Good morning, and welcome to Medtronic's Fiscal Year 2023 Q1 Earnings Broadcast. I'm Ryan Weispfenning, Vice President and Head of Medtronic Investor Relations. I'm inside one of our Medtronic mobile labs, which is making a stop here at our operational headquarters in Minneapolis. These high-tech mobile classrooms will give about 5,000 US clinicians every year the opportunity to train on some of our most advanced state-of-the-art technology, including our O-arm and StealthStation. As you can see, it's on 18 wheels. Our fleet of mobile lab trucks allows us to play big, literally, as they traverse the United States. In fact, with over 200 stops planned this fiscal year, they're likely coming to a hospital near you. Now, before we go inside to hear our prepared remarks, I'll share a few details about today's earnings broadcast. Joining me are Geoff Martha, Medtronic Chairman and Chief Executive Officer, and Karen Parkhill, Medtronic Chief Financial Officer. Geoff and Karen will provide comments on the results of our Q1, which ended on July 29, 2022, and our outlook for the remainder of the fiscal year. After our prepared remarks, the executive VPs for each of our four segments will join us, and we'll take questions from the sell-side analysts that cover the company. Today's program should last about an hour. Earlier this morning, we issued a press release containing our financial statements and divisional and geographic revenue summaries. 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 the statements we make 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. Unless we say otherwise, 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 and revenue from our recent acquisition of Intersect ENT. References to sequential revenue changes compared to the Q4 of fiscal 2022 and are made on an as reported basis. All references to share gains or losses refer to revenue share in the second calendar quarter of 2022 compared to the second calendar quarter of 2021, unless otherwise stated. Reconciliations of all non-GAAP financial measures can be found in our earnings press release or on our website at investorrelations.medtronic.com. 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, let's head into the studio and hear about the quarter. Hello, everyone, and thank you for joining us today. We reported our Q1 results this morning, and the quarter played out largely as expected. Our organization executed to deliver revenue ahead of our guidance and EPS that was in line with our guidance. Macro factors that we discussed with you and forecasted over the past few quarters, like supply chain, inflation, and foreign exchange, along with difficult comparisons to the prior year, caused our revenue and EPS to decline. At the same time, there were several bright spots in the quarter across our businesses, including strength in pacing, cardiac surgery, US core spine, neurovascular, diabetes in Europe, and strong overall growth in many emerging markets. As we look to the future, we have several near-term pipeline catalysts approaching that will accelerate growth. We're also making progress on our initiatives around quality and operating improvement. In an uncertain economy, our business is well-positioned with our robust balance sheet, strong and growing dividend, and leadership positions in many secular growth healthcare technology markets. Taking a closer look at our Q1 results, as expected, acute supply chain disruptions impacted our performance, most notably our Surgical Innovations business. We saw improvement in areas like packaging and resin supply as we progressed through the quarter. We also continue to manage semiconductor shortages across our businesses to minimize their impact on product availability as well as our financial results, and we're expecting these chip shortages to linger throughout our fiscal year. Overall, our operations teams have executed and worked closely with our suppliers to minimize impact, improving our order backlogs as we exited the quarter. We expect our overall supply chain issues to continue to improve as we move through the fiscal year. On the demand side, we're still seeing impacts to procedure volumes due to health professional labor shortages, and COVID is still causing procedure cancellations and deferrals in some pockets around the world. We see our hospital and physician customers are doing all they can to manage these dynamics. While procedure volumes in most of our markets remain at pre-COVID levels, we do have certain procedures or geographies where volumes are still lagging. Turning to market share, this is an important metric at Medtronic and is part of our annual incentive plan, along with revenue growth, profitability, and free cash flow. When we look at our quarterly market share performance, acute product availability challenges impacted our share capture opportunities in certain businesses, including Surgical Innovations and high-power CRM implants. We're also facing some competitive pressures in pelvic health and in diabetes, predominantly in the US. We're making good progress on the acute product availability issues and have pipeline plans in place to address competitive pressures over time. Now let me highlight some of our bright spots. In CRM, our pacing business continues to outperform the market as our Micra leadless pacemaker family is driving strong growth around the globe as we enter new geographies and expand penetration in existing markets. Micra grew 15% in the quarter, including high 70s growth in Japan, mid-teens growth in Western Europe, and high 30s growth in emerging markets. In CST, we had a good quarter in US core spine, which grew 4%. We won market share on the strength of our overall portfolio, including our UNiD AI-enabled surgical planning platform and patient-specific implants, which had strong double-digit sequential growth in our US user base. In addition, our recently launched Catalyft PL spinal system, designed to target the TLIF and PLIF markets, drove meaningful results in Q1. The breadth of our enabling imaging, navigation, and robotic technologies is a key differentiator. In our neuromodulation business, we are gaining initial implant share in both pain stim and DBS. In pain stim, the market continues to gravitate toward our Vanta recharge-free and Intellis with DTM rechargeable neurostimulators. In DBS, customers value the differentiated sensing capabilities of our Percept PC system with our SenSight directional lead. In diabetes, we continue to see significant growth in markets outside the US due to the increasing user base of our MiniMed 780G insulin pump, combined with our Guardian 4 sensor. The increase in this user base over the past couple of years is now driving significant recurring revenue growth for our CGM sensors and other supplies. In markets outside the US where launched, the 780G and our Guardian 4 sensor has a very positive user experience with no finger sticks and more time in range. Now, this is due to its near real-time basal insulin and auto correction boluses every five minutes to address underestimated carb counts and occasional missed mealtime boluses. Now let's move to our product pipeline, where we're advancing several meaningful technologies that can create new markets, disrupt existing ones, and accelerate our growth. We continue to execute on our pipeline, having received over 200 regulatory approvals in the US, Europe, Japan, and China over the past 12 months. Looking ahead, we have several near-term pipeline catalysts approaching that we