美敦力 (MDT) 2027财年第一季度业绩电话会议：营收增长并上调业绩指引

核心要点

• 美敦力公布2027财年第一季度营收为98亿美元，同比增长13.7%（按报告和有机口径）。额外的销售周预计贡献了5.7亿美元（即670个基点），推动了有机增长。
• 调整后每股收益为1.45美元，而调整后营业利润增长15%至23亿美元。调整后营业利润率提升10个基点至23.7%。
• 心脏消融解决方案业务是主要的增长引擎，全球营收增长88%，美国营收增长139%。Sphere-9在美国获取了9个百分点的市场份额，同时美国Affera装机量环比增长超过35%。
• 增长具有广泛性：心脏节律管理业务增长15%，颅脑及脊柱技术业务增长13%，外科业务增长9%，糖尿病业务增长15%。
• 管理层将2027财年有机营收增长预期上调至7.25%-7.75%，并将调整后每股收益预期上调至5.94-6.00美元。
• 美敦力正在加大对机器人及其他高增长平台的投资。其7亿美元对Cornerstone Robotics的投资获得了Sentire手术系统在美国以外特定市场的分销权，预计将从2028财年开始带来财务贡献。

核心财务业绩

定价因素为毛利率贡献了30个基点，而扣除通胀后的成本削减贡献了50个基点。不利的业务组合使毛利率下降了50个基点，这主要反映了糖尿病和心脏消融解决方案业务的影响。美敦力还在该季度精简了9000多个SKU。

业务与经营业绩

心血管业务

心血管业务营收增长19%，其中25%来自美国，14%来自国际市场。包含心脏节奏管理与心脏消融解决方案在内的电生理治疗业务全球增长29%。

心脏消融解决方案全球增长88%，在美国增长139%。过去12个月营收突破20亿美元。管理层表示，更广泛的电生理市场继续保持15%左右的增长速度，并预计该业务在2027财年的增速将达到市场增速的2.5倍以上，在第二季度将达到市场增速的3倍以上。

心脏节律管理业务增长了15%，全球份额扩大了80个基点。在OmniaSecure、Micra和EV ICD等产品的支持下，传导系统起搏为心脏节律管理（CRM）业务增长贡献了200多个基点。

介入心脏病疗法业务增长了7%（全球）。结构性心脏病业务实现低单位数增长，而冠状动脉及肾去神经疗法业务增长了13%。CathWorks为后者的业务贡献了近300个基点的有机增长。

神经科学业务

神经科学业务营收增长了9%，其中美国市场增长11%，国际市场增长7%。颅骨和脊柱技术业务增长了13%，这得益于核心脊柱业务增长14%、神经外科业务增长15%以及Stealth AXiS的推出。

盆腔健康业务增长了15%，主要得益于Altaviva手术量环比翻倍。管理层预计该业务将在2027财年及以后成为神经科学业务增长的更大贡献者。

专科疗法业务增长了7%，而神经调控业务增长了3%，背景是脊髓电刺激市场疲软以及脑深部电刺激更换面临逆风。

医疗手术与糖尿病业务

医疗手术业务营收增长了10%，在美国和国际市场表现均衡。外科业务增长了9%，主要得益于先进能量产品、创伤管理产品以及Hugo贡献的增加。

管理层预计Hugo完成的手术量将突破50,000例（在财年末前）。Touch Surgery已在全球超过1,500间手术室中投入使用，而Hugo手术量的增长速度达到市场增速的两倍以上。

急症护理与监护业务增长了14%，受McGRATH视频喉镜40%中段的增长以及Microstream呼气末二氧化碳监测30%高段增长的驱动。管理层预计随着2027财年的推进，该业务将趋于正常化。

糖尿病业务营收增长了15%，反映出美国市场更快的增速以及国际市场的强劲需求。美敦力拆分MiniMed的计划保持不变，拟在管理层认为经济效益适合利益相关者时于财年末前完成交割。

管理层业绩指引

业绩展望包含截至财年底的糖尿病业务。 管理层预计定价和成本效率计划将抵消业务组合带来的压力，同时继续在重点增长平台进行有针对性的商业投资。

近期收购（包括 SPR Therapeutics 和 Scientia）预计将贡献超过 1.5亿美元 的2027财年非有机营收增长。除了7亿美元投资损失的利息外，Cornerstone Robotics 交易预计在本财年对运营的影响极小。

