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Edited Transcript of MDT earnings conference call or presentation 24-May-18 12:00pm GMT

Q4 2018 Medtronic PLC Earnings Call

Dublin May 26, 2018 (Thomson StreetEvents) -- Edited Transcript of Medtronic PLC earnings conference call or presentation Thursday, May 24, 2018 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Geoffrey Straub Martha

Medtronic plc - Executive VP & President of Medtronic Restorative Therapies Group

* Hooman C. Hakami

Medtronic plc - Executive VP & Group President of Diabetes Group

* Karen L. Parkhill

Medtronic plc - Executive VP & CFO

* Michael J. Coyle

Medtronic plc - Executive VP and Group President of Cardiac & Vascular Group

* Michael Neil Weinstein

Medtronic plc - SVP of Strategy

* Omar S. Ishrak

Medtronic plc - Chairman and CEO

* Ryan Weispfenning

Medtronic plc - VP of IR

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Conference Call Participants

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* Anthony Charles Petrone

Jefferies LLC, Research Division - Equity Analyst

* Bruce M. Nudell

SunTrust Robinson Humphrey, Inc., Research Division - MD

* David Ryan Lewis

Morgan Stanley, Research Division - MD

* Isaac Ro

Goldman Sachs Group Inc., Research Division - VP

* Lawrence H. Biegelsen

Wells Fargo Securities, LLC, Research Division - Senior Analyst

* Robert Adam Hopkins

BofA Merrill Lynch, Research Division - MD of Equity Research

* Robert Justin Marcus

JP Morgan Chase & Co, Research Division - Analyst

* Steven M. Lichtman

Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst

* Vijay Muniyappa Kumar

Evercore ISI, Research Division - MD & Fundamental Research Analyst

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Presentation

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Operator [1]

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Good day. My name is Shelby, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Medtronic Fourth Quarter Earnings Conference Call. (Operator Instructions) I would now like to turn the call over to Mr. Ryan Weispfenning, Vice President, Investor Relations. Please go ahead, sir.

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Ryan Weispfenning, Medtronic plc - VP of IR [2]

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Great. Thank you, Shelby. Good morning, and welcome to Medtronic's Fourth Quarter Conference Call and Webcast. During the next hour, Omar Ishrak, Medtronic Chairman and Chief Executive Officer; and Karen Parkhill, Medtronic Chief Financial Officer, will provide comments on the results of our fourth quarter and fiscal year 2018, which ended on April 27, 2018. After our prepared remarks, we will be happy to take your questions.

First, a few logistical comments. Earlier this morning, we issued a press release containing our financial statements and a revenue-by-division summary. We also issued an earnings presentation that provides additional details on our performance and outlook.

During this earnings call, many of the statements made may be considered forward-looking statements and actual results may differ materially from those projected in any forward-looking statement. Additional information concerning factors that could cause actual results to differ is contained in our periodic reports and other filings that we make with the SEC. And we do not undertake to update any forward-looking statement. In addition, the reconciliations of any non-GAAP financial measures are available on our website, investorrelations.medtronic.com.

References to quarterly results increasing or decreasing are in comparison to the fourth quarter of fiscal year 2017 and references to annual results increasing or decreasing are in comparison to fiscal year 2017. References to organic revenue growth exclude the impact of material acquisitions, divestitures and currency. References to pro forma exclude the impact of material divestitures. Unless we say otherwise, quarterly and annual rates and ranges are given on a comparable constant currency basis, which adjusts for material divestitures as well as the impact of foreign currency. All of these adjustment details can be found in the reconciliation tables included with our earnings press release. Finally, other than as noted, our EPS growth and guidance does not include any charges or gains that would be reported as non-GAAP adjustments to earnings during the fiscal year.

With that, I am now pleased to turn the call over to Medtronic Chairman and Chief Executive Officer, Omar Ishrak.

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Omar S. Ishrak, Medtronic plc - Chairman and CEO [3]

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Good morning, and thank you, Ryan, and thank you to everyone for joining us. I'm pleased to announce that this morning, we reported strong fourth quarter financial results. Revenues grew 6.5% organic, coming in 100 basis points above the high end of our guidance range. This marks the second straight quarter of 6.5% organic top line growth, enabling us to more than overcome a very tough first half of the year.

Q4 non-GAAP operating profit grew 8% pro forma and 9% adjusted for currency while non-GAAP diluted EPS grew 14% and 15%, respectively. The operating margin expanded 80 basis points pro forma constant currency. And as we enter FY '19, currency at current rates looks to be a tailwind to both margins and earnings for the first time in years. For the full fiscal year 2018, revenue of $30 billion grew 4.6% organically with a further 40 basis points from acquisitions. Non-GAAP diluted EPS grew 9% pro forma and 10% constant currency.

The second half of the year was particularly strong, overcoming several first half challenges, including an IT disruption, multiple hurricanes, fires in Santa Rosa and supply constraints in Diabetes. Despite all of this, we recovered well and came in at the high end of both the revenue and the EPS guidance we established at the start of the year. We also continued to drive margin expansion, reduce debt leverage and returned $4.3 billion to shareholders.

We made significant progress against each of our growth strategies. In therapy innovation, we executed a number of meaningful product launches and advanced a pipeline of increasingly groundbreaking medical technology. We're creating new markets, disrupting existing markets and leading in several of the fastest-growing growth markets in med tech. In globalization, we continue to lead our industry in expanding access into markets around the world, including delivering another year of double-digit growth in emerging markets.

In economic value, we continue to develop new partnerships and business models to accelerate adoption of our innovative therapies. Our ability to overcome multiple challenges to deliver at the level that we did in the second half of the year reflects the dedication of our 86,000 employees around the world, each of whom make a difference to benefit patients and fulfill the Medtronic mission. In FY '18, together with our physician partners, we served over 71 million patients or more than 2 patients every second.

In the fourth quarter, each of our operating groups delivered strong results with mid-single-digit revenue growth in CVG, MITG and RTG and over 20% growth in Diabetes. Geographically, it was a strong diversified performance with 5.3% growth in the U.S. and 4.6% growth in non-U. S. developed markets, including 4.4% growth in Western Europe and 5.5% growth in Japan. We also had a strong finish to the year with 15.5% growth in emerging markets.

At the same time, we expanded our operating margin and delivered 290 basis points of operating leverage. This helped EPS growth of 14% pro forma and 15% constant currency. As we look to FY '19 and beyond, we have increasing confidence in our ability to deliver operating leverage and margin expansion as a result of our Enterprise Excellence Program, which is now fully underway.