expect will enhance the weighted average market growth rate of Medtronic. Now, starting with our cardiovascular portfolio and transcatheter valves, the limited US market release of our Evolut FX valve is receiving an overwhelmingly positive customer reception, and we're excited about the impact this next gen valve can have as we move to full market release this fall. Evolut FX enhances ease of use and provides implanters with greater precision and control during the procedure, and it maintains all the industry-leading hemodynamic and durability benefits of the Evolut platform. When you combine the FX launch in the US, PRO+ launch in Europe, and Evolut PRO launch in China, we feel really good about the opportunities in our TAVR franchise around the globe. TAVR is one of the largest growth drivers for Medtronic, and we expect the market, which is roughly $5.5 billion today, to exceed $7 billion within the next three years and reach $10 billion in the next five years. In cardiac rhythm management, we're really looking forward to disrupting the single chamber ICD market with our Aurora extravascular ICD. Now, as you may know, one of our competitors has had a subcutaneous ICD in the market for many years, but it's remained a niche device given its limitations compared to conventional ICDs. With Aurora, we've created a true game changer where the electrophysiologist and the patient don't have to make trade-offs. It will deliver the benefits of a traditional ICD, including having the same size, battery longevity, and ability to use proven anti-tachycardia pacing in lieu of delivering a painful shock to terminate life-threatening arrhythmias. Aurora does all of this without having to place leads inside the heart. Our EV-ICD global pivotal data will be presented this weekend in a late-breaking session at the ESC Congress in Barcelona. We're also awaiting CE mark approval for Aurora, and we expect US approval next calendar year. In renal denervation, our breakthrough procedure to treat hypertension, we're nearing completion of the six-month follow-up for the full cohort of patients in our SPYRAL HTN-ON MED study. We'll then analyze the data and plan to present the findings in the next few months. This data will complete the final piece of our clinical module submission to the US FDA, as every other module has been submitted, reviewed, and closed. The data on our Symplicity blood pressure procedure is robust, including strong pivotal trial results and compelling real-world registry data from over 3,000 patients. More recently, data has been presented that show RDN patients spend nearly double the time in target blood pressure range through three years than those who received a sham procedure. This could have a profound effect on public health through the reduction of cardiovascular events, including stroke, heart failure, and CV mortality. We expect to be a leader in this market, which we project to exceed $500 million by calendar year 2026, and $2-$3 billion by 2030. Moving to our Medical Surgical Portfolio, which includes surgical robotics, we continue to execute on the limited market release of our Hugo robot. We're installing new systems and collecting clinical data in approved geographies, enhancing the system based on surgeon feedback, improving supply chain resiliency, and scaling manufacturing production. Feedback and demand continue to be very strong. We've made progress over the last quarter, and we're nearing the start of the US IDE clinical trial for our urology indication. We also continue to increase our user base of Touch Surgery Enterprise, our AI-powered surgical video and analytics platform. With Touch Surgery Enterprise, surgeons can now easily review film from their surgeries to continuously improve and advance patient care. Overall, when it comes to surgical robotics, we're investing heavily to become a major player in the market for the long term, leveraging our decades of experience and leadership in minimally invasive surgery. Now turning to our neuroscience portfolio. In neuromodulation, we've submitted our Inceptiv ECAPs closed-loop stimulator. We expect Inceptiv's closed-loop therapy, which optimizes pain relief for patients, to revolutionize the SCS market. We're also continuing to ramp our commercial activities to go after the diabetic peripheral neuropathy opportunity with our first cohort of DPN market development reps now trained. We believe DPN is one of the largest opportunities in med tech, and we expect the market to reach $300 million by FY26, with an annual total addressable market of up to $2 billion. In diabetes, we're in active dialogue with the FDA on our regulatory submission for the MiniMed 780G with the Guardian 4 sensor, and we remain focused on resolving our warning letter. We're making good progress on our warning letter commitments. We've completed more than 90% of the actions we committed to the FDA. This represents substantial progress toward resolving the warning letter and preparing for re-inspection. In our CGM pipeline, we submitted our next generation sensor, Simplera, for CE mark. Simplera is disposable. It's easier to apply, and it's half the size of Guardian 4. The Simplera file is ready to submit to the US FDA, and we're waiting to submit it as we're prioritizing the 780G Guardian 4 review. With regards to our overall diabetes pipeline, we're making considerable investments well above our corporate R&D average. We have a comprehensive pipeline of multiple next-gen sensor and pump programs, including patch pumps. This pipeline gives us confidence that we can restore strong growth to our diabetes business over the coming years. With that, I'll turn it over to Karen to discuss our Q1 financial performance and our guidance. Karen? Thank you, Geoff. Our Q1 organic revenue exceeded guidance, decreasing 3.6%. Adjusted EPS of $1.13 decreased 17% in line with our guidance range. As we outlined on our last earnings call, we faced acute supply chain challenges in the quarter, particularly in our Surgical Innovations business. We also faced tougher underlying growth comparisons, including both strong ventilator sales and good procedure recovery following the third wave of COVID last year. Looking at our results from a geographic perspective, our US revenue declined 9%, and our non-US developed and emerging markets both grew 2%. Our emerging markets growth was impacted this quarter by China, which declined 9% given COVID lockdowns and volume-based procurement. However, our teams drove strong growth in many other markets, including high-teens growth in South Asia and Latin America, mid-teens growth in the Middle East and Africa, and low double-digit growth in Southeast Asia. When you exclude China, our emerging markets grew 13%. Turning to our margins, our adjusted gross margin declined 230 basis points. The impact of the strengthening dollar drove 50 basis points of the decline, and the rest was primarily due to inflation on labor and materials as well as freight, given fuel surcharges and increased expedited shipments. As we said at the beginning of the year, we expect the impact from inflation and currency to continue to negatively affect our gross margin in the quarters ahead. I want to remind you, when you look at our R&D line, we had a recast of last year's IPR&D that we told you about last quarter. Without that recast, adjusted R&D expense would have grown 4% as we continue to prioritize investment into development programs across our businesses. While our operating margin declined 320 basis points