风险与关注点

• 第一财季受益于多出一个销售周，使得同比对比变得复杂。若剔除该周，有机增长率约为7%。
• 随着对比基数提高，心脏消融解决方案业务的增长预计将在本财年中放缓。
• 糖尿病以及心脏消融解决方案业务产生了不利的产品组合，部分抵消了定价和成本效率提升带来的收益。
• 尽管管理层继续提交退税申请，但未在全年假设中包含未来的关税退税。
• 第一季度的税收优惠主要是时间性差异，预计将在今年晚些时候冲回。
• 预计外汇将使全年营收减少5000万至1.5亿美元。
• 神经调控业务继续面临脊髓电刺激需求疲软以及脑深部电刺激更换业务的逆风。

分析师问答亮点

分析师密切关注对 Cornerstone 的投资是否意味着对 Hugo 的信心下降。管理层否认了这一解读，表示 Sentire 是对 Hugo 的补充，旨在特定国际市场扩大客户选择并提高机器人手术的可及性。Hugo 仍是美敦力在美国的主要机器人平台。

在心脏消融解决方案方面，管理层强调了 Affera 系统在美国高手术量医疗中心的持续推广。目前，已安装基数中约有 75% 位于高手术量中心，这为向小型客户拓展留下了空间。现有的主要客户也在申请增购系统。

关于 MiniMed 拆分后的资本配置，管理层预计剥离糖尿病业务并表将使公司总体增长减少约20个基点，但会使毛利率提升约50个基点，营业利润率提升约100个基点。美敦力计划继续优先进行研发、补充性收购、风险投资和结构化交易，而不是大型交易。

管理层还重申了对 Symplicity 去肾交感神经消融术的信心，理由是真实世界临床证据不断改善、报销覆盖范围进一步扩大以及医院积极建立诊疗项目。经桡动脉导管仍计划于2027财年下半年推出。

业绩电话会议完整文字记录

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完整财报电话会议逐字稿

管理层陈述

Ingrid Goldberg

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 31, 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 discrete 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 compared to the fourth quarter of fiscal '26 and are made on an as-reported basis. Unless otherwise stated, all reference is to share gains or losses 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 earnings during the fiscal year. With that, I'm now pleased to hand it over to you, Geoff.

Geoffrey Martha

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 3 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 EV ICD, Micra and conduction system pacing, including OmniaSecure. At more than $5.5 billion in annual revenue, CRM is one of our largest businesses and has been a long-standing source of strength for the company. As an example, Micra, 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 U.S. and 10% internationally. Our AiBLE 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, AiBLE help surgeons make more informed decisions, operate with greater precision and learn from each and every case.

And our recently launched Stealth AXiS 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 U.S. 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 med tech. In Q1, CAS delivered 88% worldwide growth, reflecting the team's execution and the strength of our platform. Sphere-9 momentum continued with a 9-point increase in U.S. share during the quarter. And I'm pleased to share that we achieved an important commitment this quarter ahead of the time frame 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 at more than market rate this fiscal year. Our U.S. Affera 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 a more -- 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 U.S. VT 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 Symplicity. 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 3-year data we recently presented. And we are pleased to share that the SPYRAL 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 Ardian programs. Here, our key focus areas are on expanding coverage and integrating Ardian into the care pathway. Looking ahead for Ardian, our transradial 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 radio access today, making the therapy easier to integrate into existing workflows and potentially improving patient outcomes. These positive signals further reinforce our conviction that Symplicity 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% and 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 U.S. 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 long-standing 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 health care 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 U.S. 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 1,500 operating rooms globally, supporting AI-powered insights, collaboration and workflows. And with Touch Surgery Aid, unveiled at SRS, we are bringing 300x 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 Sentire Surgical System in select markets outside the U.S. into your compliments you go 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, Touch Surgery AID, Sentire 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.

Thierry Pieton

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 8 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 U.S. and 12% internationally. Cardiovascular delivered 19% revenue growth this quarter, excluding 25% in the U.S. and 14% internationally. Electrophysiology therapies or EPT, which includes our CRM and CAS businesses, grew 29%, including 41% in the U.S. and 18% internationally.

