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DATE

June 3, 2026

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Geoffrey Martha
• Chief Financial Officer — Thierry Pieton
• Vice President, Investor Relations — Ingrid Goldberg

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TAKEAWAYS

• Revenue -- $9.8 billion, up 9.9% reported and 6.6% organically for the fourth quarter. The company reported the highest annual top line performance in 10 years for fiscal 2026.
• Adjusted EPS -- $1.55 for the quarter and $5.53 for the fiscal year, exceeding the company’s expectations.
• Cardiac Ablation Solutions (CAS) -- 78% worldwide revenue growth, 124% growth in the U.S, installed base up 40% sequentially, and U.S. share up 8 points.
• Pulsed Field Ablation (PFA) -- 145% global growth, with Sphere-9 launched in Japan and next-generation Prism-2 mapping software rollout underway.
• Symplicity Spyral (Renal Denervation/Ardian) -- Annualizing at $100 million, more than doubled weekly procedure volumes following the NCD, and showed sustained mean systolic BP reductions of 13.3 and 18.1 mmHg in ambulatory and in-office settings at 3 years.
• Hugo Surgical Robotics -- Worldwide procedure volumes are growing 2x to 3x the market rate, with 1,400+ installations of Touch Surgery up over 30% sequentially.
• MedSurg Segment -- Achieved 5% global revenue growth, driven by 8% in the U.S, with Acute Care and Monitoring delivering 11% growth and Endoscopy achieving high single-digit growth.
• Neuroscience Segment -- Revenue up 3% globally; Stealth AXiS platform achieved FDA clearance across multiple indications and CE mark for spine and cranial, with early commercial launch progress and positive physician feedback.
• MiniMed Diabetes Operating Unit -- Completed IPO during the quarter; segment delivered 15% reported growth, 8.1% organic, primarily driven by international and U.S. CGM momentum.
• Adjusted Gross Margin -- 65.4%, up 30 basis points year over year, supported by disciplined pricing (+30 bps) and COGS efficiencies (+60 bps), partially offset by mix (-60 bps) and tariffs (-80 bps; $74 million impact).
• Free Cash Flow -- $5.4 billion for the fiscal year, the strongest since 2022, with year-end cash and investments of $9.2 billion.
• M&A and Ventures -- Closed or announced nearly $2 billion in investments during Q4, with $150 million incremental inorganic revenue expected in fiscal year '27.
• Guidance for Fiscal Year '27 -- Organic revenue growth guided to 6.75%-7.25%, including a 125 basis point contribution from the extra selling week and approximately 25 basis points from Diabetes business.
• Tariff Impact -- Expected to total approximately $250 million in fiscal year '27, including $75 million in Q1, driving a projected gross margin decrease of about 20 basis points year over year.
• Fiscal Year '27 Adjusted EPS Guidance -- $5.90 to $6.00, with first-quarter EPS expected in the $1.38 to $1.40 range.

SUMMARY

Management confirmed that Medtronic (MDT +4.11%) Cardiovascular performance remains strong, with CAS, CRM, and Ardian identified as central growth drivers for the upcoming fiscal year. Neuroscience is positioned for acceleration due to new platform launches and consumable pull-through, while MedSurg continues to benefit from robust U.S. and Acute Care/Monitoring contributions. Share stabilization in Structural Heart was attributed to recent procedure volume trends, and plans are in place to expand segment investments and digital innovation. Guidance for fiscal year '27 factors in the Diabetes business for the entire year due to uncertainty in MiniMed separation timing, as well as explicit headwinds from tariffs, fuel costs, and anticipated M&A dilution. Operating margin for the upcoming year is expected to rise by 60 basis points on operating leverage and the removal of Blackstone payments. Capital allocation strategy includes expanded investments in areas such as Structural Heart valves, chronic pain management, and neurovascular guidewire technology through M&A and venture deals.

• Leadership transition in Neuroscience was announced, with Dr. Kweli Thompson named as Executive Vice President and President, succeeding Brett Wall.
• Pieton stated, "We are factoring 2% dilution from M&A, which is roughly 1 point higher than what we shared last quarter as the timing of several of our deals actually occurred earlier than anticipated."
• The company confirmed that increased headwinds from tariffs and transportation costs have been fully incorporated into fiscal year '27 guidance, without accounting for possible reimbursements.
• Medtronic’s China sales are currently growing at the corporate average, with procedure volume gains offsetting ongoing VBP pricing pressures.
• Installed base expansions in CAS and CST segments are positioned to drive additional consumable revenue growth.

INDUSTRY GLOSSARY

• CAS (Cardiac Ablation Solutions): Device and catheter technology platform for treating cardiac arrhythmias, focused on ablation and electrophysiology therapies.
• PFA (Pulsed Field Ablation): Non-thermal ablation technology using pulsed electric fields to treat cardiac tissue in arrhythmia procedures.
• CGM (Continuous Glucose Monitoring): Devices for real-time tracking of blood glucose levels for diabetes management.
• VBP (Volume-Based Procurement): Policy mechanism in China aiming to reduce healthcare costs through bulk purchasing and price negotiations on devices and medical consumables.
• ICD (Implantable Cardioverter Defibrillator): Device implanted in patients to correct life-threatening heart arrhythmias by delivering shocks.
• EV-ICD (Extravascular Implantable Cardioverter Defibrillator): Next-generation defibrillator placed outside the heart and veins.
• TAVR (Transcatheter Aortic Valve Replacement): Catheter-based technique for replacing aortic valves in structural heart disease.
• FFRangio: Noninvasive functional flow reserve imaging system for coronary artery assessment.
• MiniMed: Medtronic's Diabetes business for insulin pumps and diabetes technologies, recently IPO’d as a standalone entity.
• Stealth AXiS: Advanced navigation and robotics platform for spine, cranial, and ENT surgery launched in Neuroscience.
• Altaviva: Medtronic’s device for urge urinary incontinence, allowing same-day activation and full-body MRI access.
• AiBLE: Medtronic’s neurosurgical planning and robotics platform ecosystem.
• SPR Therapeutics: Peripheral Nerve Stimulation therapy platform focused on chronic pain management.
• Prism-2: Next-generation cardiac mapping software enhancing visualization in ablation procedures.
• Sphere-360: Rotation-free, single-shot ablation catheter launched primarily in Europe.