on lower revenue and gross margin pressures, we do expect to show sequential improvement as our revenue growth accelerates through the year. Our balance sheet remains strong, allowing us to invest in future growth and return capital to shareholders. We continue to target returning a minimum of 50% of our free cash flow to our shareholders, primarily through our strong and growing dividend. We supplement these returns through opportunistic share repurchases. This past quarter, we repurchased $336 million, which is on top of the $2.5 billion we repurchased last fiscal year. We also continue to put the cash on our balance sheet to work, investing in tuck-in acquisitions and minority investments that help fuel our near-term and future growth. We closed Intersect ENT in the quarter, and we also began the structured acquisition of the Acutus left-heart access portfolio and expect to begin distribution by the first half of calendar 2023. Their advanced transseptal access systems will be an important part of our broad offering to electrophysiologists and interventional cardiologists. Last month, we announced a co-promotion agreement and path toward acquisition with CathWorks. We're excited to partner with CathWorks and promote their innovative FFRangio system, which we believe can disrupt the traditional FFR market. We believe that Medtronic can add a lot of value to the technologies that we acquire, and we expect tuck-ins to supplement our organic R&D investment and long-term growth acceleration. Now, turning to our guidance. With one quarter behind us, we are maintaining our full year revenue guidance at 4%-5% organic, which excludes currency movement and revenue from our Intersect ENT acquisition. If recent exchange rates hold, foreign currency would now have a negative impact on full year revenue of $1.4 billion-$1.5 billion, an increase of $400 million over the past quarter. We expect organic revenue growth to improve each quarter with the second half of our fiscal year much stronger than the first, driven by our expectation that many of the acute supply chain challenges subside and new products drive our growth. It's worth noting that we also face increasingly easier comparisons as we go through the fiscal year. By segment, and on an organic basis, we continue to expect Cardiovascular to grow 5.5%-6.5%. Medical-Surgical to now grow 0.75%-2.75% given increased volume-based procurement in many of the Chinese provinces. Neuroscience to now grow 4.75%-5.75% given a slightly lower outlook for the neuromodulation market. Diabetes to now decline 3%-6% fine given stronger growth in international markets. On the bottom line, we continue to expect non-GAAP diluted EPS in the range of $5.53-$5.65. Inflation and currency are still creating near-term impacts on our margins, and we've seen inflation on raw materials and freight become larger headwinds over the past quarter. We also continue to execute on initiatives to partially offset these macro impacts, as well as prioritize our R&D investments to drive future growth. Given these dynamics, and the fact that we are still early in our fiscal year, we would suggest you model closer to the lower end of our EPS guidance range. Our EPS guidance includes an unfavorable impact of foreign currency, which is approximately $0.17-$0.22 at recent rates. In the Q2, we expect organic revenue growth in the range of 3%-3.5%, implying a strong sequential acceleration driven by improved product availability and the cadence of our launches. Assuming recent exchange rates hold, the Q2 would have a currency headwind between $365 million and $415 million. By segment, we expect cardiovascular to grow 5%-5.5%. Medical Surgical to be down a quarter point to up a quarter point. Neuroscience to grow 5.5%-6%, and diabetes to be down 3%-6%, all on an organic basis. We expect EPS of $1.26-$1.30, including an FX headwind of about $0.02 at current rates. While our markets are facing challenges, we're focused on identifying ways to offset their impact to our financials, and we are optimistic about our future as we prepare to create markets and realize new opportunities. In addition, I want to take a moment to recognize and thank our employees at Medtronic who are unwavering in their commitment to deliver life-saving treatment to people around the world. Back to you, Geoff. Thank you, Karen. Now, this last quarter, we made a lot of progress on our aggressive agenda of underlying changes that are needed to ultimately accelerate our growth. With supply chain, it's getting better, and our back orders are coming down, not just because of the external environment, but because of the actions we are taking under Greg Smith's leadership. I expect these improvements will continue. We've co-located our employees with suppliers and are also working closely with sub-tier suppliers. We're managing through the acute issues and making progress on improvements that I'm confident can enhance the resiliency of our end-to-end supply chain. On quality, we've been conducting a large transformation of our quality system over the past couple of years. We're advancing quality in innovative ways, working very closely with our regulators, and this is leading to important progress. We're also making progress on our pipeline and portfolio as these two strategies come together to create meaningful growth drivers. We're tucking new products into dependable, higher growth businesses like we did by adding Intersect ENT to our ENT business. We're also broadening the product portfolio of some of our businesses so they can become more meaningful growth drivers for the total company, like our strategy in cardiac ablation solutions. Overall, the path has not been easy, but I am confident that these fundamental enhancements that we're making to the company, combined with our op model change, culture changes, and incentive changes, are positioning us to deliver a higher level of growth that can be sustained. As we overcome the near-term issues and start to put points on the board with the pipeline, I believe the underlying transformation of Medtronic, all the work that we've been doing over the past couple of years, will become increasingly apparent, setting up a durable value creation engine to fully capitalize on the mega trends in the healthcare and technology markets, which will benefit all stakeholders. To close, I want to join Karen in thanking our employees. It's never easy going through change, especially in a challenging macro environment. Our teams have stayed focused and are playing critical roles in helping to alleviate pain, restore health, and extend life for millions of people around the globe. Now let's move to Q&A. We're going to try to get to as many analysts as possible, so we ask that you limit yourself to just one question and only if needed, a related follow-up. If you have additional questions, you can reach out to Ryan and the investor relations teams after the call. With that, Brad, can you please give the instructions for asking a question? For the sell-side analysts that would like to ask a question, please select the Participants button and click Raise Hand. If you're using the mobile app, press the More button and select Raise Hand. Your lines are currently on mute. When called upon, you will receive a request to unmute your line, which you must respond to before asking your question. Lastly, please be advised that this Q&A session is being recorded. For today's session, Geoff, Karen, and Ryan are joined by Sean Salmon, EVP and President of the