Within EPT, Cardiac Ablation Solutions was again a significant contributor, delivering 88% growth, up 139% in the U.S. 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 U.S. 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 include structural heart and coronary and renal renovation. ICT grew 7% globally, driven mainly by 11% in international growth. Structural Heart grew low single digits. Similarly to Q4, U.S. 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 Antares as well as Pi-Cardia announced this morning. Pi-Cardia is the first FDA cared 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 renovation grew 13% globally. Our coronary business was up low double digits, with Cath works 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 U.S. and 7% internationally. Crano 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 staff access following its first full quarter since commercial launch. Specialty Therapies was up 7%, including 10% in the U.S. and 4% internationally. Within Specialty, Neurovascular grew 4% globally driven by 9% in hemorrhagic and continued strength across flow diversion, intrasaccular embolization, carotid stenting and access devices. In August, Onyx 12 received U.S. FDA approval for MMA embolization to treat subdural hematomas. All 3 Onyx viscosities are now approved for a 1-minute shake time versus the conventional 20 minutes. This quarter, we completed our acquisition of Scientia, which represents an important advancement in navigation, enabling neuro interventionalists 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. ENT grew 7% worldwide, driven by low double-digit growth in the U.S. Neuromodulation was up 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 Medical which expands our presence in BVNA. Both segments are growing over 20% annually. Together, these strategic actions increased 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 U.S. and internationally. Surgical revenue increased 9% with similar performance across the U.S. and international markets.

We saw strength in Advanced Energy and Wound Management driven by share gains from our LigaSure vessel sealing and VLOC Barb sutures. As Geoff mentioned, we are 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 PillCam. Acute care and monitoring was up 14% globally including high teens growth in the U.S. Results were driven by mid-40s growth in McGRATH video laryngoscopy, high 30s in Microstream capnography and high single digits in [indiscernible] core pass 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 U.S. acceleration and robust growth internationally. Our strategic intent for the separation of MiniMed is unchanged, create 2 focused companies that will allow both MiniMed and Medtronic to execute more effectively, pursue their distinct capital allocation strategies and align with the investor bases 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. Now 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 benefit 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 CAS businesses. Consistent with prior quarters, while the near-term capital mix continues to impact our gross margin, it's reflective of our strong commercial performance and growing installed base, which is expanding our foundation for future pull-through of higher-margin catheter sales over the long term. The tariff-related impact with 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 investments 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 continue 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, $0.06 above the midpoint of our guidance range and of Street expectations. Now turning to our guidance. As a reminder, our full year guidance includes the diabetes business through fiscal year-end. On the top line, we are pleased with the strong performance in the first quarter, and are raising our fiscal year 2017 organic revenue growth guidance to 7.25% to 7.75%, which represents a 50 basis point increase from our prior guidance. In the second quarter, we're expecting roughly 6% organic revenue growth. Based on recent FX rates, we expect foreign exchange to be a roughly $50 million to $150 million headwind for the full year with approximate $25 million to $75 million headwind 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 MiniMed 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 and 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.

Geoffrey Martha

Okay. 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 10 and 11. With that, I'd like to thank our Medtronic colleagues around the world. The progress we are making reflects the disciplined 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.

Okay. Let's turn to Q&A now, and Ingrid, please provide the instructions and queue up the analysts.

Ingrid Goldberg

[Operator Instructions]

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.

分析师问答

Travis Steed

Congrats on a great quarter. I guess I want to -- as is doing really well, but I want to spend a second on kind of the Medtronic business ex CAS and just some 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 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 Cornerstone.

And then, Thierry, I wanted to also follow up the margin guide, I think ticked 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 some of the investments you've done this year.

Geoffrey Martha

Okay. A couple of other questions here. Thanks for the questions, Travis. First on the -- I'll take -- I'll start on the first one, just on the business performance and get it ex CAS. I say, first of all, -- what we like about the quarter is the breadth and the depth of the performance, right? You had a number of businesses are -- including our big 3 performed really well. cardiac rhythm and improving performance in surgical. And on that breadth note, a lot of different countries around the world contributed to the growth.

And then as you point out, we had a number of growth drivers on top of this to give you the depth, right? The CAS being the biggest one, but also some good progress in Altaviva, 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 in structural heart with Pi-Cardia as well as in soft tissue robotics with Cornerstone robotics. There's a lot to talk about, and Ardian is making good progress as well. 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 AXiS 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 the mid-single digit. But it is 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 then, of course, in Pain Stim and our Neuromod business, we got the new BB&A partnership. It'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 question.