Looking now at our group results in the quarter. Our Cardiac and Vascular Group grew 5.4%, delivering sustained growth by leveraging the breadth of its products and services as well as its strong positions in important, rapidly expanding markets. In Cardiac Rhythm & Heart Failure, we had a very good quarter in Pacing with high single-digit growth, driven by the continued rollout of our Micra Transcatheter Pacing System as well as the recent launch of the AZURE next-generation family of pacemakers. We also continue to see strong growth in Infection Control, AF Solutions and our Mechanical Circulatory Support business.

Coronary & Structural Heart delivered impressive 12.8% growth, driven by the rollout of our Resolute Onyx drug eluting stent in the U.S. and Japan as well as low 20s growth in the transcatheter aortic valves. This was driven by continued strong global demand for our Evolut PRO valve and expanded indications in the U.S., which has resulted in above-market levels of growth for the past 5 quarters.

In addition, during this past quarter, we received approval for our global pivotal trial of SYMPLICITY Spyral, a new therapy for treatment-resistant hypertension. With its innovative, adaptive Bayesian trial design, which leverages prior enrollments in our previously reported off-med clinical study cohort, patient enrollment is now well underway. Positive results of our SYMPLICITY Spyral on-med clinical trial were presented yesterday at the EuroPCR meeting in Paris, validating the role this therapy can have in patients with treatment-resistant hypertension as an adjacent -- as an adjunct to medical therapy.

Our Minimally Invasive Therapies Group grew 4.8%, led by 5.9% growth in Surgical Innovations with strength in Advanced Stapling and Advanced Energy as we capitalized on the conversion of surgical procedures from open to minimally invasive. Our innovative products are improving outcomes and driving growth, including our Signia-powered surgical stapling system, which uses our Tri-Staple 2.0 reloads, as well as our Valleylab FT10 energy platform and new iterations of our LigaSure vessel sealing instruments.

Our Restorative Therapies Group grew 6.1% this quarter, its best quarter of organic growth since we established the group 8 years ago. This is despite the well-known challenges in the spine market and reflects strong execution and robust growth, in particular in our brain and pain divisions. In Brain Therapies, we're leading the development of the endovascular therapy market for the treatment of ischemic stroke, resulting in high-teens growth in Neurovascular. We also had a great quarter in Neurosurgery with low double-digit growth, reflecting strong demand for our StealthStation S8 navigation system, the Mazor X robotic guidance system for spine surgery and our Visualase MRI-guided laser ablation system.

In Pain Therapies, the turnaround is officially underway with back-to-back quarters of strong growth. Our spinal cord stimulation business grew mid-teens this quarter, including high-teens in the U.S. We're seeing great acceptance of our new offerings in spinal cord stim, including our Intellis stimulator, our Evolve workflow algorithm and our Snapshot reporting. This is a dramatic turnaround for a business that declined in the mid-single digits in FY '17 and low double digits in the first half of this year.

In Spine, we grew 1%, better than the global market, which we estimate is slightly declining. We're seeing emerging strength in our differentiated Spine products and procedures, including high single-digit growth in BMP and OLIF; strong double-digit growth in PRESTIGE LP Cervical Discs; and strong customer adoption of our new Solera Voyager 5.5/6.0 fixation system and ARTiC-L 3D printed titanium cage. In addition, when coupling our Spine revenue with the spine-enabling technologies that are reported in our Neurosurgery business, our combined revenue grew 2.7%. We believe this is a more relevant comparison of our Spine results against our competition and an indication that our surgical synergy strategy is working and driving our overall growth in Spine procedures.

Diabetes had a very strong finish to the year, with low 20s growth driven by U.S. patient demand for our MiniMed 670G hybrid closed-loop system. We now have over 70,000 trained active users in our 670G system. And we continue to get positive feedback with real-world results in line with our pivotal study data. Importantly, we have completed upgrades to our sensor manufacturing lines and now have capacity to meet expected global demand going forward.

Outside the U.S., we continue to see strong demand for our 640G system. We experienced another quarter of strong performance in Europe and recently received regulatory approval for the 640G in Japan. All of this led to our IIM division growing in the mid-20s internationally. Based on the strength of the 6 series system, IIM share grew sequentially to 70% of all durable and consumable pumps globally. In addition, our sensor attachment rates continue to increase as we shift our customer base from stand-alone pumps to sensor-augmented systems. As this happens, our business is seeing an increasing revenue mix from CGM sensors, which creates a strong, consistent annuity stream for our Diabetes Group.

We're also excited about our entry into the $1 billion stand-alone CGM market with our Guardian Connect system. As our sensor capacity increased, we ramped up our commercial efforts for this product in Europe this quarter and expect to continue commercial expansion into the new fiscal year. In the U.S., we recently received FDA approval for Guardian Connect and intend to start our broad launch in the first quarter. Guardian Connect is the only stand-alone sensor that transmits directly to a smartphone. It features unique predictive alerts, and in the U.S. will utilize Sugar. IQ, which is based in the cognitive computing capability of IBM Watson to detect important patterns and trends for people with diabetes.

Turning now to our globalization growth strategy. Emerging markets, which represent 15% of our revenue, grew 15.5%. It is important to point out that it is not just one market driving growth but several and reflects our broad diversification. Latin America, the Middle East and Africa, Eastern Europe and China all grew double digits in the fourth quarter. China, our largest emerging market, grew 12.7% in the fourth quarter and finished the year with over $1.8 billion in revenue. This is a significant increase from the less than $0.5 billion of revenue in the region when I joined Medtronic 7 years ago.

Our differentiated strategies of public and private partnerships, optimizing the distribution channel and driving local manufacturing and R&D are making a difference, not only in China but in our emerging markets around the world. We're investing to build strong leading businesses in emerging markets as we continue to collectively represent the single largest opportunity in med tech.

Our remaining growth strategy, economic value, is an accelerator for therapy innovation and globalization strategies. We continue to make progress in creating new value-based business models that directly link our therapies to improving outcomes. With our TYRX-related value-based healthcare arrangements, we now have over 1,100 hospitals under contract, covering over 30% of our U.S. CRHF implantables revenue, helping to drive sequential market share gains in ICDs and CRT. This is one of the reasons why our performance in CRHF has been better than The Street was expecting 6 to 9 months back. The other reason is innovation, where we lead the development of several important and often disruptive technologies, such as Micra.