Cardiovascular Portfolio, Bob White, EVP and President of the Medical Surgical Portfolio, Brett Wall, EVP and President of the Neuroscience Portfolio, and Que Dallara, EVP and President of the Diabetes Operating Unit. We'll pause for a few seconds to assemble the queue. We'll take the first question from Robbie Marcus at J.P. Morgan. Robbie, please go ahead. Oh, good morning, everyone, and congrats on the quarter. Maybe I'll ask both of my questions up front in one. You know, the quarter came in a little better than expected, but Q2 guide is lower than where the street was thinking by maybe half a percent, three-quarters of a percent on organic sales growth. Maybe you could walk us through, you know, how you're thinking about the cadence of the year. It includes a pretty material dollar step up each quarter. What's driving that? And then also it looks like you narrowed or lowered a lot of the product segment organic sales growth guidance, with diabetes the big offset. Maybe talk through if you're seeing, you know, any impact to share from some of the supply issues you had and what's driving those moderated outlooks on a segment basis. Thanks a lot. Hi, Robbie. Well, thanks for the question. There's a lot there to unpack. Maybe I'll start and then hand it over, you know, to Karen. I mean, look, I think, you know, look, the quarter played out largely as expected, you know, managing through these macro headwinds and making progress on supply chain issues like resins and packaging. You know, the procedures largely remain at pre-COVID levels. We are seeing, you know, month-over-month improvement and had a pretty good exit coming out of the quarter. You know, getting to the remaining three-quarters of the year, I mean, one, you see coming out of this Q1, you know, you'll see some tough comps anniversarying. I think we grew like 19% in Q1 last year and, you know, we have vents and LVADs, certain tough comps anniversarying there. I mentioned earlier some of these acute supply chain issues. We're starting to put them behind us. I mentioned resins and packaging. You know, we have semiconductors that we're still dealing with across many businesses that'll be with us for a little longer. A lot of the acute issues we're starting to put behind us. Then we've got, you know, a number of, I'll let Karen get into specifics of the Q2 versus the second half. We have a number of nice growth drivers in the second half of the year, like the full market release of Evolut FX and EV-ICD coming as well. There's a number of other launches as well, or even existing products that are out there that pick up momentum. It's the cadence as they go through the three quarters. Maybe I'll turn it over to Karen to provide a little more details on that. Yeah. Thanks, Jeff, and good morning, Robbie. I would add on Q2 that we do also expect some modest improvement in underlying procedural fundamentals. You know, for example, we expect China procedures to come back. We had some cardio procedures that were slightly impacted from contrast supply last quarter that we expect to come back. We also, you know, continue to factor in the potential for incremental pressure from volume-based procurement in China, including a potential national VBP tender in spine and continued provincial tenders in SI. Just an important reminder, in Q2, we do have much easier comparisons versus the prior year. You know, we grew only 2% last fiscal year, and that was given the impact of the Delta variant and some labor shortages on procedure volumes. As we move into the back half of the year, you know, Geoff mentioned the exciting product launches that we have, and the continued improvement in our acute supply chain challenges. I would also just note that, you know, our year-over-year comparisons continue to get easier from where they were in Q2. We had roughly 1.5% growth in Q3 and Q4 last year. We also have the vent headwind easing in the back half. In terms of, you know, what's going on with our portfolios and the diabetes offset, yes, we did see greater strength in diabetes in this quarter, particularly in international growth, and we expect that to continue. We're just being overall prudent with our guidance. We think it's early in the fiscal year. We've still got a lot of macro uncertainties, particularly with inflation and freight. Again, we just wanted to be prudent. Hope that helps. Yeah. Thank you very much. Yeah. Thanks, Robbie. Take the next question, Brad. Okay. We'll take the next question from Vijay Kumar at Evercore ISI. Vijay, please go ahead. Hey, guys. Congrats on the print, and thanks for taking my question. Geoff, I had two product-related questions, maybe one on RDN and one on the robot. RDN, you know, can you just talk to us and, you know, when can we expect this data? I think you said it's in the upcoming months. Is that gonna be a headline press release? Will there be a formal presentation at a conference? Is there any chance that the FDA looks at the data and could hold an AdCom or any sense on what we can expect from RDN? Sure. Well, thanks for the question. Well, I'll start by saying I think I'm gonna hand it over to Sean here for the answer on this one. You know, we're, as you've seen over the last couple of months and a number of conferences, you know, more and more data is coming out. You know, I saw you did an interview or whatever, a session with a KOL in the space and it was good to hear his feedback. There is a lot more and more data emerging, more and more physician excitement and confidence as they've been, you know, our sites, our trial sites have been working with these patients for quite a long time and the data continues to build and be super positive. We're optimistic and Sean's pointed this out before. The FDA's done their own kind of patient preference studies and it's clear to them that patients prefer this to medical management. I know that they're looking for this to hit the market as well. But the specifics on your questions, I'll open up to Sean here to answer those on the timing of the data and will we have an AdCom or what have you. Vijay, you know, we finished enrollment and then you have a six-month endpoint to get to, which we'll be wrapping up very, very shortly. We target the whatever conference we have this fall, which was most likely in the AHA. We'll submit to AHA, and if it gets accepted, that would be the place where we'd see the results. We'd also publish those results and make the top line available if in that same period of time. That is just a reminder, that is the last part of what we've submitted, right? Every other module has been reviewed and closed. It's just the clinical data that's outstanding. We're as close as we've ever been. Gotcha. Jeff, maybe one on the surgical robot. I thought the prepared remarks, the commentary was pretty bullish. Correct me if I'm wrong, I saw healthy order book, momentum with installations, key supply chain challenges have been addressed, US IDE about to start. This feels like a change in tone versus the last call. Perhaps, can you comment on what's changed in the last three months? Sure. I'll have Bob chime in as well. Yeah, this quarter was a big quarter for us, as we made, I think, you know, quite a bit of progress on some of the supply chain, you know, concerns that we had, in some cases, some specific issues that we had to resolve. Building our manufacturing capacity as well ahead of the US IDE and, more importantly, expanded sales in Europe. We had a number of installs and continue to get good feedback. You