Thierry Pieton

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 with kind of a partial year impact. And it's in organic for now, but it will turn into inorganic for now, we'll turn it into organic. And all of these investments and acquisitions are areas where the CAGR is significantly higher than the rest of the business, right? We're talking segments where the growth is typically north of 20%. So that's further good news down the road. 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 AXiS in CST. You talked about Scientia, Onyx, Neuro guard, RTs in neurovascular. We've got Stealth AXiS, ENT version for the ENT business and 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. There's -- yes, 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.

Geoffrey Martha

Yes. I'm sure we're going to get more questions on Cornerstone and Pi-Cardia. But just high level, I'd say, first on Pi-Cardia, 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 Anteris investment a few months ago in the TAVR space. We're investing heavily in tricuspid and mitral. We've got an ecosystem that we're building with [indiscernible] on the sizing as well and now Pi-Cardia here. It's just another investment in the space, and 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 U.S. 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 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 300x more computing power in the surgical suite or investments in visualization, robotic instrumentation. So there's a lot going on in soft tissue, and we're really excited about our progress there.

Ingrid Goldberg

Our next question comes from Larry Biegelsen at Wells Fargo.

Larry Biegelsen

I'll keep it at one, Geoff, and follow-up on Cornerstone, just maybe expand on the deal rationale. I'm going to just ask it head on. Some investors may think this is a signal that you're not confident in Hugo, address that and maybe a little bit more on the financial implications and which markets you're going to launch a and whether it includes the U.S. And just lastly, is there an option to acquire the company.

Geoffrey Martha

Well, look, we've got Mike Marinaro 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, you can hit some of the financial questions. But on the Hugo question, 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 in clinical indications. We expect multiple new indications by -- in the fall here. We're investing.

I was just in our North Haven Connected facility, where we do a lot of the instrumentation last week, and we've got host of new instruments coming out. So we're really bullish about Hugo. That is our U.S. play and other countries as well. But Cornerstone, like I said, does give us it's like more of a global play. Gives our customers -- it helps us drive up access to robotic surgery, which is very underpenetrated, particularly in emerging markets, 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.

Mike Marinaro

Yes. 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 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 2x the market rate and then our digital ecosystem, of course, is now expanding.

I think as you've seen at society of 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 2 or 3 platforms that we'll 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 the specifics of the customer situation very well where they sit. So this is an opportunity for us to take that strategy and expand access in one of the largest markets in med tech that is still highly underpenetrated, and we see it as complementary and really just an expression of our confidence in the progress that we continue to make here with Hugo.

Lastly, I'd say we're in this to win. This is a critical area for us. 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 this platform and portfolio that will build together between Hugo, Cornerstone and our Touch Surgery ecosystem.

Thierry Pieton

And then on the financials, hi, Larry, just -- 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 Sentire, 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. Look, we -- on the potential acquisition, we just made a large investment. The investment that we made just 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 we understand what's under the hood, so to speak, consider our options. So some optionality there.

Geoffrey Martha

Just Larry, just to reemphasize, I just want to make sure we're not missing any words here, and there's no earnings peak. 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 word in it. We're building a winning strategy here. We feel good about our position. I feel good about Hugo. We've got confidence and conviction, but there's no arrogance as my college hockey coach used to say, head on a love Panther like stance. lots going on here, and we've got to continue to invest and continue to execute here. We like our we want to become that meaningful #2 and gain on the market leader. And we really like the -- what we believe is a multiyear head start over the next scaled competitor, which is important.

Ingrid Goldberg

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

Vijay Kumar

Congrats on the nice spring this morning. I hired a 2-quarter for you, Geoff. One diabetes split off timing. When you look at Medtronic versus stock prices and MiniMed stock, obviously, it's come off the bottom. Why not? What is the hesitancy in announcing the split off in on CAS. I want to make sure I heard this correctly. I think your prior comment was about what is the rate of market growth. And I think today, you said $2.5 million ex the rate of market growth. So did underlying cash assumptions improve? And now what is driving this confidence?

