Medtronic plc (NYSE:MDT) Q4 2024 Earnings Call Transcript

Page 2 of 11

GI Genius uses the power of artificial intelligence to detect polyps in real time during a colonoscopy, integrating seamlessly into a GI doc’s existing workflow. GI Genius results in a 50% reduction in mispolyps versus a standard colonoscopy, which plays an important role in the prevention of colon cancer. Turning to businesses in our highest growth markets, cardiac ablation solutions grew 6% on strong market procedural growth. Now, over the coming years, we expect this business to be a very meaningful growth driver for Medtronic. We are leading the way in bringing pulse field ablation catheters to market in both the focal and single shot segments. In focal PFA, we continue to ramp manufacturing of the Sphere 9 catheter and remain in limited market release in Europe.

Sphere 9 can perform both PFA and RF ablation and drives high density mapping all from the same catheter. And it integrates seamlessly with our differentiated Affera mapping system. In the U.S., we expect to complete the 12-month follow-up in the pivotal trial for Sphere 9 in the coming weeks, and then we’ll prepare for FDA submission. In Single Shot PFA, we just received CE Mark for our PulseSelect catheter, and it will be commercially available early next calendar year. We are now the only company with approved catheters for both Single Shot and focal PFA. And in the U.S., the FDA is reviewing our PulseSelect submission, and we expect to be one of the first companies with a PFA catheter in the U.S. market. Now with our PFA catheters and the Affera Map/Nav system, combined with our leading Arctic front cryo solution and differentiated flex cath cross-transceptal system, we expect to drive strong long-term growth in the fast-growing $8 billion EP ablation space.

Now turning to Structural Heart, overall the TAVR space continues to grow in the high-single, low-double-digit range. In Q2 we grew mid-single-digits, which was below the market. Now we declined slightly in the U.S., comping difficult prior year comparisons when we initially launched Evolut FX and customers purchased for stock. Yet we grew 4% sequentially, evidence of the strength of our product. In Europe, we grew high-single-digits and received CE mark for Evolut FX at the end of the quarter. And in Japan, we continued to win share and grew in the mid-30s on the continued adoption of Evolut FX and expanded ESRD indication. Our Evolut platform has now shown superior valve performance, compared to surgery in randomized trials that extend to five to 10 years after initial procedure.

And last month our landmark Evolut low-risk trial was presented at TCT and published in Jack. The trial randomized patients to Evolut or best-in-class surgery. As you can see in this chart, Evolut, which is the blue line, had a lower rate of death or disabling stroke, and the difference continues to diverge each year, going from a 2% difference at two years to 2.9% at three years and growing to a 3.4% difference at four years. This resulted in a 26% reduction in death or disabling stroke with Evolut at four years. And no other transcatheter valve has shown better valve performance and outcomes, compared to surgery. Valve design matters and this differentiates us competitively. Physicians understand this data. This is compelling to them, and it’s compelling to patients.

So as we look ahead, we expect the combination of this data, coupled with the global rollout of Evolut FX to drive our TAVR growth above market. In neurovascular, we grew high-single-digits when you exclude sales in China where the coils market is subject to volume-based procurement. We continue to see very strong growth and flow diversion, which was up low-20s globally. This is being driven by our innovative Shield Technology for treating brain aneurysms, which is available on both the Pipeline Flex and Pipeline Vantage flow diverters. In Robotic Surgical Technologies, we increased our installed base as we continue the international launch of our differentiated Hugo robotic system. In the U.S., our EXPAND URO pivotal trial continues to enroll and is on plan.

And we’re happy to announce that we have FDA approval to start our U.S. Hernia indication pivotal trial for Hugo. Adoption of Hugo is positive, with surgeons appreciating features that are core to the system, including Touch Surgery Enterprise Digital Technology. This AI-powered video solution, currently available for both robotic and laparoscopic surgery, creates a new paradigm for case review and performance improvement. We’ve already deployed it in over 20 countries and we’re continually developing our connected digital ecosystem and we’re excited about the upcoming launch of Touch Surgery Livestream to enable live streaming and sharing of procedures securely and seamlessly. We expect Hugo, equipped with advanced digital capabilities, to be a meaningful growth driver for us in the years ahead.

Page 2 of 11