know, the surgeon feedback continues to be really strong. I actually had a chance to meet with a number of our Surgical Innovations reps, sales reps. I was asking them, you know, like, "What are you hearing from your surgeons?" You know, I was pleased with what I heard, and there's a lot of certainty. The word is out, you know, they like the design. They like the approach we're taking to the market. You know, they realize that when we launch, you know, we won't have all the indications yet, and we're gonna be building out our instrument, you know, and the number of instruments we have with it, but they wanna be part of this journey with us. I think the expectations are appropriately set. We built out some manufacturing capacity, and like I said in the commentary, you know, we are real close to this US IDE. I don't know, Bob, you know, what do you wanna add to that? Yeah, no, thanks, Jeff, and Vijay, thanks a lot for the question. I think you're right to characterize we're making solid progress with our surgical robotic ecosystem, and we really do think about it as an ecosystem with really good progress with Touch Surgery as well. As Jeff mentioned, our Hugo installations continued in the quarter, and we like to say accelerated as we closed the quarter as well. As I've spoken on previous calls, we were really focused on hardening our supply chain and our operations performance, and we've seen progress there. Then third, we continue to train surgeons across the globe and across multiple specialties, and solid progress there. We're near the start of our IDE, and we believe we continue on track. Thanks, Vijay, and thanks, Jeff. Thanks, guys. Yeah, Bob mentioned the Touch Surgery. That's another big piece here with this ecosystem. That's something we learned in the spine space, how important it is to have not just the robot, but all the enabling technologies around it. We're starting to use, you know, customers are starting to use Touch Surgery with Hugo now. You know, surgeons are impressed with the kind of analytical capabilities and the benefits of the secure video storage and sharing for case review and training and whatnot. The ecosystem for our soft tissue robot is coming along nicely, as Bob mentioned. There's definitely some excitement on our end. Thanks, Vijay. Next question, please, Brad. The next question comes from Travis Steed at BofA Global Research. Travis, please go ahead. Hey, thanks for taking the question. So, Geoff, let's start with the portfolio management, portfolio stuff. It's been about eight months since you started highlighting that. Didn't know if that was something we could see in FY 2023 and seems like you're highlighting solving for your weighted average market growth rate more than other variables at this stage of the process. Then, Karen, a quick follow-up on something you said earlier. I think you said exiting the quarter with better momentum. Curious if you could comment a little bit on some of the August trends. There's been some concern with investors about, you know, vacations and stuff like that. Would love to get any color on August. Okay. Yeah, thanks for the question, Travis. Yeah, we're definitely continuing to look at the whole portfolio more intently, and we've been doing that for, you know, several months now, as you mentioned. Look, I'll start by saying, look, we're really deeply committed to doing the right things for shareholders and all Medtronic stakeholders. When we're looking at this portfolio and capital allocation, we are talking about both the buying and the selling side and actively looking at, as you pointed out, portfolio management to really improve our weighted average market growth rate, whether it be through addition or subtraction and to make sure that the growth is more durable. You know, look, we're making. We're making a lot of progress on the approach here to look strategically at each business. Last quarter, I'll remind you, we did announce an initial step on the subtraction side of things with the Renal Care Solutions JV with DaVita. But this process will be a continuous process. I just wanna also set that expectation and will play out over time. The goals are unchanged. You know, the process continues and like the goal is this durable growth. You know, it's a lot easier to grow when your weighted average market growth rate is increasing as well. Yeah, I'll leave it at that and turn it over to Karen for the other question. Yeah. Thanks, Travis. We did exit the quarter with better momentum. We saw a reduction in our backlogs. We saw continued improvement each month of the quarter. You know, as we look at August, it's still early. We do have, you know, we're still managing through some supply issues in some of our businesses. The numbers are a little cloudy. When we took that into account in our guidance, and when we look at, you know, the operating units that are not impacted by supply issues through the first three weeks of August, we're trending largely in line with the Q2 of last year. You know, seeing continued momentum and improvement. Thanks, Travis. Take the next question, please, Brad. The next question comes from Cecilia Furlong at Morgan Stanley. Cecilia, please go ahead. Good morning, and thank you for taking the question. I wanted to ask about the diabetes business, the updated guidance for the year. Obviously, US or OUS came in stronger, but just what you're expecting now, both OUS, but then also in the US, from competitive pressures. Then I wanted to follow up. It sounded like your timing for submission of Simplera shifted your strategy there. Just if you could comment on how you're thinking about the cadence of submission. Thank you. Sure. Well, thanks for the question, Cecilia. Yeah, I mean, look, diabetes, as mentioned, and Karen mentioned it in her comments, I mean, we're seeing, you know, really strong growth in outside the US, in Europe in particular. And more, even more importantly than the quarterly growth, it's the clinical results we're seeing in patients, and the feedback on the patient experience is really positive with the 780G plus Guardian Sensor 4 system. So that, we think, bodes well for, you know, our the franchise and what we'll see when we get it into the US, 'cause we're competing with everybody there in Europe. Yeah, you had a couple specific questions. The other thing I'll say is, look, we... This is a business that, you know, there were a lot of questions when I first became CEO two years ago about what we're gonna do. We doubled down on investment. You know, we believe that the integrated insulin delivery system that we have with the sensors, the insulin delivery device, and right now for us it's a durable pump, and down the road with the pen and then hopefully the patch. We think we've got a, in our market leading algorithms, we think we've got a very sustainable position in a high growth market that has high barriers to entry. We've been powering through, and these results in Europe are very encouraging. On top of that, we recently had the transition from Sean to Que, and you know Sean did a great job stabilizing this business and really focusing it where we have a competitive advantage, and helping really focus our product roadmap. You know, Que's picking it up from there. They had a great transition. With that, maybe I'll introduce Que Dallara, who's been with us now, you know, 14, 15 weeks and is already having a big impact on not just diabetes, but on kind of the leadership team at Medtronic. It's a delight to be working with