexibility to do more of that. From a buyback perspective, no specific plans in that area, but never close to, if the conditions are right, doing it for tactical reasons.

and just to kind of further emphasize the point and get into our mindset just go back and look at some of our actions right in terms of prioritizing these high growth areas we had to take cash right which we just talked about a fib ablation we had an organic we have an organic program pulse select and at the same time we thought the space was so important we decided to go out and invest a billion dollars in an inorganic platform so multiple shots on goal and here we are today announcing these type of results we picked up another nine points a share in the highest growth One of the highest growth segments in med tech. I mean, we want to put together these decisive winning strategies. And then we talked about soft tissue surgery. Again, a lot of investments organically in Hugo and that ecosystem around it, like the digital platform with touch surgery. And then here we go today announcing an inorganic investment. Again, doubling down on these high growth spaces where we believe we have a right to win and putting together winning strategies.

It's just one thing I want to add because it's important. You might have seen in the numbers this morning our free cash flow performance for the first quarter was very strong. Cash conversion is improving. We were at 70% in the first quarter, which is good. But we think we have a strong path to getting to 80%. We've got a strong balance sheet. So independently of the diabetes deal, we've got a lot of firepower to go do this investment. So we look forward to continuing to deploy capital.

Thank you. Excellent quarter. Thank you.

Okay, great. Matt O'Brien at Piper Sandler, you are up next. Go ahead, Matt.

Great, thanks. Can you hear me okay? Yep. Okay so just real quick I know we're running long um on on uh renal denervation I just want to be sure I'm clear on the message here um because obviously CASA is doing really well so how are you thinking about the trajectory of that business um now the market opportunity any updates on what you're thinking in terms of the market and then do you really need TransRadial to accelerate that that franchise over the next several years is it a reimbursement thing you know what's really the clear message on on real denervation here as we uh um uh we get this update here in q1 thanks so much

Well, thanks for the question, Matt, on RDN. We have confidence and conviction that this is going to be one of the biggest things in med tech. And there's three things driving it. You touched on some of them. One is the improving clinical evidence, which I'll touch upon. The other is broader reimbursement coverage. And the third is market development. In terms of the evidence, the real world outcomes just keep getting better. I don't know what else to say. We had great three year data at CRT, where you saw over 18 point reduction in the office. over a 13 point reduction in the ambulatory setting. I mean, these are materially higher, like two, three X, four X higher than the clinical trial. And then we put in the commentary today, Spiral Affirm was accepted as a late breaker TCT. So more data coming out. I think that's full six month data coming out in a very visible conference. So what you're seeing is the difference from the trial is material in terms of the improved results. And we're also seeing really strong durability of these results, especially versus like ultrasound. So this is driving, the conversation is shifting. KOLs and hospitals are coming to us to really get some of these programs going as they see this continued improvement in clinical evidence. Also driving that would be more improvement in reimbursement coverage. Beyond the national coverage decision for CMS, we're seeing these commercial payers continue to jump on board and this quarter we had a number of them you know particularly with some bigger ones like Highmark so we're seeing that reimbursement coverage improve and then the market development that's where a lot of the focus is now and look as you I know Matt you get out there you talk to a lot of the KOLs and you know we're out there talking to them as well as the the hospital c-suite and the conversation like I said is shifting the enthusiasms there and we're really partnering with them to build out these programs on the back of the clinical evidence on the back of more insurance coverage building out those referral pathways and driving consumer slash patient awareness on these so again you know we thought we made a good progress on a number of those leading indicators and it bodes well for the ramp here over the next you know quarters and in years to come

All right, I think we have time for two more. So the next question comes from Robbie Marcus at JP Morgan.

Oh, great. Congrats on the nice quarter. Thierry wanted to ask on margins. This quarter, it came in just a bit above the street on operating margin. How are you thinking about reinvesting this top line upside versus driving margin expansion, both in the first quarter and for the rest of the year and then a quick follow-up you talked about tariffs rebates offsetting tariffs paid do you have the tariff rebate number so we can all keep track of that as some some of the the one-time benefits in the quarter thanks a lot