Geoffrey Martha

Well, thanks, Vijay, for the question. Maybe I'll start with the cash question, and then Thierry can take the diabetes question. Yes, we did say for the balance of the fiscal year, that we would grow 2.5x the market. And we think the market's mid-teens in Q3 or Q2, rather, it might even be higher than that. So look, we're just -- there's a lot going on in CAS I'd say. First of all, there's still room to run on Sphere-9, right? 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. And Sphere-9 remains kind of one of a kind in that dual energy point-to-point space. And it's with a lot of different features and benefits that physicians like and it continues to grow, and we're getting more clinical indications there. We're on the -- we took out a CE 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 with Sphere 360 in Europe. And we're going to keep going here. We're building out an ecosystem. That's a trend to 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, as being one, we talked about 2 investments in ICE technology last quarter, and we're going to keep going. So again, not too dissimilar from soft tissue. I mean, we like our position. And this one, we're further ahead and marching towards that market leadership. But you got to keep investing here, not just in the therapy itself but also the ecosystem around it. And I forgot about mapping too, the integrated mapping continued 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 over you on Diabetes.

Thierry Pieton

Yes. And just on CAS, it's -- you're right, Vijay. It's 2.5x the market on the full year. We expect it to be north of 3x the market in the second quarter. So we 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 Kew ] 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, no hesitation going forward with the separation just when the time is right.

Ingrid Goldberg

All right. Great. Next question comes from Mike Kratky at Leerink.

Michael Kratky

Awesome. Can you hear me right?

Geoffrey Martha

Yes, yes.

Michael Kratky

Great. So congrats on the strong quarter. Thanks very much for taking on really encouraging to see the 35% sequential growth for your U.S. affair installed base after 40% last quarter. So can you provide any additional color on utilization trends in centers after they've added in a fair system? How quickly are you seeing your PSA market share shift in those centers? And where are you seeing your share kind of stabilize over time there?

Geoffrey Martha

Well, we're seeing -- let me see here, going on my notes here. Well, so first of all, 75% of our U.S. installed base are at high volume centers, right? So right now, we're still concentrated in these high-volume centers, which is not a bad thing, but it also tells us we got room to run in the lower volume centers across the U.S. 30% of our accounts are doing 70% of the ablation, right? 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 many of these large accounts have only 1 or 2 systems and they're asking for more.

So we're seeing -- like once Affera goes in there, most of our experience, Mike, is in these high-volume accounts, right? And once our system gets in there, the utilization is high. We're seeing them add systems. And so we're -- that's all good sign. 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 centers outside of these high-volume centers. You have anything to add there?

Thierry Pieton

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.

Geoffrey Martha

And for just a variety of reasons. I won't go through all the list of benefits. [indiscernible] is becoming the workhorse in these centers. and that bodes well. And then we've got Sphere 360 coming, which, as I mentioned earlier, goes right at the heart of the largest -- our largest PFA competitor. So feeling bullish on CAS right now.

Ingrid Goldberg

Great. Next question comes from Anthony Petrone at Mizuho.

Anthony Petrone

Thanks, and congratulations here on a solid quarter. I'll stick to one and maybe go back to Vijay, which is maybe capital allocation and diabetes. There will be a pretty significant hole in the 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 7%. So maybe how the capital allocation will change post diabetes being completely separated will the cadence of tuck-in deals accelerate? Will you consider scale deals? Is a buyback in the cards here as well, considering that med tech valuations are off the bottom but are certainly not at multiyear highs. So just looking ahead to what the capital allocation program looks like post diabetes.

Geoffrey Martha

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? It's not -- and with our growth accelerating, we're very comfortable. And 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 through that. Look, the diabetes business is, 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, right, on its best day, materially lower than the rest of Medtronic.

And so getting that capital allocation question, I wouldn't say anything has 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 opportunities in the highest growth, but also where you have confidence that they're going to be big. So high growth, large patient pools. And the third thing is where we feel like we have a right to win. We've got strong commercial presence, a good reputation. We understand the clinical nature of it. 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, okay? That's broad-based, organic and inorganic.

And on the M&A, you've seen over the last 18 months, we've been working on this for probably 3 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 it's venture, an uptick in venture investing an uptick in structured deals where you're making investment and then you have strategic optionality later and then just flat out acquisitions. You're seeing it across the board. Prioritize in those high-growth areas. And we announced 2 more investments today. So you're going to see that continue in those areas of cardiology, neuroscience and our medical surgical area.