her. Why don't I introduce Que and welcome her to her first earnings call. Que? Thanks, Geoff. Yeah, I would say the transition with Sean has gone really well, and I'm really encouraged with the progress we're making on restoring this business to growth as well as innovation roadmap. To address your two specific questions around, you know, what we see in the US as well as around Simplera, I would say that, look, our short-term focus is remediating the warning letter and also making progress with the FDA around approval of the 780G and Guardian 4 sensor system. We continue to be encouraged by that, making good progress. Our hope is that we can remediate that and secure approval in the near term. But we're not standing still. In the US, we do see growth in our 770G system, as well as our InPen technology. Not only that, we are very close to launching the extended wear infusion set, which has been approved by the FDA for up to 7-day wear, and this is a game changer for patients. It's probably the biggest innovation we've seen in the last 20 years in this area, and allows patients to be able to synchronize, if you like, their sensor CGM changes with the infusion set changes, leading to better site recovery, and comfort for our customers. That's happening. We obviously anticipate 780G, but we're not standing still with respect to the products that we do have approved in the US With regards to Simplera, I mean, we're very excited about this product. It's half the size of the Guardian 4 sensor. It's thinner. We've submitted a CE mark in July, as we said we would. It is ready to go for submission in the US, but we remain focused on prioritizing the efforts around the warning letter as well as 780G approval. Okay. Thank you, Que. Thanks, Cecilia. Next question please, Brad. Yes. The next question comes from Larry Biegelsen at Wells Fargo Securities. Larry, please go ahead. Good morning. Thanks for taking the question. First on supply constraints, I think in Q4 you said it was about a $260 million impact. How much was the impact in Q1? What are your expectations for Q2? And are you assuming some catch-up from lost sales? Just lastly, Karen, maybe talk about the FX hedging gain in the guidance now for 2022, I think it was $410-$440, and how that rolls off in fiscal 2024, how we should think about that. Thanks so much. Thanks for the question, Larry. I'll start on the expectations for Q2 and beyond on the supply chain stuff. Like I mentioned, Q4, Q1 were the most acute for us on these supply chain issues, and I'm definitely glad to be looking in the rearview mirror on those quarters. You know, we're not totally out of the woods yet, but you know, our back orders are coming down. We're seeing particular improvement in areas like resins and packaging across the company. A lot of this is a result of us taking, you know, well over a hundred of our employees and co-locating them with our top suppliers, you know, to help them prioritize Medtronic, but more importantly, kinda work through, make sure the communication is tight, the planning is tight, and that that's really making a difference. The macro market is getting a little better, I mean, some of it in these areas in particular. I mentioned earlier that the semiconductors are still gonna be with us for a while, that back order. We're working directly with, you know, the semiconductor companies on this, and just across the board also in. Well, one of the things we've done in addition to co-locating our employees with our top suppliers is going out to directly to the commodity or raw material suppliers, you know, versus the supplier that's between us and them, if you will, the finisher or the distributor or the middleman, and locking in contracts and getting prioritization, especially given that, you know, these products go into medical products and, you know, are life-preserving, life-saving, and some cases, those raw material suppliers weren't aware of that. All this is definitely helping, and we'll continue to see this backorder go down over time. As I said, I think we're starting to put the most acute piece of this behind us. In terms of catching up on lost sales, kinda like COVID, you know, we don't put a bolus of lost sales coming through into our guidance. You know, right now in particular, as you've seen and heard, there is a kind of a little bit of a governor out there on procedures with the healthcare worker shortage, which it's gotten better, but you know, it's still hard for customers to run at 110%-120% of pre-COVID levels. Because of that, we haven't really baked a catch-up on sales into the guidance. You had some specific quantification questions on, and I'll turn those over to Karen, and Karen, anything else you wanna add to the qualitative comments that I made? Thank you. I think you covered it well on supply chain. We did say that we expect it to get a little worse before it got better, and that's what happened in the Q1, but we expect it to get better from here. We do have, you know, the supply chain improving, but again, not necessarily a bolus catch-up, built into the guide. In terms of FX, you know, as you've seen, we've had the strengthening dollar, you know, continue to impact our reported revenue, just like it has for many of our peers. We do have foreign currency-based cost of sales and overhead, and now we have foreign currency-based interest expense as well, and those all provided some offset. As you know, Larry, we also have the benefit of our multi-year currency hedging program, which did produce significant gains, and that resulted in a smaller FX impact to the bottom line in the quarter. As we look ahead for FX, I would say keep in mind it's only Q1 now. You know, we've got foreign exchange rates that are continually volatile, so we know they're gonna move from here. But if we look at next fiscal year, based on recent rates, you know, we would expect the headwind next fiscal year to be similar to the headwind this fiscal year, again, if rates stay the same. Hope that helps. Thank you. Yeah. Thanks, Larry. Next question please, Brad. Yep. The next question comes from Joanne Wuensch at Citi. Joanne, please go ahead. Good morning, and thank you for taking the question. Briefly, if revenue is improving quarter-over-quarter throughout the remainder of the year, do operating margins and gross margins also improve? I'll just throw in my second one quickly. Hugo, what does it take to bring that into the United States, and is there a parameter or a thought process on the timing? Thanks. Yeah. Thanks, Joanne. On margins, we do expect margins to improve sequentially through the year as revenue improves, so the answer to that one is yes. Geoff for- Yeah, sure. On Hugo, what does it take to get to the United States? You know, obviously, we gotta start our US IDE, which is set up here, and, like Bob's mentioned in the past, getting our customers, you know, our trial sites ready for that, and physicians trained, which we've been working on. You know, Bob, you wanna give some more specifics on that? Yeah. You're exactly right, Geoff. It begins with our US IDE. That'll start the US process, and as we mentioned, Joanne, we're nearing the start of that. That'll be the key milestone that we'll certainly update you, our investors on. Okay. Thanks, Joanne. Next question please. Yeah. The next question comes from Jayson Bedford at Raymond James. Jayson, please go ahead. Good morning. Just a couple diabetes questions. It was mentioned that you hope to remediate the warning letter and secure approval