Finally, I want you to know that across Medtronic, execution is our top priority. You've seen that in our results in the past 2 quarters, in our resurgence following a string of challenges in the first half of the year and in our ongoing commitment to cost management that began by achieving our Covidien cost synergies and is now being extended into our Enterprise Excellence initiative. We know there's much work to be done, but we're excited and optimistic as our direction is clear, our pipeline is full and our team has never been stronger.

With that, let me ask Karen to now take you through a discussion of our fourth quarter financials. Karen?

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Karen L. Parkhill, Medtronic plc - Executive VP & CFO [4]

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Thank you, Omar. As mentioned, our fourth quarter revenue of $8,144,000,000 represented a 2.9% increase as reported and organic growth of 6.5%. Foreign currency had a positive $315 million impact on fourth quarter revenue. GAAP diluted earnings per share were $1.07. Non-GAAP earnings per share were $1.42. After adjusting for the divestiture, non-GAAP diluted EPS grew 14% pro forma and 15% constant currency.

The operating margin for the quarter was 30.2%, representing an 80 basis point improvement on a pro forma constant currency basis. Gross margin was down 50 basis points, reflecting our sales mix in the quarter. The impact of mix on our gross margin this quarter was more than offset by 150 basis point improvement in SG&A on a pro forma constant currency basis, reflecting our company-wide initiatives on expense leverage.

Net other expense, which is included in our operating margin, was $188 million. This was slightly higher than expected primarily due to mark-to-market on some of our investments. Foreign exchange in total had 160 basis point negative impact on our operating margin in the quarter primarily due to the year-over-year change in currency gains and losses related to our hedging program. But the good news is that based on current rates, we expect the currency headwind that's plagued us for several quarters on the operating margin to turn into a tailwind in fiscal '19, starting in the first quarter.

Our fourth quarter non-GAAP nominal tax rate was 14.9%, slightly better than expected, given favorable IRS audit resolutions. Fourth quarter average daily shares outstanding on a non-GAAP diluted basis were 1,366,000,000 shares. As expected, this was roughly flat sequentially. Combining our $1.8 billion of net share repurchase in fiscal '18 with the $2.5 billion we paid in dividends over the same period, our total payout ratio was 65% on non-GAAP net income and 118% on free cash flow.

Free cash flow for fiscal '18 was $4.7 billion, above our prior guidance range and after adjusting for a $1.1 billion prepayment to the IRS related to our Puerto Rico tax litigation. While the litigation is still in process, given our access to cash post tax reform, we elected to put as much of this potential $1.5 billion liability as possible behind us. By prepaying, we were also able to stop the accrual of significant interest.

In the quarter, we reduced debt by approximately $3 billion, allowing us now to focus on other capital allocation priorities going forward. Given U.S. tax reform, we will be continuing the liquidation of some of our investments overseas. Note that this will negatively impact interest income, but it will enable increasing access over the next several quarters to our formerly trapped cash on our balance sheet. We intend to put this cash to work by investing in our business and returning to our shareholders.

Now looking at the picture ahead. For fiscal year '19, we expect organic revenue growth to be in the range of 4% to 4.5%. By business group, we expect CVG, MITG and RTG to grow 4%, plus or minus, with CVG likely on the minus side, given the anniversary of major product launches in Coronary & Structural Heart, and MITG and RTG to be more in line with the 4%. We expect Diabetes to grow in the low double digits with a stronger first half off of low comparisons. For the first quarter, we expect total company revenue to be consistent with our guidance for the year. In addition to CVG, we expect MITG to be on the minus side of the full year, given more difficult comparisons from endostapling and capital sales, offset by more robust growth from Diabetes with continued 670G strength.

Turning to margins. We expect operating margin expansion in fiscal year '19 of approximately 50 basis points on a pro forma constant currency basis, driven by our Enterprise Excellence initiatives. For modeling purposes, we would assume a slight improvement in the first quarter with increasing improvement through the remainder of the fiscal year. We expect our tax rate to be between 14% and 15%, roughly in line with our fiscal '18 tax rate.

With respect to earnings, we expect fiscal year '19 non-GAAP diluted earnings per share in the range of $5.10 to $5.15. This implies EPS growth of 10% at the midpoint of the range. For the quarter, we expect non-GAAP diluted EPS in the range of $1.10 to $1.12 off the fiscal '18 base of $1.03. We recognize that The Street didn't have the full picture on first quarter comparison pro forma for the divestiture until we shared them last week in an 8-K. So hopefully, that filing helped. Also keep in mind, we had a lower tax rate in the first quarter last year from benefits not expected to repeat, creating a roughly $0.03 headwind in the first quarter.

Finally, on free cash flow, we expect $4.7 billion to $5.1 billion in fiscal year '19. This excludes a potential final $400 million payment to Puerto Rico related to our pending litigation that I referenced earlier, the timing and outcome of which is uncertain. Over the next couple of years, we expect to make significant progress in improving our free cash flow conversion as litigation and tax payments are expected to diminish and we benefit from programs we have put in place to improve working capital.

While the impact from currency is fluid, if recent exchange rates hold, our full year revenue would be negatively affected by approximately $50 million to $150 million. Recall at the time of our third quarter earnings call, it was a $500 million positive impact. However, despite this $600 million swing, FX is still [a not as] positive to fiscal '19 margins, earnings and free cash flow because of our hedging program. If recent rates hold, we would expect a reported operating margin of 28.5% for the year and a $0.05 tailwind to full year EPS. For the first quarter, if recent rates hold, revenue would be positively affected by approximately $90 million to $130 million, operating margin would have a slight benefit and EPS would have a $0.02 benefit.

Before I turn the call back to Omar, I would like to note that we plan to hold our biennial Institutional Investor and Analyst Day on Tuesday, June 5 in New York City. We intend to discuss our long-term strategies and share our long-range plan at that time. Now I will return the call back to Omar.

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Omar S. Ishrak, Medtronic plc - Chairman and CEO [5]

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Thanks, Karen. And to summarize, we have delivered 2 consecutive quarters of strong revenue growth to finish our fiscal year. We also expanded our operating margin and delivered meaningful EPS leverage. Looking ahead, we feel good about the growth opportunities in our markets and our competitive position in these markets. We expect continued revenue growth and margin expansion. And we're also focused on generating strong free cash flow conversion and making the right investments to drive shareholder value. And finally, execution is our top priority.