Thierry Pieton

I don't know what to add, Geoff, that was a pretty complete answer. Just a couple of numbers. I mean, Jeff 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, it's -- 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 doing about $2.8 billion of R&D and $0.5 billion of acquisitions to almost $3 billion in R&D and $2 billion acquisitions or investments. So 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 on 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.

Geoffrey Martha

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 CAS, right, which we just talked about, AFib 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 $1 billion in an inorganic platform. So multiple shots on goal. And here we are today announcing these type of results, we picked up another 9 points of 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.

Thierry Pieton

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 of 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 is investment. So we look forward to continuing to deploy capital.

Ingrid Goldberg

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

Matthew O'Brien

Great. Can you hear me okay?

Geoffrey Martha

Yes.

Matthew O'Brien

Okay. So just real quick, I know we're running long. On renal denervation, I just want to be sure I'm clear on the message here. because obviously, cash is doing really well. So how are you thinking about the trajectory of that business now, the market opportunity? Any updates on what you're thinking in terms of the market? And then do you really need Transat deal to accelerate that franchise over the next several years? Is it a reimbursement thing? What's really the clear message on real derivation here as we get this update here in Q1. Thank you so much.

Geoffrey Martha

Well, thanks for the question, Matt, on Ardian I still -- we have confidence and conviction that this is going to be one of the biggest things in med tech, right? And there's 3 things driving. 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, right, the real-world outcomes just keep getting better. I don't know what else to say that we had great 3-year data at CRT, where you saw like an 18 -- over 18-point reduction in the office. Over a 13-point reduction in the ambulatory setting. I mean these are materially higher, like 2x, 3x, 4x higher than the clinical trial. We put in the commentary today, spiral a firm was accepted as a late-breaker TCT, so more data coming out. It's I think that's full 6-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, right? 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, right? 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, 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 I know, Matt, you get out there, you talked to a lot of the KOLs and we're out there talking to them as well as the hospital C-suite. And the conversation, like I said, is shifting the enthusiasm 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 in driving consumer/patient awareness on these.

So again, 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 quarters and years to come.

Ingrid Goldberg

All right. I think we have time for 2 more. So the next question comes from Robbie Marcus at JPMorgan.

Robert Marcus

Great. Congrats on the nice quarter. Thierry, I 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 of the onetime benefits in the quarter?

Thierry Pieton

Yes. 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 a 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're -- 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 full year basis today still calls for an operating margin that should be up about 50 basis points on a full year basis. which should put us with a net profit up 10%, so significantly higher than our revenue growth. So look, we're going through all the different parts 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 starting to pay off. You've seen some of it in the first quarter. And on the full year, we're going to deliver a leveraged P&L.

Ingrid Goldberg

All right. I'm waiting for my queue up here on our last question which should come from Rick Wise at Stifel. All right. Thanks. Rick, please go ahead.

Thierry Pieton

It might be on mute Rick? You want to go the next one?

Ingrid Goldberg

Yes. All right. Rick, we'll get you on the next one, please. The next question is going to come from Joanne Wuensch, Citi.

Joanne Wuensch

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 use 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?

Geoffrey Martha

Well, look, I'll start with your last -- the back half of the question and let Thierry pile on there. But look, we're -- Thierry mentioned between the strong cash so that we're generating or our cash flows, improving here continues to improve. It's always been good, but it's improving. Had a really strong quarter. We're going to continue 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're seeing effectively a doubling of our investment in 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 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 2 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?

Thierry Pieton

No, no, 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.

Geoffrey Martha

And so Charlotte, why are we going there? So look, the IRCAD facility there in Charlotte is an impressive facility. IRCAD, is mainly historically outside of the physician training outside of the U.S. This is their first North American site and 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 capital. So you got our able platform and Stealth AXiS. 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 IRCAD 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 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 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 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 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, a space that is built for this. And so December 10 and 11, please mark your calendar. It's -- we're really excited to share, and I know the team is as well. So thanks for the question, Joanne.

Ingrid Goldberg

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. And Geoff, if you have any other additional prepared remarks, please go ahead.

Geoffrey Martha

I mean, look, thanks for -- thanks, as always, thanks for joining today. Really appreciate the engagement. I appreciate the support and the continued interest in Medtronic. With that, have a great rest of your day, and thank you very much.