for 780G in the near term. Do you have clarity on if you can get approval for 780G while the warning letter is still outstanding? Thanks for the question. I think the variance path is an option, but you know, as I said earlier, I think our primary priority is to work with the FDA and remediate the warning letter. Now focus is entirely on doing that. Obviously, we'd love to. We're eager to launch the product, but we're focused on you know, patient safety, making sure that our remediation plans are robust. It's really the first and foremost in our mind that we make those corrective actions. So that's our primary focus. In parallel to that, we are engaged with the FDA on getting the 780G and Guardian 4 sensor system approved. Both those things continue to make progress. It's obviously very hard for us to be completely predictive around when those things will happen, but I'm really pleased with the progress that we're making on both of those. I apologize if I missed this earlier, but when will you submit Simplera to the FDA? We will do that as soon as we feel confident that we've made sufficient progress on the warning letter remediation, as well as progress on the 780G. As you know, we submitted for CE mark in July, as we said we would. We just want to make sure that our focus remains on those immediate short-term goals of warning letter remediation and approval for the 780G. Thank you. Yeah. Thanks, Jason. Next question, please, Brad. Yeah. The next question comes from Steven Lichtman at Oppenheimer & Co. Steve, please go ahead. Thank you. Good morning. Geoff, you know, thinking a little longer term, how far along would you say are Greg Smith and his team in making the more durable changes in operations you've talked about in prior calls, and when do you think we could start seeing margin benefits from those initiatives? That's a great question. You know, thanks for that one, Steven. They've made quite a bit of progress in a relatively short period of time. Greg started in April of 2021. So it's been a little over a year. In that time, working with the executive team, we've centralized, if you will, the global operations and supply chain function. This is one of those opportunities in our new model, you know, where we're trying to play, you know, small and play big at the same time. Certain things that have been decentralized into the businesses and the businesses are more empowered. We refer to them as operating units. Certain things, a limited list, where we leverage our scale or drive and/or drive standards, and supply chain is definitely one of those. We've made that change, that organizational change, which is probably the biggest organizational change we've made, even more than the going to the 20 operating units. It's significant. In addition, we started to invest in new capabilities, hiring people from outside the company, outside the industry, and in many cases that are best in class in the various, you know, functions, if you will, or capabilities within the global operations and supply chain, things like planning, things like factory automation, et cetera. We've hired quite a few, and I think the majority of Greg's team is new in the last year. We've been making investments in technology, various different systems on planning and supply planning, demand planning, et cetera. The number one focus has been resiliency and quality. All right. There are three things we're looking at from this function. Resiliency, quality, 'cause they have a big impact on quality, and over time, cost of goods sold productivity that you're getting to, that would be, you know, 2x or more of what we've seen historically at Medtronic. You know, that will play out over time. You know, we haven't seen that yet. The other thing, you've got a lot going on in there. You've got, you know, you've got inflation and, you know, and things like that that are, you know, kind of masking any kind of or overshadowing, if you will, any kind of cost of goods sold productivity that we are seeing. We will see that over time, you know, and we're confident. We haven't quantified the exact timing of it. Like I said, it's been a little kind of hard to decipher here in the short term because of the inflationary impact on our cost of goods sold. I don't know, Karen, you wanna? Yeah. Thanks, Geoff. Thanks for the question. We are making a lot of progress in the ops front. You know, our shorter term goal is gonna be a focus on, you know, driving enough cost offset to offset, you know, the impacts that we've got either in pricing or inflation. You know, we're not ready to give guidance for next fiscal year, but you know, that's the initial goal, just to offset. Then over time, to hopefully more than offset. You know, I would say Geoff mentioned too that you know, this work in operations is not just going to help on the cost of goods sold line, but also on the revenue line, as we can more predictably, you know, have products available and, you know, get quality issues in better stead. I think it'll help on both. Okay. Thanks, Steve. Next question, please, Brad. The next question comes from Rich Newitter at Truist Securities. Rich, please go ahead. Hi. Thanks for taking the questions. Just on spine, I think you guys called out navigation and robotics. It declined. I was hoping you could talk a little bit about what you're seeing there on the funnel and the pipeline and the capital environment more broadly. Any changes that are taking place in the way you're selling these types of capital items, especially robotics? You know, we did see one of your orthopedics robotic competitors talk about changing business models, more rentals. Meanwhile, your direct spine robotics competitor actually saw a sequential pickup in capital purchases. Would be great to get your color on the capital environment and specifically what's going on in spine robotics. Thanks. Sure. Thanks for the question, Rich. I'm have Brett Wall field that question. Sure, Rich. Looking overall at the capital, we have a very extensive ecosystem and capital system within our CST business. What we saw was extended purchasing times, particularly as we moved through to the end of our quarter. Now, specifically as it relates to the technology and the selling models, we have a variety of different approaches that we use, so we're well-positioned. However, the market seems to work if hospitals are in a mode of preserving cash. We have more opportunities to put forth different models where we actually utilize the implantables and other disposable products as a way of financing this particular capital, and that works very well. We didn't see a significant uptick in our O-arm or StealthStation during this time with that model, but we saw a little bit of an uptick with Mazor in that particular model, and we think during these times we'll probably see more of that. The competitor you referenced there, if you look at calendar Q2, per our calculations, we continue to outstrip them in our actual placement and sales of robots. We continue to do that, and our procedural base there is nearing almost double the amount that they reported in their last earnings call. We are very well-positioned there. The underlying spine business remains you know pretty attractive. We saw a 4% increase in our core spine business there, so we're pleased with how that's recovering. Thank you. Yeah. We're really excited about the positioning of our spine business with the recent product launches in the implant side, but the ecosystem that we've built over the last