Before we turn to Q&A, we had the benefit of Mike Weinstein joining us earlier this month. Given his recent transition, we thought it might be helpful for him to make some comments. So Mike?

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Michael Neil Weinstein, Medtronic plc - SVP of Strategy [6]

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Certainly. Thanks, Omar. I'll make a few comments. I think for starters, I think it was a great quarter. There's a lot of work to do. And I certainly don't want The Street to get out ahead of us. But this was a good quarter.

6 or 9 months ago when I was on the other side of this call, we on the sell side were all worried about growth and the company's ability to execute in the face of competition, competitors introducing MRI-compatible pacers and ICDs, deep brain stimulators, insertable cardiac monitors, et cetera. And now here we are 6 months later and Medtronic has delivered back-to-back quarters of 6.5% organic growth. Again, I don't want everybody to extrapolate from that and start modeling 6.5% going forward.

But I do think it speaks to the breadth of the franchise and the number of growth drivers moving in the right direction, which honestly The Street, myself included, underestimated or missed 6 months back. RTG, as you've noted, Omar, had its best quarter in years, growing 6% organic despite all the challenges that we're aware of in the spine market. Neurovascular grew high-teens, Neurosurgery grew low double digits and the SCS pain stim business has had a remarkable turnaround, growing mid-teens this quarter after a meaningful decline in the first half of this year. So that's all heading in the right direction. Diabetes obviously had a fantastic quarter, growing 20% - plus, well north of what The Street was modeling, and Guardian standalone hasn't launched yet in the U.S. and that's going to start this quarter.

So I could go on. In fact, all 4 operating groups, CVG, RTG, MITG and Diabetes did better than The Street was modeling. But the good news is that it's not just the top line. Margins are starting, and I emphasize starting, to go in the right direction. Gross margin, beat by 20 basis points, SG&A, beat by 80 basis points. The FX, headwind to margins, which was severe this quarter at 160 basis points, which we were all focused on 3 months ago, should go away as we head into FY '19, obviously assuming current rates.

But there's a long ways to go. And I think the good news is that we all know that. As Omar said, execution is the #1 priority right now. And we're not going to let 1 or 2 good quarters go to our heads. But I feel good that we're clearly heading in the right direction. And the investor meeting on the 5th will give us a chance to talk about it some more.

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Omar S. Ishrak, Medtronic plc - Chairman and CEO [7]

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Okay. Thank you, Mike. And let's open the phone lines now for Q&A. In addition to Karen and Mike, I will ask Mike Coyle, who's President of CVG; Bob White, President of MITG; Geoff Martha, President of RTG; and Hooman Hakami, President of our Diabetes Group, to join us. (Operator Instructions) If you have additional questions, please contact Ryan and our Investor Relations team after the call. And with that, operator, first question, please?

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Questions and Answers

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Operator [1]

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Your first question comes from Bob Hopkins of Bank of America.

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Robert Adam Hopkins, BofA Merrill Lynch, Research Division - MD of Equity Research [2]

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So I have a quick question for Karen and then a follow-up for Omar. Karen, to start with on operating margins, it's obviously been a focus point for investors. You delivered 80 basis points of underlying margin in Q4 and 20 basis points for the full fiscal year and you're guiding to 50 for 2019. So I was wondering if you could just talk about the 80 basis points of underlying improvement in Q4, which was a little shy of what you were hoping for at the 100 basis points you had talked about. And then more importantly for fiscal '19, can you talk about your goal of delivering 50 basis points of underlying margin improvement, which is above the 20 basis points you did this year? So what are the drivers of that? How much of that is from the restructuring? Just what gives you confidence that you can do 50 next year when you did 20 this year?

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Karen L. Parkhill, Medtronic plc - Executive VP & CFO [3]

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Yes. No, thank you for the question, Bob. We were pleased with the operating margin improvement in the fourth quarter of 80 basis points. Keep in mind that, that was driven through Covidien synergies that we are now benefiting from as well as the company-wide focus on expense leverage. And it was delivered mostly through improvement, noted 150 basis point improvement in our SG&A. But going forward, we do expect to continue to drive operating margin improvement. We have a company-wide program around Enterprise Excellence, which is intended specifically to drive margin improvement and also to help us offset pricing headwinds and continue to reinvest in our company. That Enterprise Excellence Program is well structured, well underway. And we're confident in our ability going forward to continue to drive this margin expansion. We'll talk more about it at Investor Day as well.

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Robert Adam Hopkins, BofA Merrill Lynch, Research Division - MD of Equity Research [4]

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Okay. And then I did want to follow up with Omar on the emerging market growth because it just -- it really seemed like a standout in the quarter. It drove over 2 points of growth in the quarter. So maybe talk about the sustainability of that emerging market growth. Were there any onetime things impacting emerging market growth in this quarter? And kind of what do you assume for fiscal '19 in terms of emerging market growth?

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Omar S. Ishrak, Medtronic plc - Chairman and CEO [5]

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Well, thanks, Bob. Like I mentioned earlier, the story in our emerging markets is our diversification and our presence in multiple geographies. While China is still the largest, we have significant presence in the Middle East and Africa and Latin America. And in the fourth quarter, all of these geographies grew in the mid-double -- in sort of in the teens, the mid-teens. And so that helped a lot in the fourth quarter performance. Going forward, we certainly expect double-digit growth in the emerging markets. I'd say the low double digits, that's what we've been performing consistently over time. There was certainly no onetime swing here in the fourth quarter. I think the diversification is playing out well for us with at least 3 big sort of geographic collection of countries that are well diversified amongst themselves. So that's what gives us confidence that we can continue to do this. And above all, the biggest confidence that we have is that we've been delivering this for the past 5 years. So there's nothing other than better performance to expect going forward as our strategies start to play out.

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Operator [6]

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Your next question comes from David Lewis of Morgan Stanley.

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David Ryan Lewis, Morgan Stanley, Research Division - MD [7]

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A couple of questions for Karen. Karen, just talking about -- you want to start off with growth. So you mentioned the first quarter growth guidance, you're sort of assuming, is comparable for your growth guidance for the remainder of the year. But the first quarter is also the easiest comp of the year. And if you go back to fiscal '18, the defining element of that year was, the first half was dramatically weaker than the second half. So I guess said more simply, what drives the momentum improvement in the business across the remaining 3 quarters if the first quarter is going to be comparable with the remainder of the year?