Full Conference Call Transcript

With that, I am now pleased to hand it over to Geoff.

Geoffrey Martha: Okay. Thanks, Ingrid. And good morning, everyone, and thank you for joining us. In our fourth quarter of fiscal 2026, we delivered $9.8 billion in revenue, up 9.9% on a reported basis and [ up ] 6.6% organically. So for the full fiscal year, we delivered $36.4 billion in revenue, up 8.4% reported and up 5.8% organically, marking our strongest top line performance in 10 years. And on the bottom line, we delivered Q4 and FY '26 adjusted EPS of $1.55 and $5.53, respectively, ahead of expectations and reflective of our commitment to operational rigor as we invest in durable growth. These results represent the compounding impact of deliberate choices we've made across strategy, operations and culture.

We saw continued strong execution across our largest foundational businesses, like CRM, CST and Surgical. And we made material progress on our highest-growth platforms. We marched toward leadership in CAS, advanced Symplicity and Hugo, and built momentum in Altaviva and Stealth AXiS, all while supporting our uniquely deep pipeline of innovation. In Q4, we advanced our commitment to further focus the company, deploying capital in line with our capital allocation priorities and meaningfully increasing our investments in M&A, ventures and partnerships. And I am incredibly proud of our teams. Through a dynamic macro environment, we have executed with discipline to deliver an excellent fiscal '26 that will continue into fiscal '27.

And now let's turn to the details of our fiscal fourth quarter, beginning with Cardiac Ablation Solutions. Look, CAS delivered another outstanding quarter, with 78% worldwide growth and gaining an additional 8 points of U.S. share. PFA saw exceptional global growth of 145%, with Sphere-9 continuing to demonstrate broad versatility. And we're still in the early innings for Affera. In the U.S., we increased our installed base by 40% sequentially, and we see significant runway for continued expansion. Globally, we are now rolling out Prism-2, our next-generation mapping software. Prism-2 unlocks meaningful benefits, including improved navigation using hybrid impedance and magnetic mapping to better visualize non-sensor-based catheters.

As we look ahead, we're expanding our entire EP ecosystem, expanding geographically into new indications and with an exciting cadence of new innovation. In Q4, we launched Sphere-9 in Japan, where we expect to extend our market leadership. We also secured FDA approval for our U.S. VT pivotal trial, which we aim to begin enrolling in the first half of FY '27. This is an important population due to the complexity of these potentially life-threatening arrhythmias that are often really difficult to treat. Now further strengthening our EP offering is our Sphere-360 catheter, the only rotation-free large tip single-shot catheter that's available. Sphere-360 is CE marked and launching in Europe.

Early physician feedback is really strong, and our U.S. pivotal trial is enrolling swiftly. And as you saw in our additional press release this morning, we are continuing to invest in a fully integrated EP ecosystem with 2 targeted investments in ICE catheter technology that will give physicians real-time visualization of the heart. This will further enhance the Affera platform over time to extend our capabilities. Now through innovation, purposeful investment and global execution, we plan to completely surround the electrophysiology space and offer patients and physicians a more complete, end-to-end set of EP solutions. Next, I'd like to share our progress with Symplicity Spyral, which is a novel, one-time, minimally invasive approach to treat hypertension.

Hypertension represents a massive unmet need. Now, despite the use of multiple medications, roughly 18 million people still live with uncontrolled hypertension in the U.S. alone. Our Symplicity physician finder now spans 200 doctors across more than 300 accounts, connecting patients with physicians as demand grows. We've also seen a significant uptick in prior authorization approvals, and since the NCD, we have doubled average weekly procedure volumes. And now Symplicity is annualizing at $100 million. At CRT this year, we presented late-breaking, long-term data reinforcing the clinical outcomes of RF renal denervation.

In over 2,000 patients, Symplicity delivered sustained mean systolic blood pressure reductions of 13.3 and 18.1 milligrams of mercury (sic) [ millimeters of mercury ] in ambulatory and in-office settings at 3 years, respectively, with 90% of patients achieving a meaningful benefit. And as a reminder, a 10-point reduction in BP is proven to show a greater than 20% reduction in major Cardiovascular events, like heart attack, stroke and heart failure. So this is critical and underscores the impact of Symplicity on patients and the health care system itself. Importantly, we stand apart as the proven platform in a category with enormous unmet need, and we intend to lead it.

We are confident in the foundation we've established, with robust and growing clinical evidence, a broad label, expanding reimbursement and growing demand from both physicians and patients. We are well positioned in the early stages of this ramp to redefine the standard of care in a historically drug-based setting with a new option for managing hypertension. Now we're also starting to see meaningful impact from Hugo, our surgical robotics system. Our worldwide procedure volume growth is 2x to 3x the market and utilization is increasing. Last quarter, we launched Hugo for urology in the United States, placing systems at leading institutions and treating our first patients.

Feedback from surgical teams has been positive, both in terms of their experience and early clinical outcomes. We are pleased to announce that in late April, we submitted to the FDA for 510(k) clearance for General Surgery and Gynecologic indications as well as for our LigaSure RAS vessel sealer. We also recently received FDA clearance for our ProGrip Advanced, a new mesh optimized for robotic-assisted ventral hernia repair procedures. And our Touch Surgery digital ecosystem continues to represent a clear advantage, with over 1,400 installations, up 30% plus, sequentially. We are complementing our strong foundation with data and analytics, driving a more precise, intelligent and predictable future in surgery.