decade, you know, and how that's coming to bear and how the market's shifting to that ecosystem approach. We're feeling good about spine as we move forward here. Yeah. Thanks, Rich. I think we've got time for one more question, Brad. Our final question comes from Rick Wise at Stifel, Nicolaus & Company. Rick, please go ahead. Thanks, and good morning, Geoff. Hi, Karen. I was hoping, Geoff, just in closing you'd expand on two of your exciting, I think, pipeline opportunities. You highlighted Aurora, the leadless subcutaneous device that. I was hoping you'd share your latest thinking in terms of the opportunity there and, when you talk about US approval next year, are you saying next calendar year or next fiscal year? You know, this seems like a major opportunity. I was hoping you could talk about that. Just last, you didn't talk as much this time about the opportunity in pulsed field ablation. Maybe just update us on your internal Medtronic program and the Affera programs and just some timelines on US trial follow-up, submission, and approval timing. Any of that would be great. Thanks so much. Yeah, sure. Thanks for the question, Rick. Those are two topics we like to talk about, you know. I'm gonna hand it over to Sean here to give you some details. On Aurora, like I mentioned in the commentary, I mean, we, you know, this, we think we can take this segment and shift it from what up to now has been, you know, what we would define as somewhat niche-y to a bigger segment. We're talking about $1 billion by 2030. With our Aurora, we just don't think you're making the physicians or the patients have to make trade-offs here. You get that traditional impact that we had from a traditional ICD with much less invasive approach here. you know, I'll turn it over to Sean on that. On PFA, you mentioned Affera, and Sean will give you the details between our internal program on PFA and Affera. Again, Affera plus Acutus, it's that whole cardiac ablation solutions business, our AFib business. We think this really rounds out that business. You know, we're anticipating an approval from FTC on the Affera acquisition here. We'll move forward on that aggressively, 'cause it really is a high growth market where we've been a little bit niche-y, I would say, and this would round out that and make that business a real growth driver for the company. On your specific questions, I don't know, Sean, do you wanna dive into the some of Rick's specifics? Yeah, sure. Rick, as Geoff mentioned in the commentary, today's subcutaneous ICD market is a niche around $300-$350 million, $300-$350 million annually. We think that within 10 years this could be a billion-dollar segment. The reason that it expands is all those limitations of the current device, where we can get sort of the benefits of traditional ICD, smaller devices, longer battery life, the ability to pace out of the arrhythmia rather than having to shock out the arrhythmia. That's really both gonna expand the market, like we saw with leadless pacing. When we went to that, we started picking up new patients that weren't being treated because of the acuity of the disease, and it leads to that strong growth. With regard to timing, we're saying next calendar year. To kind of put a finer point on that, it's the first half of next calendar year is what we're targeting for approval for the US Pulsed field ablation, we have completed the trial, as you know, last November, and that's been in its follow-up period. That would put us for, you know, availability of data in the springtime. That's probably when it'd be most likely to be presented. Of course, the filing of our technology would be at that point in time. As Jeff mentioned, we're awaiting the regulatory closure of Affera, and that really expands out the fuller bag. It gives us within both RF and pulsed field, you know, point by point ablation. What we have with our own internal PFA is really for the isolation of pulmonary veins sleeve, right? It's more anatomically based. The other catheters that come with Affera would be for point by point ablation or for lines of conduction block that you do with a linear catheter. Really nice complementary sort of technologies for PFA. More importantly, you know, we've been restrained from being able to participate in the full market because we don't control the mapping and navigation systems. There's really a strong monopoly between two players, Biosense Webster and Abbott in particular who really control and dominate that field. That Affera acquisition allows us to have all of our catheters now with mapping navigation, really expands the opportunity into that. What is today an $8 billion market should be, you know, by the time all this stuff rolls out, it continues to grow robustly close to $10 billion, and we'll be able to fully participate in that market. Yeah, two really important growth drivers. We're excited about them, and we're making meaningful progress on both of them. Thanks, Sean. Thanks, Geoff. Yeah, so I just, you know, on Rick, on this one in the short term, you know, we'll see a pretty nice uptick in sequential growth, again, going from Q1 to Q2, and then, you know, see more sequential improvement from there. But the reason we're confident is things like these two areas that you mentioned, you know, along with a host of others, right? Micra continues. As Sean mentioned, Micra, we just hit PFA and what's coming there and EV-ICD in the cardiac space. But we, you know, on the call. Then down the road, you know, RDN, see the data, the economic impact of that will be a little bit out there, beyond this year, obviously, but or this fiscal year. That's just in the cardiology area. We hit on, you know, Hugo, you know, on the soft tissue robotic side. I forgot to mention Mitral and Tricuspid on the cardiac side. There's a lot in cardiology. You got the soft tissue robot and that whole surgical ecosystem that we're surrounding that with. It's way more than the robot. You've got a lot going on in neuroscience. We mentioned the spine surgical ecosystem. We didn't get any questions on DBS this time with the sensing and the Percept product and the leads that go with it and the closed loop trial that we're doing there. We talked a little bit about ECAPs and pain. Shifting, you know, you heard Q talk about diabetes and, you know, what we're seeing in Europe with the system now, the 780G, and just sending in the Simplera submission into the EU, and she gave you the dynamics on when we would do it in the US. There's a lot going on here, and we're excited about it. The operational issues that we've gone through are, you know, not all of them are completely in the rearview mirror. Like I mentioned, semiconductor shortages. It's made us stronger. You know, all this, the changes that we made will become more apparent in the quarters. The benefits of those changes will become more apparent in the quarters ahead here. We're looking forward to it for sure. With that, I think that is all for Q&A, all the time we have. I just again want to thank you for the questions, the engagement. As always, we appreciate your support and your continued interest in Medtronic, and we look forward to updating you on our continued progress that we talked about here on our next earnings call, our Q2 earnings broadcast, which we anticipate holding on November 22nd, so just before Thanksgiving. Those here in the US, just before Thanksgiving. With that, you know, thanks for tuning in today and you know, please stay healthy and safe and have a great rest of your day.