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Karen L. Parkhill, Medtronic plc - Executive VP & CFO [8]

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So I would remind everyone that our first quarter comes off the heels typically of a very strong end to our fiscal year. And so the first quarter is typically not our most robust growth quarter. The second quarter will be the quarter next year that comes off very low comparisons much more so than the first quarter. So we're confident in the guidance that we've given for the first quarter of consistent with our annual guidance of 4% to 4.5%. But I would remind folks that both for CVG and MITG in the first quarter, we do expect both businesses to be on the minus side of that 4% with MITG having difficult year-over-year comparisons from endostapling and capital sales and CVG seeing the anniversary of some major product launches last year.

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David Ryan Lewis, Morgan Stanley, Research Division - MD [9]

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Okay, very helpful, Karen. The second question is just on cash flow. I know improving cash flow is a big focus for '19 and beyond. I imagine it will be a focus for the Analyst Day in a couple of weeks. But could you just kind of talk about for fiscal '19, the operating cash flow assumptions, CapEx assumptions, free cash flow conversion and maybe a little bit about some of the executive compensation changes that may be happening around free cash?

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Karen L. Parkhill, Medtronic plc - Executive VP & CFO [10]

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Thanks for the question, David. On free cash flow for FY '19, we said that we expect it to be between $4.7 billion and $5.1 billion. We have improved our conversion ratio. And honestly, we expect to improve that conversion ratio going forward, specifically over the next couple of years. In terms of things that impact cash, on cash from operations, we expect that to grow in line with earnings. On CapEx, we expect CapEx to be roughly flat year-over-year. We intend to spend a little over $1 billion in CapEx like we did this year. And we will have certain other payments related to our restructuring program, some continued legal payments. But we do expect tax, specifically when you include the $1.1 billion payment related to the Puerto Rico litigation, to decline meaningfully. We will still have that potential $400 million payment to Puerto Rico. It's unclear whether or not that payment will need to be made in fiscal '19. It will be dependent on the outcome of the litigation. But we will have that as well.

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Operator [11]

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Your next question comes from Vijay Kumar of Evercore ISI.

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Vijay Muniyappa Kumar, Evercore ISI, Research Division - MD & Fundamental Research Analyst [12]

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So maybe, Karen, just talking about the guidance and the cash conversion rate. So for the EPS guidance, what kind of assumptions are we making on capital deployment? And when you talk about cash conversions improving, what should be a normalized cash conversion for this business? Can Medtronic go to 90% or north of 90% over the medium term?

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Karen L. Parkhill, Medtronic plc - Executive VP & CFO [13]

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So on EPS, we are assuming this is organic. We obviously don't assume that we make any acquisitions or divestitures. On tax, I did say that we expect 14% to 15% tax rate for the year. And on our debt, we expect that to remain relatively stable now that we have completed the debt paydown that we have talked about. In terms of return to shareholders, we did announce recently that we expect to repurchase $1.2 billion in shares throughout the year. That was commensurate with us talking about some debt tendering that we were doing. In terms of a normal cash conversion, keep in mind that our med tech industry is typically around the 80% conversion rate. And we expect to be improving to that range over the next couple of years. We are very focused on it. And we expect particularly some of the onetime charges that we've had over the past will be diminishing.

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Vijay Muniyappa Kumar, Evercore ISI, Research Division - MD & Fundamental Research Analyst [14]

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That's extremely helpful. And maybe one for Omar. Medtronic has done a fantastic job on the top line, right? I think the issue has always been for us maybe modeling some of the FX impact and the moving parts. The prior Analyst Days, Omar, a lot of the focus was on innovation and top line, what's happening with Medtronic, right? And when we think about the upcoming Analyst Day, is there anything going to be different at this Analyst Day in terms of focus? Should we be expecting any update on the robot or anything else that you want to highlight?

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Omar S. Ishrak, Medtronic plc - Chairman and CEO [15]

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Well, I can assure you that technology and innovation will still be at the top of the agenda. That's what we're most excited about. That's what fuels this company. And we've got many -- our pipeline is fuller than it's ever been. And we're extremely excited about it and we'll be -- I'm really looking forward to sharing all of that with you at Investor Day. But equally, we're laying out an Enterprise Excellence Program. And our focus on operating margins, our focus on cash flow are elements that are serious. And I expect that will come through at Analyst Day. So again, there's going to be no dropoff in our excitement around technology. And if anything, it's increased. And you'll see exciting examples from all our groups. But I do want to emphasize that the operating margin focus and our cash flow conversion focus, driven by our Enterprise Excellence Program, will be clear as well.

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Vijay Muniyappa Kumar, Evercore ISI, Research Division - MD & Fundamental Research Analyst [16]

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And just, sorry, on the robot, should we be expecting any update on the robot?

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Omar S. Ishrak, Medtronic plc - Chairman and CEO [17]

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Well, look, robot is a major program for us. And obviously, we're going to talk about it.

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Operator [18]

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Your next question comes from Larry Biegelsen of Wells Fargo.

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Lawrence H. Biegelsen, Wells Fargo Securities, LLC, Research Division - Senior Analyst [19]

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One on TAVR and one on just new product launches in fiscal 2019. So maybe for Mike Coyle, by our math, it looks like the worldwide TAVR market did slow a bit in calendar Q1. Is that accurate? And what are you seeing in the market? At PCR today, one of the presenters said that you would be presenting your low-risk data at ACC in 2019. I just want to confirm that's accurate because that would be pretty impactful. And just lastly on TAVR, Mike, any expectations for the MEDCAC? Do you think it's more likely to expand, keep the same or decrease centers?

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Michael J. Coyle, Medtronic plc - Executive VP and Group President of Cardiac & Vascular Group [20]

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So thanks for your question, Larry. In terms of the TAVR growth profile for the quarter, we would peg TAVR growth at somewhere in the vicinity of the high-teens, which obviously is a slowdown from 2 years ago, it was mid-20s but for the fiscal year, it was low 20s. But still that's very strong growth, given the size that, that market has grown to. And for us, obviously we've been growing faster than that in the low 20s. So it's been an important growth driver for us. And we expect it to continue to be an important growth driver for us. In terms of the pipeline, we're going to cover that at the Analyst Meeting next Tuesday. We will show you what we have in terms of beyond the EnVeo delivery system that is now rolling out in the United States and into Europe. We'll talk about that pipeline in terms of both [miteration] and then some of the more significant platform investments that we're making in TAVR going forward, not to mention what we're doing in mitral. And then in terms of the MEDCAC, our position is a bit intermediate to what we hear coming from the societies and then from some competitors in the sense that we believe that all -- currently -- the current national coverage decision covers all the indications for use for TAVR that are approved. And we don't see constraints at the moment in terms of being able to meet demand. We do think if what the societies are proposing is adopted, that we could see upwards of 35% of the centers now falling out of the ability to provide TAVR, which we think would be a problem for the access to this lifesaving technology. And so our view would be to maintain the national coverage decision until there is an expanded FDA approval for indications that are not covered by the NCD. And that would then give us time to basically evaluate the question of, are centers that are smaller and have lower volume actually performing worse than those at higher volume? And frankly, the data that we have seen to date would not support any conclusion that we're seeing meaningfully worse results in those smaller centers. So we think the NCD, as it exists today, is good. We support its continuation. And we think it might be the right time to look at that maybe in a couple of years.