Digital is creating real value in the OR, and we are investing and innovating to lead in this space. We are building our robotics program deliberately. We are driving utilization and procedure growth globally, making steady progress in the United States and investing to strengthen our broader Surgical franchise over time. Hugo is having an impact on our MedSurg portfolio, and we are pleased with the early progress. Now moving to Altaviva. Momentum here continues to build, and we are encouraged by the strong physician feedback and early patient demand. Altaviva redefines what is possible for patients with urge urinary incontinence.

With same-day activation, up to 15 years longevity and full body MRI access while the device remains on, patients can start therapy sooner and live life with fewer disruptions. We've trained nearly 1,000 physicians since launch, and that investment is starting to translate into commercial momentum. Sequentially, active implanters are up 3x, and patients treated are up 2.5x. Importantly, as physicians gain more experience and move through prior authorization more swiftly, implants are accelerating. Finally, we executed our focused portfolio strategy. In early March, we completed the MiniMed IPO, establishing it as a standalone, publicly-traded company. We also advanced our M&A and venture initiatives, targeting higher-growth segments to accelerate innovation in markets where we have a right to win.

In our coronary portfolio, we closed on the CathWorks transaction. CathWorks' FFRangio system uses a combination of AI and advanced computational science to improve decision-making in the cath lab. The company recently presented positive 1-year data from the ALL-RISE trial validating FFRangio as a noninvasive technology poised to disrupt the gold standard, traditional wire-based FFR, which is a $1 billion segment growing in the low double digits. We announced plans to acquire Scientia and SPR Therapeutics as well as investments in Beluga Medical and CardioACC. Scientia will meaningfully expand our neurovascular platform with differentiated guidewire technologies for stroke, enabling every neurovascular procedure to start with Medtronic. SPR Therapeutics for PNS will build out our portfolio of chronic pain management therapies.

And Beluga Medical and CardioACC will advance development of next-generation ICE catheters that will further advance our EP toolkit. In our venture portfolio, we invested in emerging technologies including Pulnovo, a first-of-its-kind, minimally-invasive system, designed to address pulmonary artery denervation. And we entered into a distribution agreement with Merit Medical for ViaVerte, which brings an FDA-cleared solution for chronic vertebrogenic back pain. Now both of these transactions will expand our reach into new and high-growth adjacencies, where we hold leadership positions. These investments are deliberate and tightly aligned to our strategy of reinforcing leadership positions, building scalable ecosystems and extending our reach in attractive markets.

Together, these meaningful tuck-in investments position us to drive sustainable growth for the near and the long term. Now these are just a few highlights from the quarter. Looking across the business, multiple operating units contributed to the strength in Q4, like CST with Stealth AXiS or CRM with OmniaSecure and Micra, and many others which Thierry will cover in more depth. So to close, I want to start with thanking our teams, not only for delivering a strong year, but embracing the changes that have enabled this performance. In a world with many moving pieces, we are executing.

We are delivering on our strategic priorities and accelerating access to life-changing therapies, all while creating meaningful value for patients, for physicians, for health care systems and for our shareholders. Now with that, I'm going to turn it over to Thierry. He's going to walk through the financial results of both the quarter and the full year before turning to guidance. Thierry?

Thierry Pieton: Okay. Thanks, Geoff. And hello, everyone. I appreciate you joining today. Let's start with Cardiovascular, which delivered 10% revenue growth this quarter, led by 14% in the U.S. and 7% in international markets. Driving this performance was 78% growth in CAS, including 124% in the U.S. In a $14 billion market that grew about 20% in 4Q, we're now annualizing over $2 billion in revenue and are on track to reach $2 billion trailing in the first quarter of fiscal year '27. Cardiac Rhythm Management delivered 5% growth in both U.S. and international markets. Defibrillation delivered mid-single-digit growth, including high-teens in ICD and mid-60s in EV-ICD.

We saw strong momentum in the recently launched OmniaSecure defibrillation lead following our indication expansion that allows for conduction system pacing. Cardiac Pacing Therapies delivered mid-single-digit growth, driven by mid-teens in Micra and high teens in the SelectSecure 3830 lead for CSP. Turning to Structural Heart. Performance in the quarter was flat. We saw strong international performance while the U.S. was softer, in part due to the low-risk data. We're encouraged, though, by the trajectory we've seen in the field as weekly U.S. procedure volumes have stabilized over the last 8 weeks.

Structural Heart clearly remains a strategic priority for us, with internal programs in mitral and tricuspid replacement and targeted external investments in TAVR, including Anteris paving the way forward. Coronary declined in the quarter but was offset by strength in renal denervation as described by Geoff. Importantly, we saw clear acceleration of Symplicity in the back half of the year. We're pleased to see the sequential lift and feel well positioned to drive momentum going forward. Finally, Peripheral Vascular Health delivered low single-digit growth and Cardiac Surgery was up mid-single digit. Moving to Neuroscience. Our position in Neuroscience is strong. We have the most comprehensive portfolio and are the #1 player and category leader across each of our segments.

We're investing across the portfolio to advance pipeline innovation and accelerate long-term growth. This quarter, we delivered 3% revenue growth globally, driven by 6% in international markets. Cranial and Spinal Technologies was up 3% in both U.S. and international markets. Core spine gained share this quarter, growing 6% on continued ModuleX expansion and distributor conversions. In neurosurgery, results improved sequentially, supported by low double-digit growth in navigation following the launch of Stealth AXiS late in the quarter. Stealth AXiS platform is an important growth driver for our CST business. The early commercial launch is progressing well. Physician feedback has been very positive, and sales are off to a very strong start.