Yeah, thanks, Robbie. So I'll start with the rebates, with the tariffs, sorry. So the refunds in the first quarter were such that we were slight net negative on the impact from tariffs. So they almost compensated the full tariffs. Going forward for the year, Just to be clear, we have not embedded future refunds. So we wanted to remain prudent going forward. So we have a construction for the remainder of the year that doesn't bank on any refunds happening. We are continuing to submit for refunds. So there's a potential upside coming from that. From a margin expansion perspective, look, we're in growth mode, so we're taking a portion of the upside that we're seeing from a revenue perspective and reinvesting in the growth areas, and a portion only. And so the construction that we've got on a four-year basis today still calls for an operating margin that should be up about 50 basis points on a four-year basis which should put us with a non-profit up 10% so significantly higher than our our revenue growth so look we're going through you know all the different parts of of the company right cost of goods sold the manufacturing efficiency the relationships with the suppliers we're looking at logistics cost and we're looking at overhead and we're really looking at how we can drive efficiency at every level and it's it's starting to pay off you've seen some of it in the first quarter and on the four year we're we're going to deliver a leveraged pnl appreciate it thanks a lot all right i'm waiting for my queue up here on our last question it should come from perfect rick wise at steeple all right thanks rick please go ahead

Rick, you there?

You might be on mute, Rick.

You want to go to the next one? Yeah.

All right, Rick. We'll get you on the next one, please. The next question is going to come from Joanne, then. Joanne at Citi.

Good morning. Thank you so much for taking the question. And really nice quarter. To wrap it up, I think I'll ask about Charlotte, North Carolina, and why are we going there and what can we expect from the analyst meeting? And my second question sort of probably ties to that one. For a while, I used to think of Medtronic or we used to think of Medtronic as sort of a mid single digit revenue grower, high single digit EPS. Has that formula shifted? Thank you.

Well, look, I'll start with your last question, the back half of the question, and let Thierry pile on there. But look, Thierry mentioned between The strong cash flow that we're generating, our cash flow is improving here, continues to improve. It's always been good, but it's improving. Had a really strong quarter. We're going to continue to focus on that. And then our focus on gross margin and operating margins are going to allow us to invest more, both organically and inorganically. and in ramping up our inorganic tuck-in acquisitions combining that with our organic you know you're seeing effectively a doubling of our investment innovation and we've been doing this for a while and now you're seeing that growth tick up and clearly we have aspirations for higher growth than we've done historically you've seen over the last A couple of years, we've gotten the growth to mid-single digits, but we're not satisfied with that. That's why the more investments and the focus on execution, we have, I can't describe in words the sense of urgency on the investments and the execution to continue. You've seen in the last two quarters A bit of an inflection of growth, and we want to kind of continue with that. So before I get to the Charlotte, Thierry, any other comments on that?

No, look, I think you said it all. So we're clearly at an inflection from a growth perspective. And we're working the P&L. As I just said, we're continuing to make progress in pricing. We're continuing to make progress in cost out. We're reinvesting in innovation. But we're getting leverage from an overhead perspective. So we're really focused on driving the leverage on the income statement as well. and it's one of the things that we'll talk about in Charlotte.

And so Charlotte, why are we going there? So look, the ERCAD facility there in Charlotte is an impressive facility. ERCAD is mainly, historically, does physician training outside of the US. This is their first North American site. and we're we have a big presence in that site and it's a good way Joanne to actually see especially a lot of our technology now is or more and more of it is is capital so you got our able platform and self-access you you have all of our soft tissue technology which we keep adding to you have the digital piece it really helps to see it in action. And ERCAT is set up so that you can actually see it. We'll have physicians there walking you through it and describing how they're using it. And these are physicians that also use our competition. We all have our weak moments. But they'll be able to provide, I think, a good balance of how we stand up versus the competition. And we'll talk about where we're going with these technologies as well. And then the other thing, look, on these earnings calls, and some of our other events that we do the different you know banking meetings we don't get a chance to go in depth with some of the other parts of our growth pipeline and so there's a lot that we haven't talked about that we're going to talk about and in addition to that you're going to go down A layer into the org below my leadership team to some of the business unit leaders and the experts in these specific areas. And you're going to hear it from them as well. So physicians plus the business unit leaders themselves. New growth investments that we haven't talked about. And then going way deeper into some of these big areas, like these surgical ecosystems. And in a showcase of a space that is built for this. And so December 10th and 11th, please mark your calendar. We're really excited to share. And I know the team is as well. So thanks for the question, Joanne. all right great well that wraps up the call so thank you everyone very much for joining i appreciate your support and continued interest in medtronic um and uh jeff if you have any other additional prepared remarks please i mean look thanks for for thanks as always thanks for joining today really appreciate the engagement appreciate the support and uh and the continued interest in in medtronic uh with that you know have a great rest of your day and and thank you very much