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Lawrence H. Biegelsen, Wells Fargo Securities, LLC, Research Division - Senior Analyst [21]

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And Omar, I know you have your Analyst Day obviously in a week or 2. But just for -- just to give us confidence in your guidance for fiscal 2019, what are the product launches that you're most excited about for fiscal '19?

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Omar S. Ishrak, Medtronic plc - Chairman and CEO [22]

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Thanks. I'll just name a few. And as you mentioned, we'll go through our overall pipeline in greater depth. The pain business, this turnaround in pain is very significant. And we're extremely excited about what we're seeing. And we're seeing that with the Intellis product, our Evolve workflow and our Snapshot reporting. I think these are unique elements in that industry. And it's a massive turnaround from as recently as the first half of this year and something we're getting a lot of traction. So I think continued momentum in pain is something that we will definitely see. Diabetes is the other one. I mean, we're just starting there to get the full benefit of the 670G in the U.S. And we're extremely excited about what we see. But equally, we've got penetration of the 670G into global markets on the back of 640G, which is already very successful. And then the Guardian Connect is a whole big opportunity, which I mentioned, which also is a big area for us. I think in CVG, you heard Mike talk about it. But there's many areas here. One that I don't know the exact contribution of growth, but I'm extremely excited about is the further evolution of the Micra product, which is a revolutionary product for us and one that we're extremely proud about. And the consistent growth that we've seen in surgical technologies within MITG will continue. We have a rich pipeline of products. And they come out regularly and that will be sustained into next year. So we expect an exciting year full of new products, which will continue to fuel our growth.

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Operator [23]

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Your next question comes from Robbie Marcus of JPMorgan.

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Robert Justin Marcus, JP Morgan Chase & Co, Research Division - Analyst [24]

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Two of the businesses that stood out were Diabetes and spinal cord stim. And Omar, you touched on this just briefly in the last question. But you have new product launches there. Maybe you could give a little more color into what you're seeing in the dynamics with the product launches and how you think that's impacting the market?

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Omar S. Ishrak, Medtronic plc - Chairman and CEO [25]

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Sure. I'll let the 2 group leaders kind of briefly comment on that. So Hooman, you want to go with Diabetes first?

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Hooman C. Hakami, Medtronic plc - Executive VP & Group President of Diabetes Group [26]

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Sure. Robbie, I think the quarter was really strong. We had some great balanced performance across businesses, across geographies. I'd say there were really 2 main drivers. The first is strong global pump growth that we saw. And Omar just touched on this a second ago. The first was just continued strong uptake of the 640G in markets outside the United States but in particular, Europe. And then we have seen continued strong performance out of the 670G in the U.S. And this is really encouraging because in many ways, we're just getting started here. So you look at those dynamics, all of those things led to 6 points of share gain for us across both consumable and durable pumps this past quarter, which we're obviously really excited about. The second big driver for us was the pull-through of sensors. This is, as we sell more integrated systems, we're seeing more sensor pull-through. So both the 640G, the 670G are driven by sophisticated algorithms, where the pump and the sensor work together to keep a patient in control. As we sell more of these systems, the more sensors we pull through. So those 2 dynamics were really the catalyst for us this quarter. And then looking forward, we expect both of these things to continue and for us starting to capitalize on a stand-alone CGM market that we're just starting to get into.

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Omar S. Ishrak, Medtronic plc - Chairman and CEO [27]

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Okay. Geoff, do you want to say a few words about pain?

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Geoffrey Straub Martha, Medtronic plc - Executive VP & President of Medtronic Restorative Therapies Group [28]

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Yes, sure. Sure, Robbie. Well, obviously Intellis is off to a strong start for a couple of reasons. One, the device itself, I mean, it's much, much smaller than the competition. It's a much faster, 3 to 4x faster recharge, very little battery fade over time, MR-compatible, et cetera. And so there are some real compelling differences there. And in addition, our Evolve workflow, which really drives the outcome, has been, I believe, underappreciated. And these 2 things taken together gets us back in the game. Regarding Evolve, we're still building credibility as we produce more robust data over time. We just launched our Vectors trial, which is a prospective clinical trial testing multiple aspects of Evolve. We're thick in -- enrollment's underway and on schedule. And we anticipate the first release of this data at NANS in January of 2019. And additionally, we published some other data from -- we call it the [Vertalin] data from Dr. Vertalin -- we presented that recently at 2 scientific meetings. And we got really strong results. So this is an independent physician study, mirroring real-world outcomes. And we had 83% of 114 patients, 114 patients had 75% pain reduction. So this is really good results. And after 3 months, we saw similar results. So we're seeing really strong data from Evolve. And that's going to continue to build over the course of the year and I think help us access a whole new group of physicians and patients. So as Omar indicated, we're really excited about the pain stim business and the strong market growth and how we're positioned within it.

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Robert Justin Marcus, JP Morgan Chase & Co, Research Division - Analyst [29]

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And a quick follow-up for Karen. With FX moving so much, maybe you could help us think about how it might impact the gross margin and the other income line, and with higher interest expense run rate, what that might be for next year.

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Karen L. Parkhill, Medtronic plc - Executive VP & CFO [30]

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Sure. So in terms of FX, with the recent movement over the last months in currency rates, we do now expect a bit of a headwind for the full year from FX on revenue. And I mentioned between $50 million to $150 million. But I also mentioned the good news is that we still expect a positive impact from FX on our operating margin, on our EPS and on our free cash flow. And the key reason for that is our hedging program. Based on where rates are today, we do expect gains in our hedging program that shows up in our net other expense line item and positively impacts our operating margin. You had a second question, Robbie. Will you remind me that one?