This quarter, we achieved FDA clearance across spine, cranial and ENT indications as well as CE mark for spine and cranial, broadening the platform's reach across our portfolio. Look, Stealth is a force multiplier, driving pull-through across planning, robotics and our broader AiBLE ecosystem. It promotes the adoption of robotics in spine surgery, creates efficiencies that allow more physicians to integrate it without disrupting workflow. All of this makes our installed base stickier over time. With robotics penetration still in the high single digits, we see significant runway ahead. Specialty Therapies delivered 3% growth. Neurovascular was up 6%, driven by 11% growth in hemorrhagic, including healthy adoption in Neuroguard and Artisse.

We are actively investing in neurovascular as evidenced also by our planned Scientia acquisition. Scientia represents a significant advancement in navigation, enabling neuro-interventionalists to reach areas of the brain that were historically extremely difficult to get to. ENT delivered another quarter of mid-single-digit growth, including high single digit in international markets. In Pelvic Health, results were flat as solid growth in Altaviva was offset by broader market softness in sacral nerve modulation. Given the progress our teams have made, we look forward to seeing Altaviva continue to scale into 2027. Finally, Neuromodulation was up low single digit.

This is another area of strategic focus and investment, as demonstrated by our expansion in BVNA and planned acquisition of SPR Therapeutics, an attractive space growing over 20% annually. Now turning to Medical Surgical, which delivered 5% growth globally, including 8% in the U.S. Surgical revenue increased 3% globally, split evenly between the U.S. and international markets. Performance was driven by high single-digit growth in both Advanced Energy and Wound Management as well as an increased contribution from Hugo. This was partially offset, like in prior quarters, by continued pressure in bariatrics. Endoscopy delivered high single-digit growth, driven by strong adoption of Endoflip in the U.S. and Western Europe and market share gain in Nexpowder in the U.S.

And then Acute Care and Monitoring was up 11%, including high teens growth in the U.S. Results were driven by mid-teens growth in Nellcor pulse oximetry, high single-digit growth in respiratory and airways as well as mid-single digit in perioperative. The outsized strength we've seen in ACM was a positive tailwind to the quarter. Looking ahead, we anticipate this growth to normalize as we head into fiscal year '27. Overall, we are very pleased with the finish Medical-Surgical had to close the year. Rounding out with the Diabetes business, we completed the MiniMed IPO during the quarter, marking an important milestone in establishing MiniMed as a standalone, publicly traded company.

For the quarter, the Diabetes business delivered 15% reported growth or 8.1% organic, driven by strong international execution and continued momentum in U.S. CGM and new patient starts, as the team prepares for the commercial launch of MiniMed Flex during the summer. Look, we're excited to see the MiniMed team share more detail on their first earnings call later this morning. Before we move into the details of Q4 and guidance, I'd like to remind everyone that the Diabetes financials as reported by Medtronic are prepared on a different basis than the standalone MiniMed ones. Accordingly, you cannot precisely estimate Medtronic RemainCo financials by subtracting one set of financials from another.

As with prior, similar transactions, post-split, when Medtronic is no longer the majority shareholder of MiniMed, we will provide Medtronic guidance that will reflect updated operational performance metrics and share count. Now turning to financials. Revenue this quarter of $9.8 billion grew 9.9% reported or 6.6% organic. This represented a 60 basis point acceleration from last quarter on a far more challenging comp. This caps the strongest annual performance we have seen in 10 years. Geographically, performance was balanced, with 7% growth in the U.S. and 6.2% internationally.

Before I turn to the P&L, I want to pause and take a moment to acknowledge our Medtronic colleagues, especially those in the Middle East and impacted countries who, despite the ongoing conflict, have remained focused on serving our customers and our patients. Their performance under tremendously difficult circumstances reflects their commitment, resilience and the strength of our mission and culture. So thank you. On that note, I will now turn to walking us through the fourth quarter P&L. Our adjusted gross margin was 65.4%, up 30 basis points year-over-year and up 50 basis points sequentially. Let me walk you through the elements shaping gross margin this quarter as I usually do.

Similar to Q3, our disciplined pricing provided 30-basis-point benefit. Net of inflation, cost-down contributed 60 basis points, driven by COGS efficiency programs as our portfolios, global operations and supply chain teams delivered material savings, improved efficiencies and higher yields. Mix was unfavorable by 60 basis points, largely reflecting the Diabetes business as well as higher mix of lower-margin capital to higher-margin catheters in our CAS business. While a near-term headwind to gross margin rate, this represents a favorable leading indicator as this reflects further penetration of the market and strong pull-through potential for future catheter sales. Tariffs impacted the business by $74 million or 80 basis points, in line with expectations.

And finally, foreign exchange was an approximate 80 basis point tailwind. Moving to overhead. Adjusted R&D was roughly 7% of revenue in the fourth quarter and fiscal year R&D grew $150 million as we march towards higher investment goals. Q4 to date, we closed or announced nearly $2 billion of additional investments as we executed on our M&A and venture capital strategy. We expect recent M&A to contribute approximately $150 million to inorganic revenue growth in fiscal year '27 and to be a healthy contributor to our organic base in the out years. Within our venture portfolio, we also made 16 venture investments this fiscal year, totaling approximately $250 million.

Each of these investments are in growth-accretive adjacencies and should generate strong returns and potential acquisition opportunities in the years ahead. We're committed to accelerating our pace of innovation and top line growth through a prudent and strategic combination of organic and inorganic investment. Adjusted SG&A was 30.5% of revenue in the quarter, up 30 basis points year-over-year. With favorability below the line this quarter, we made the deliberate decision to accelerate investment in our commercial firepower to support our key growth areas. Our adjusted operating profit was $2.5 billion, resulting in an adjusted operating margin of 25.5%. This includes impacts of 160 basis points from the MiniMed Blackstone payment and 80 basis points from tariffs.

