Medtronic plc (NYSE:MDT) Q2 2023 Earnings Call Transcript

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Pito Chickering: Hey guys. Thanks for taking me in here. I know that you don’t have a ton of exposure here, but there has been a healthy debate around hospital demand for capital equipment this year. Can you give us any color on what you are seeing from behavior changes in hospitals for capital ordering in 2Q and what you guys assume in the back half of the year?

Geoff Martha: Our capital, first of all, isn’t a huge piece yet of our revenue. But it is €“ it tends to be tied to profitable procedures, and we actually had a strong capital performance in last quarter. And especially in our Cranial & Spinal Technology’s business, CST, our capital there, we had a number of our €“ whether it would be navigation, inter-operative imaging, had record capital quarters for us. So, we are €“ we definitely see a bit of €“ it takes a little longer to close a deal, but the demand as you are working with the hospital and how they are going to pay or finance this, but we are having strong demand in those areas. And then, of course, we mentioned Hugo. Hugo is still new for us, but we are very happy with the placements we have been able to make on Hugo here. Of course, those are outside the U.S., but very pleased with that.

Pito Chickering: Alright. Thanks so much.

Geoff Martha: Thank you, Pito. We have got time for one more question, please, Brad.

Brad Welnick: Yes. Our final question comes from Joanne Wuensch, Citi. Joanne, please go ahead.

Joanne Wuensch: Hi. Can you hear me?

Geoff Martha: Yes Joanne. Good morning.

Joanne Wuensch: Wonderful. Good morning and early happy Thanksgiving. This led straight into my Hugo question. Could you give us a little bit of an update on how you feel about the market potential for the product, the timing of U.S. approval? And at one stage, several years ago, you were talking about the potential contribution. Is there a way to start thinking about that again? Thank you.

Geoff Martha: Sure. Well, thanks for the question, Joanne. Yes, like I said, we have good news on Hugo. We are kicking off the U.S. IDE with our first case is scheduled for December based on getting these instruments enhancements approved. And like I just said to Pito, we are pleased with the system placements. And in terms of the other color or commentary on that, I will ask Bob White to chime in.

Bob White: Yes. Thanks Geoff and thanks Joanne. Good morning. Couple of thoughts here. First, on the overall market of 4Q go, we continued to be really excited about it. Remember, there’s €“ around the world still 95% cases are not done. That could be done robotically assistedly. So, we believe this is a true market expansion opportunity. So, we are still really excited about the continued long-term health of the market and excited to be the number two player in this space. With respect to the timing of U.S. approval, as Geoff mentioned, we expect to begin our U.S. IDE by the end of this calendar year. So, that’s exciting. Actual approval in the U.S., of course, depends upon the agency and the process there. So, I really can’t comment on that.

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