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Robert Justin Marcus, JP Morgan Chase & Co, Research Division - Analyst [31]

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Just how will FX impacts down the P&L and what interest expense might look like, given the higher run rate?

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Karen L. Parkhill, Medtronic plc - Executive VP & CFO [32]

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Right. So on interest expense, obviously interest expense -- the interest rates have been increasing, so we will have a modest impact from that on an interest expense perspective. On an interest income perspective, I did mention that we are focused on continuing to liquidate our overseas portfolio. And as we do that, we will have interest income coming down a little bit.

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Operator [33]

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Your next question comes from Isaac Ro of Goldman Sachs.

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Isaac Ro, Goldman Sachs Group Inc., Research Division - VP [34]

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Question on the 2019 op margin expansion guidance that you gave for that 50 basis points. If I think about your prior plan for that $3 billion in gross cost savings through 2022, could you help us understand kind of what's embedded in the 2019 guidance for margin expansion as it relates to that program? It would just be helpful to understand the pacing there and the net effect.

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Karen L. Parkhill, Medtronic plc - Executive VP & CFO [35]

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Sure. So when we gave our Enterprise Excellence -- when we announced our Enterprise Excellence Program and talked about the over $3 billion in savings and leverage that, that would deliver through 2022, we also said that we expected over $500 million to $700 million impact or positive savings and leverage annually each year. That is now embedded into our forecast. So that program is designed to offset pricing pressure, which we expect continued pricing pressure. It is also intended to help ensure that we can continue to reinvest, particularly in R&D. And it is intended to drive operating margin improvement and expansion. And for next year, I mentioned we expect operating margin expansion of about 50 basis points pro forma constant currency.

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Isaac Ro, Goldman Sachs Group Inc., Research Division - VP [36]

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Okay, got it. And then maybe just a follow-up question on a couple of product specifics. Specifically on SCS, Omar, you called out the mid-teens growth there, I think, a little bit better in the U.S. And just trying to understand as we think about the sequential trend from here as Intellis ramps, I mean, do you expect that growth rate to accelerate on a year-on-year basis? Trying to figure out kind of what's embedded there.

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Omar S. Ishrak, Medtronic plc - Chairman and CEO [37]

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I think, Geoff, do you want to take that?

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Geoffrey Straub Martha, Medtronic plc - Executive VP & President of Medtronic Restorative Therapies Group [38]

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Yes, sure. Look, it's clearly off to a strong start. I caution you to not extrapolate continued further growth in terms of market share until some of this data comes out. The data that I mentioned a few minutes ago is going to take some time. And that will, I think, drive incremental growth. But we do think it will maintain. This is a sustainable growth driver. But in terms of acceleration, we really, I think, need to provide more data in order to accelerate that growth rate. But it is not kind of a onetime blip. We do think this is going to sustain.

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Operator [39]

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Your next question comes from Raj Denhoy of Jefferies.

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Anthony Charles Petrone, Jefferies LLC, Research Division - Equity Analyst [40]

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Anthony for Raj. Maybe 2 product questions and then an operating margin question. Just to clarify on 670G fair gains, is that from prior MDI patients who are existing pump/CGM users? So that's the first product question. The second would be on Spyral. You had data out at EuroPCR. Maybe just to recap on why this program is different from the prior SYMPLICITY program and what the update on market opportunity is there. And then on operating margin, can you clarify that mark-to-market gains and losses on securities, how that could impact operating margin next year and if the company is contemplating shifting that out of other income?

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Omar S. Ishrak, Medtronic plc - Chairman and CEO [41]

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Hooman, do you want to go first?

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Hooman C. Hakami, Medtronic plc - Executive VP & Group President of Diabetes Group [42]

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Sure. So Raj, with respect to the 670G. We are getting penetration of the 670G really across, I would say, patient population, certainly our own installed base, competitive conversions and MDI. So we are seeing all 3. I think as you look forward though, we do expect more penetration within MDI because as the data comes in -- and now we have, as you heard from the commentary, 70,000 trained patients, where the results are in line with the pivotal. As more of this data comes through and as physicians see this data, I anticipate we'll see even a greater penetration within MDI.

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Omar S. Ishrak, Medtronic plc - Chairman and CEO [43]

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Mike, do you want to take Spyral?

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Michael J. Coyle, Medtronic plc - Executive VP and Group President of Cardiac & Vascular Group [44]

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And then as it relates to Spyral, there are a whole bunch of things different about the data that were presented here, both the off-med that was shown back at ESC last fall as well as the data shown yesterday at the PCR meeting. For one thing, the device is different. The HTN-3 data was studying the flex device. This is Spyral, which basically is targeting a different part of the anatomy, going more distal in the renal artery, which is where we're seeing congregation of the nerves that we're trying to denigrate. So that has been an important contributor to the reliability of the denigration. Number two, the patient population is different. In the original study, we had mostly loaned systolic patients, older patients involved in a very extensive, if you will, hardening of the arteries, which were less responsive to the treatment. And so that by moving to a patient population that is actually a bit less sick but has both systolic and diastolic hypertension, we've seen a much higher response rate, which was shown in the HTN-3 data and obviously has now been validated here. In addition, we're using ambulatory blood pressure measurement as the basis for the analysis, which gets away from a lot of the whitecoat and hypertension issues that were shown. But probably the biggest difference here is that what's become clear is that patients are not compliant to their medications. And we showed the data yesterday that basically 40% to 50% of patients who say they are taking medication are not taking the medication. We were able to validate that by looking at not only urinalysis but also blood levels. And it's very clear that, that was a huge confounder to the original HTN-3 data in that it created a huge variability in the statistics. And so by carefully factoring that out in our analysis, we were able to now show not only with the off-med study that was shown but now with the on-med study that was shown yesterday that we have not only statistically significant but clinically significant reductions in the blood pressure levels. And so we are now rolling into the pivotal study using the adaptive Bayesian design, which means we're already 35% through the enrollment phase of the study for the pivotal trial. So it's a very exciting program for us and something that we spent a lot of years fixing. And now we're glad we're moving ahead with the pivotal trial.

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Omar S. Ishrak, Medtronic plc - Chairman and CEO [45]

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That's great, Mike. Karen, do you want to take the...

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Karen L. Parkhill, Medtronic plc - Executive VP & CFO [46]

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And on the operating margin, yes, I did mention we had some mark-to-market losses in the quarter. They were primarily related to the warrants that we own on Mazor. And yes, we are planning to shift mark-to-market gains and losses going forward into non-GAAP reporting.