Our adjusted tax rate was 17.7%, slightly better than expected. All in all, adjusted EPS was $1.55, above the midpoint of our guidance range and above the Street expectations. Free cash flow was $5.4 billion in fiscal year '26, the strongest it has been since 2022 and ahead of our expectations. We've made solid progress in working capital over the year. The team delivered notable progress in accounts receivable and controlled inventory effectively. Our CapEx spend was up roughly $50 million and grew at a significantly lower rate than revenue. Because of this, we ended the year with a $9.2 billion in cash and investments, positioning the company very favorably to execute on M&A opportunities.

Look, our performance this year underscores the strength of our portfolio and the consistency of our execution. While we faced headwinds like tariffs and a transitioning product mix, we made meaningful progress on our efficiency initiatives, driving COGS improvements and achieving gross profit leverage, ex-tariffs. Importantly, we remained disciplined in balancing performance with investment. We purposefully increased investment in SG&A, R&D and M&A to support innovation and commercialization in some of the most attractive and durable growth markets in MedTech. I'd like to thank our teams for all of the progress made this year, and I look forward to seeing this momentum carrying into the next fiscal year. Speaking of '27, now turning to the guidance.

I want to note that our full year guidance continues to include the Diabetes business, as Medtronic remains the majority shareholder of MiniMed through the spin-off process. Today, we're guiding fiscal year '27 organic revenue growth of 6.75% to 7.25%, including approximately 11.5% to 12% organic growth in the first quarter. This guidance includes a roughly 25 basis point tailwind from the Diabetes business. It also incorporates the benefit from the additional selling week, which is recognized in the first fiscal quarter. We expect it to contribute approximately 125 basis points to the full year growth and 500 to 600 basis points in the first quarter.

Additionally, based on recent FX rates, we expect the foreign exchange to be a neutral to roughly $100 million headwind for the full year, with an approximate neutral to $50 million tailwind to the first quarter. Moving down the P&L. We expect our fiscal '27 margin to be roughly in line with the previous year, excluding tariffs. Pricing and COGS efficiency programs are expected to offset the impact of business mix primarily from Diabetes. This pressure point will disappear upon separation. We anticipate a tariff impact to COGS of approximately $250 million in total, including $75 million in the first quarter. Including tariffs, we expect fiscal year '27 gross margin to decrease by roughly 20 basis points.

We continue to invest in innovation to accelerate the launch of key products. This includes incremental spend as we integrate several acquisitions. Overall, we expect our fiscal '27 operating margin to be up 60 basis points, driven by the absence of Blackstone milestone payments we saw this year and operating leverage. Below the operating profit line, we're expecting an approximate 200 basis point headwind, driven by an increase in net interest expense as well as a slightly higher tax rate. We're guiding '27 EPS of $5.90 to $6.00. Fiscal year '27 incorporates several dynamic components, and I would like to be explicit around our assumptions on the inputs.

We have included an approximate 150 basis point benefit from the extra selling week to the full year. Because we do not yet know the timing of the MiniMed separation, we're taking a conservative approach and including the full year of the Diabetes business in our estimates, including the associated monthly dilution and assuming no separation share count benefit in fiscal '27. Should we separate prior to year-end, as per our intent, we could see potential upside from our current guidance. We are factoring 2% dilution from M&A, which is roughly 1 point higher than what we shared last quarter as the timing of several of our deals actually occurred earlier than anticipated.

We're taking the full tariff impact of $250 million, as mentioned previously, an increase of $65 million versus prior year. We have not taken into consideration any government refund. We've embedded also a roughly 1-point headwind from increased fuel and transportation costs due to the conflict in the Middle East. And finally, based on recent FX rates, we expect foreign exchange to have a neutral to 1% accretive impact for the full year. For the first quarter, we would expect EPS in the range of $1.38 to $1.40, including a 600 to 700 basis points benefit from the extra selling week as well as roughly neutral impact from foreign exchange at recent rates.

Look, all of this taken together, our approach to guidance for the full fiscal year positions us well for a strong performance in 2027. And with that, back to you, Geoff.

Geoffrey Martha: Okay. Thanks, Thierry. Now as we come to a close, I'd like to take a step back. The macro backdrop, as you know, has been challenging and dynamic, but MedTech is structurally resilient because the fundamentals are durable. People are living longer, chronic disease is rising and the demand for medical procedures will only grow. AI, digital, robotics as well as advanced electronics are meaningful accelerants. And at Medtronic, we are uniquely positioned to integrate these technologies for safer care, improved outcomes and stronger health care economics that scale globally. I also want to take a moment to recognize Brett Wall, who will be leaving Medtronic this summer following an extraordinary 25-year career.

Brett has been an integral part of our leadership team and played a defining role in shaping our Neuroscience portfolio, including helping establish interventional stroke as a global standard of care and advancing innovation across neuromodulation. His impact on patients, on our strategy and our culture, it's been significant, and we are deeply grateful for his contributions. As part of this planned transition, Dr. Kweli Thompson will step into the role of Executive Vice President and President of our Neuroscience portfolio. Kweli is a proven leader with a strong track record of execution, deep clinical and operational experience, most recently leading our CRM business. He is well positioned to lead Neuroscience into its next phase of growth.

Again, we want to thank Brett for his leadership, and we look forward to Kweli's continued impact. So we delivered a strong finish to the year, powered by the breadth of our portfolio and disciplined execution across the business. And look, we are not letting up. We are investing in the future. We are building momentum in our key growth areas, advancing innovations across the portfolio and deploying capital through targeted M&A, ventures and partnerships. Together with strong commercial execution and market development, these actions give us confidence in our ability to deliver durable, innovation-led growth for FY '27 and years to come. With that, let's turn to Q&A.

Ingrid, can you please provide the instructions and queue up the analysts?

Ingrid Goldberg: [Operator Instructions] Please be advised that this Q&A session will be recorded. [Operator Instructions] We'll take our first question from Vijay Kumar at Evercore.

Vijay Kumar: Geoff, congrats on a nice sprint here. Maybe, Geoff, I'll start with the guidance question. Fiscal '27, excluding the extra week, I think underlying 5.5% to 6%, that's an acceleration in line with prior assumptions. I think as CAS slows down, that's been a concern for the market, right? Can you just talk about what are the offsets? What segments accelerate to offset CAS and drives the confidence in this 5.5% to 6% organic?

Geoffrey Martha: Well, thanks for the question, Vijay. Maybe I'll -- let me just start with the CAS comment you made, then I'm going to turn it over to Thierry to answer the ins and outs, the puts and takes of the guidance question. But on CAS, look, the impact of CAS to our growth will be very similar next year to this year. I mean we see the market in FY '27 growing -- well, first of all, in Q4, we think the CAS market grew around 20%. In FY '27, we're thinking mid- to high-teens market growth, and we're going to grow north of 2x that of the market rate.

And again, the business has gotten a lot bigger, so its contributions to our growth are even more because of the size. And yes, so we're annualizing -- that business is annualizing now at $2 billion. We're going to hit that $2 billion backward-looking revenue mark that I laid out there. We're going to hit that in Q1. That implies -- we're about 15% share right now and marching towards market leadership in CAS. So I don't -- we're not -- look, we're not talking about CAS slowing down or its impact on our growth. I just laid out what I think it'll grow, but the impact is strong.

So I just want to clarify that first, and then maybe Thierry, you talk about the guidance.

Thierry Pieton: Sure, Vijay. So look, just maybe to give you the couple components of the growth rate here. So the Cardiovascular business should have a performance next year that's pretty much in line with what we've seen in '26. So it's in -- it's got really, really strong momentum. Geoff just talked about CAS. We're clearly still in the early innings of the CAS development here. You probably saw in the commentary that from an installed base perspective, the installed base was up 40% in the fourth quarter alone. So that gives us a ton of headroom to grow the catheter sales going forward. CRM will continue to be a strong mid-single digit.

We have a lot of strength coming from innovation, from Micra, from Omnia, from EV-ICD, and that's going to carry into '27. And then staying in the Cardiovascular portfolio, we expect to continue to see some strong lift coming from Ardian. So Ardian is now annualizing about $100 million revenue a year, and we expect that to continue to grow significantly into '27 and beyond. And then we've incorporated a prudent guidance for Structural Heart. As we mentioned in the commentary, the business has been pretty stable over the last weeks, and that's what we've incorporated in the guidance going forward. So strong continuation in Cardiovascular. Then we've got the Neuroscience portfolio.

Hey, look, in Neuroscience, we're leading in every segment we're in and we're gaining share. And on top of that, we've got meaningful innovation in almost every segment out there. If you take CST, we have Stealth AXiS. Stealth AXiS is off to a really good start. About 50% of the revenue we get in CST is coming from consumables. And the more we sell Stealth AXiS, the more we're going to have pull-through on the consumables side, and we're super excited about that. In the Neurovascular business, you saw that we made progress this quarter that's going to continue into '27.

We've got a ton of innovation coming there with Neuroguard product and with MMA, and that's going to continue going forward. And on top of that, we'll have the inorganic impact coming from the acquisitions. But expect Neuroscience overall to continue to grow.

Geoffrey Martha: To accelerate.

Thierry Pieton: To accelerate, yes. Continuing in Neuroscience, in Pelvic Health, look, Altaviva is off to a good start, and it's going to continue to grow into next year. So you can see every single franchise in Neuroscience is going to accelerate going forward. And then if you look at MedSurg, look, MedSurg had a great quarter in Q4, with Surgical being pretty strong around 3%, both U.S. and OUS. We had great performance from ACM and from Endo.

Look, I think that business has great momentum, but we expect that growth to normalize a little bit or we haven't reflected, I would say, the run rate that we see in Q4 fully in the guidance that we're taking into consideration for '27. And then to finish with MiniMed, the team will comment more in detail in the following call after this. But MiniMed had a strong Q4. We expect continued strength into '27 and MiniMed should bring about sort of 20 to 25 basis points of growth in the construct next year. So look, all in all, if you look at what happened in '26, we started the year with a 5% guidance.

Gradually, we increased it to 5.5%. We ended the year at 5.8%. The midpoint of our guidance this year is -- for '27 is right at that level, 5.8%. So I think we're positioning the business for success going into this year.

Ingrid Goldberg: And our next call comes from Larry Biegelsen at Wells Fargo.

Larry Biegelsen: Geoff, congrats on a strong finish here. Geoff, I'm going to ask the one question. I think that one area people are concerned about, which is your TAVR business. The Evolut 6- and 7-year data did get a lot of attention this year. What did you see -- or earlier this year, sorry, what did you see from a share standpoint in your TAVR business in fiscal Q4? Was there any differences U.S. versus international? And what are you assuming for your TAVR business in fiscal '27?

Geoffrey Martha: No, thanks for the question, Larry. I'd say I know there's been a lot of talk on TAVR and Evolut. I'll say this. Just to repeat what Thierry said a second ago, the business has stabilized, right? Over the last 8 to 10 weeks, it's been stable. We did experience a slowdown in growth, and it really was tied, we believe, to the low-risk data that came out. It's more of a U.S. dynamic, I would say. I mean, again, I just want to emphasize it's kind of -- it's an older technology. It's an old procedure. The procedure tactics we've changed, and it's limited to a large-size valve, which is more used in the United States.

So it's not really impacting us outside the U.S. like it is in, and it's stabilized, and we're moving forward now, right? So we're heavily investing into this business. We announced a big investment last quarter. We're investing in this DASI software, where we've got mitral and tricuspid. And so we're feeling good going forward. We got some new, fresh leadership there that's running fast. And so I don't know if you have anything to add to that, Thierry, in terms of next year.