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Operator [47]

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Your next question from Bruce Nudell of SunTrust.

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Bruce M. Nudell, SunTrust Robinson Humphrey, Inc., Research Division - MD [48]

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Omar, a question for you and then a couple questions on products. So firstly, just looking at the midpoint of top line guidance next year. It's feeling like you're thinking developed markets for Medtronic will grow 2.5% to 3% and emerging markets more 12% to 15%. Is that the right way to be thinking about it? And is that really the slowdown in developed markets really just due to the product introduction timings?

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Omar S. Ishrak, Medtronic plc - Chairman and CEO [49]

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Emerging markets are in the double digits. And I think that's the way you should model it. I think we've got confidence in that. And then the remainder is the developed markets. So I think if you build the model out from that, that's the best way to do it. So we're pretty confident on the double-digit emerging market as a baseline. And then the strength will be in developed markets, which is usually driven by innovation cycles.

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Bruce M. Nudell, SunTrust Robinson Humphrey, Inc., Research Division - MD [50]

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Okay. And then, Geoff, just on the spinal cord stimulation, what's the internal confidence that the low kilohertz sub perception is really equivalent to 10 kilohertz and that waveform optionality is also very important to having durable, long-term pain relief?

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Geoffrey Straub Martha, Medtronic plc - Executive VP & President of Medtronic Restorative Therapies Group [51]

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Well, that's been our position and our data is proving that out, that we believe that patients benefit over time from the optionality between high-dose and low-dose energy. And we're going to continue to do more. And that's really the heart of our Evolve workflow, right? So one, just to make it simple, one, having the flexibility to toggle between high dose and low dose, we think, over time produces the best outcomes. However, you need to provide physicians with the recipe for doing that, so they can get consistent outcomes and mitigate complex patient follow-up. And that's our Evolve workflow. And we're very confident in that, not just internally, but you're seeing external confidence building. I mentioned the [Vertalin] data that we just talked about in a couple of scientific conferences recently and then our Vectors trial that we'll be announcing the data on that in NANS in 2019.

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Bruce M. Nudell, SunTrust Robinson Humphrey, Inc., Research Division - MD [52]

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And my final question is SAPIEN 3 showed very good results extracted from the TVT Registry in bicuspid patients. I'm pretty sure you guys have done the same sort of analysis. And could you just say how CoreValve's looking in that registry amongst bicuspid patients that are of course important once the low-risk label is garnered?

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Michael J. Coyle, Medtronic plc - Executive VP and Group President of Cardiac & Vascular Group [53]

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Yes, Bruce, I think we'll wait until we're prepared to show the data. But we are absolutely doing that analysis as the basis for an approval for bicuspid. And obviously, the rich dataset of TVT is going to provide us the basis for being able to see what the effect is. But we are very optimistic about that analysis being supportive of seeing similar outcomes to what we see in the intermediate-risk and high-risk groups.

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Operator [54]

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Your final question comes from Steven Lichtman of Oppenheimer.

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Steven M. Lichtman, Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst [55]

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Just first question on Core Spine. As you mentioned during prepared remarks, the recent soft patch here is well-known. Just wondering what your latest views on the market are, maybe most recent thoughts on the drivers of the growth challenge. And do you think we could see a pickup? And if so, what would be the driver there?

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Geoffrey Straub Martha, Medtronic plc - Executive VP & President of Medtronic Restorative Therapies Group [56]

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Well, first of all, I'd like to say, look, for Medtronic Spine, I'm pleased with our performance against the softer market that you mentioned. We grew our Spine business as reported 1%. And then when you combine that with our enabling technologies, which like things like spine navigation and robotics, we grew closer to 3%. So we believe this is definitely outpacing the competition. Now regarding softer market, I mean, look, what we're seeing is that historically, the procedure growth has outpaced the pricing pressure for maybe a net 2%, maybe even 3% global market growth. But in the last couple of quarters, that procedure growth has softened. And it has not outpaced the price declines, the price pressure, so you're seeing more of a flat to slightly down market. That's why I'm pretty excited about our performance. And that's been driven by the Spine, the Core Spine and biologics piece has been high single-digit growth in BMP and our lateral approach called OLIF, strong double-digit growth with our PRESTIGE LP Cervical Discs. And then we've got a number of new product launches that are just starting to take hold, our Solera Voyager 5.5/6.0 fixation system, our ARTiC-L 3D printed titanium cage. And then coming up here shortly, we've got an INFINITY posterior cervical system coming to market. So that's the whole Speed-to-Scale strategy of our Core Spine business. And then on top of that, our navigation, robotics, power tools, nerve monitoring, [weave] all that together further integrating that and helping physicians use these tools to improve both clinical and economic outcomes, we believe that, combined with our Spine business, is going to be growing 3%-plus going forward. And the final thing I'd say that's helping our Spine business maybe versus some others is our global exposure. In China, for example, which is a big business for us, our Spine business is growing 8%. So our OUS growth is stronger than our U.S. growth and pulling up the business. So those 3 things, continued Speed-to-Scale of our product launches within Core Spine, enabling technology, improving clinical and economic outcomes and really differentiating us and helping our Core Spine business and then finally, the mix of OUS growth, particularly in our emerging markets. Those 3 things will help us grow faster than the market. And in terms of predicting the market, that's hard to do. We think -- we don't think it's going to get much weaker. We do think maybe a slight uptick. But it's very hard to predict that.

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Steven M. Lichtman, Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst [57]

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Great. And then just lastly, Karen, just a clarification on capital allocation in FY '19. You were clear on the reduced interest income as you position the balance sheet post tax reform. But are you assuming any uses of that freed-up cash, whether through reinvestment in the business or enhanced buybacks beyond the $1.2 billion that you've previously talked about?

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Karen L. Parkhill, Medtronic plc - Executive VP & CFO [58]

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No, at this stage, the liquidation of these assets properly will take some time. So we're not necessarily anticipating any large change in capital allocation other than what we've already communicated.

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Omar S. Ishrak, Medtronic plc - Chairman and CEO [59]

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Okay. So with that, thank you all very much for your questions. And on behalf of the entire management team, I'd like to thank you for your continued support and interest in Medtronic. We look forward to discussing our long-range plan review at our Investor Day 1.5 weeks from now on Tuesday, June 5. And we also plan on holding our next earnings call, the Q1 earnings call, on Tuesday, August 21. So thank you all very much.

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Operator [60]

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This concludes today's conference call. You may now disconnect.