Thierry Pieton: No, I would just say, look, in Q4, we grew 6.6% despite the headwind that we had from TAVR, in particular in the U.S., as you said, Geoff. And what we've seen over the last 8 weeks is a stabilization of that business, and that's what we've modeled going forward.

Ingrid Goldberg: Okay. Our next question comes from Travis Steed at Bank of America.

Travis Steed: I'll start with MedSurg grew 5% this quarter. Surgery grew 3% this quarter. Maybe just how you factor these businesses and as you talked about accelerating growth next year into the guidance and to keep these businesses at kind of these higher growth levels. And on Hugo, when does that start to show up on the surgery growth? And when do you expect Hugo to start contributing positively to the margin and EPS profile versus being an R&D investment, and how to think about the return on that program?

Geoffrey Martha: Well, look, I'd say, first of all, on MedSurg, it was a great quarter, and it was pretty much across the board, right? The Surgical business accelerated to 3%, as Thierry just pointed out. You have ACM at nearly 11%, our Endo business at 9%. I mean Mike Marinaro and the team have done a great job building to this. And like I said, it was a great quarter. And in there, Hugo contributed, right? We had told you that we thought Hugo would have an impact towards the end of FY '26, and it did in Q4. It's -- we're feeling really good about the feedback we're getting on the launch.

We announced this morning the submission to the new indications General Surgery, GYN and LigaSure RAS. So we've got those submitted. And the feedback we're getting on the early cases is good. We're seeing the smooth case rate is up. That means how many cases -- if everything goes well in a case, that's really important, especially in the U.S., where the physicians really test the system. Our procedures are meaningfully up and utilization continues to be strong. We've got additional placements, installations in the U.S., outside of the U.S. And complementary to this is our Touch Surgery platform is -- installs are up 30% sequentially. We're now in over 1,400 ORs globally.

This is going to be a real differentiator. I want to get to the point where we're talking about the enabling technology, not just Hugo, but all the enabling technology, including the digital piece, kind of like we do with -- in spine, with AiBLE. That's what we're building to. Obviously, Hugo is a big piece of that. So we're feeling very positive right now. Thierry, anything to add to that?

Thierry Pieton: No, I think you said it all, Geoff.

Ingrid Goldberg: Thanks, Travis. Our next question comes from Ryan Zimmerman at BTIG.

Ryan Zimmerman: Can you hear me okay?

Geoffrey Martha: Yes, we can hear you, Ryan.

Ryan Zimmerman: Wonderful. So a lot of directions to go here, but I'm actually going to ask a little bit of a margin question to Thierry. Assuming you lap some of these tariff dynamics kind of midway through fiscal year '27, potentially MiniMed is coming off. And then again, I appreciate that you're including it for the full year, but it would seem that there is opportunity potentially for a gross margin step-up in -- particularly in the second half of 2027. And so is there anything else that we should be considering in terms of constraining gross margins as we think about it in the context of the 2027 guide?

Thierry Pieton: No. So look, I think you -- the dynamics in the gross margin are pretty similar to what we've seen so far. So kind of peeling through the different parts, we'll have negative impact from the carryover of the tariffs issue or the tariffs topic, I should say, in the first half to the tune of -- there's someone else that's on the line, sorry. So yes, so we'll have about $65 million of carryover coming from tariffs in the first quarter and the second quarter. To your point, we'll lap that in the second half. And then if you look at excluding tariffs operationally, we expect to continue to see pricing lift as we did in '26.

We expect to continue to see good traction from a cost of goods sold net cost out perspective. The team is gradually netting out better and better performance of cost out net of inflation, and we expect that to continue. Then we've got the mix topic. And as you know, there are 2 drivers behind that. One is Diabetes. To your point, if we are to separate Diabetes before the end of the year, which is our intent, then we should see some lift in the gross margin rate coming from that. And then the other dimension of the mix impact is coming from CAS.

It's actually getting better because the margin of CAS is improving, and so we should see that being less of a headwind going into the second half. So look, all in all, what we've embedded in the guidance here is a gross margin that's basically flattish, slightly up excluding tariffs, or I would say very slightly up excluding tariffs, with a better performance in the second half than in the first half. And then the good news is growth is accelerating, and with growth we're getting operating margin leverage with better absorption of the overhead. And this will come primarily from the SG&A line going into this year.

So yes, we'll have accretion in operating margin, in particular in the second half of the year.

Ingrid Goldberg: All right. Our next question comes from Josh Jennings at TD Cowen.

Joshua Jennings: I was hoping to just get a bead on the China franchise, not the sexiest question here, but historically, China has been a growth channel. There have been some headwinds with VBP for a couple business units. But what's the outlook for 2027? Maybe help us think about exposure there as a percentage of revenue? And is that -- is the China franchise going to be accretive or dilutive to the organic revenue growth guidance?

Geoffrey Martha: Look, thanks for the question, Joshua. We haven't gotten a China question in a while. Look, China is -- we still view China as a growth market. So when we think about China, we think about it as a growth -- as an end market. We don't have a whole lot of exposure in terms of manufacturing in China for export outside of China. So we don't really have much exposure there. That's very small. It's really about how it continues to be a profitable growth market for the company. And look, we've had to navigate a number of these VBP, and I think VBP is here to stay. The worst is behind us.

And the team has navigated it well. We've been able to increase the procedures and lower our costs because we're on these big contracts, these big tenders, and we've been able to pull out costs, increase volume, even though pricing is down. And it remains growing at the corporate average right now, and that average for the company is improving, as you see. And profitability is also strong. For years, there's been this misconception that China is not profitable. Prior to VBP, I admit it was even more profitable, but it's still accretive from a profitability standpoint, and it's a growth region for the company.

Ingrid Goldberg: Okay. All right. Next up, we have David Roman from Goldman Sachs.

David Roman: I wanted just to come to the -- a comment you made on CAS during the prepared remarks. I think you talked about visualizing other catheters on Affera and how you were thinking about integration of some of the investments you're making on expanding the accessory business within CAS as well as the potential to integrate some of the other established technologies onto Affera. And then maybe I'll just ask my follow-up front here. I know, Thierry, you talked about tariffs as you reflected in the guidance, but there do seem to be a lot of other unresolved considerations on tariffs, such as USMCA and then 232. So maybe just your latest updated thoughts there would be helpful.

Geoffrey Martha: Well, first on CAS, I mean they're on our Affera platform, like we look at it as a 3-in-1 kind of -- we view it as the premier platform out there, right? And I think the numbers are bearing that out. And we've worked hard to get to this point, and we're still in the early innings of the launch of Affera in the U.S., as Thierry pointed out, and globally. And there's a couple vectors of growth. One is the innovation you pointed out. We're really surrounding electrophysiologists. So we have more catheters coming out. Sphere-360 is in Europe. We started the trial in the U.S. for single shot that goes right at our biggest competitor.

The mapping, we just launched our second-generation mapping software. And as you pointed out, David, it's got this ability to sense other -- pick up other catheters. And then we're bringing in -- we made 2 investments in ICE catheter companies. So we're going to build out our ecosystem and surround the EP. In terms of -- if your question is about are we opening the system, I don't think we have plans for that right now. I mean it's -- we're really building out our proprietary technology and ensuring that we have that tight workflow. That is our plan to have that tight workflow and get the best clinical outcomes and the best experience for the physicians.

Thierry Pieton: And on the tariff side, I think we mentioned it in the commentary. Look, we continue to monitor the environment there, which is still a little volatile, as you mentioned. I think we continue to look at the 232 situation. On the flip side, we've incorporated sort of a status quo in tariffs. So we haven't incorporated any potential upside from reimbursements that could occur, which we have applied for. So we took a balanced approach on it, I would say.

Ingrid Goldberg: Thanks, David. Our next question comes from Robbie Marcus at JPMorgan.

Robert Marcus: Great. Two quick ones for me. First, Geoff, I wanted to ask on MiniMed. I see consensus numbers have strong organic sales growth, margin and free cash flow improvements over the coming years. If that's the case, can you just remind us what's the rationale for separating it here? Wouldn't you want to keep a business with strong improvements and inflections in profitability and growth going forward?

Geoffrey Martha: Look, I mean, we're separating it not because of our confidence in the outlook of the business. I mean, to your point, we think it's going to do really -- it's doing well today and it's going to accelerate from here with the product pipeline that they have, which I'm sure Que will give updates on the call after this. I mean -- but it's the best we've seen, and it's comprehensive across all aspects of managing insulin-dependent patients. So we feel really good about that. I think as we focus, we have a lot of growth drivers to focus on.

And these other growth drivers that we talked about today, whether it be CAS or Ardian, Hugo, Altaviva, Stealth AXiS, all of them, I think, take more advantage of and benefit from either technology platforms that cut across the company, especially in robotics and areas like that or our commercial footprint, where MiniMed does not really capitalize on that as much. And second is, look, we are very disciplined around capital allocation. And it's hard to constantly allocate capital to something even though the growth is there, but the rest of Medtronic is growing much faster now. So the gap between MiniMed and the rest of Medtronic isn't as much as it used to be in terms of growth.

And profitability, though, it's just a structurally lower-profitable segment. And so it's kind of hard to allocate capital that way. I think both businesses will do better separated. And we've -- for our own reputation and patients, we've -- we did not -- we think we're separating at the right time. We've put a lot of time and money into the business. It's ready to go. It's got a great management team, and it's going to do well for patients. It's going to do well for physicians, and it's going to do well for shareholders. And the rest of Medtronic, we're accelerating, and we're going to do well as well.

So we're feeling really good about that decision and excited about the future of both organizations.

Robert Marcus: Fantastic. Maybe a quick one. Thierry, I look at consensus. I realize you just guided to fiscal '27. I look at consensus for 7% EPS growth for 2028, realizing there's one fewer selling week, which is 150-plus basis points to EPS this year. Should we be thinking about a similar headwind next year? And how do you want people to think about the year-to-year there, just so we could get it correct at this update? Appreciate the questions.

Thierry Pieton: Yes. Thanks, Robbie. Look, we'll give '28 guidance when we give '28 guidance, it's kind of early, but just kind of directionally, some of the headwinds that we've got like tariffs, et cetera, disappear going into '28. And we expect the growth to continue, right? So we went through all the growth areas that we've got in the portfolio today. And a lot of these are in early innings, right? CAS is still going to continue to accelerate. Ardian is very early in its development. Altaviva is also very early. And then we've got a long list of innovation that's kicking in, in the rest of the portfolio.

So yes, there will be pressure coming from the 53rd week going away, but we have a lot of things going the other way. So we look forward to talking about that later in the year.

Ingrid Goldberg: All right. And our last question, we have time for one more. It's going to come from Mike Kratky at Leerink Partners.

Michael Kratky: Awesome. Can you hear me all right?

Geoffrey Martha: Yes.

Michael Kratky: Congrats on the strong quarter. Maybe just one quick one. But in terms of your commercial strategy in mechanical thrombectomy, to what extent is Liberant bringing differentiation to this market? How are you thinking about your ability to carve out share of the market with 2 well-entrenched competitors? And what could that opportunity look like?

Geoffrey Martha: Yes. Look, we're not -- we don't -- we try not to guide at a product level, so I can't get too specific there. But I do think we have a strong commercial footprint out there in our Peripheral Vascular business. And this is a product we've worked on for a while, and it's gotten -- getting great clinical results. Physician feedback is good. And I think we're putting that product in the bag of our Peripheral Vascular business, plus it's got -- we got this agreement with Contego that's also helping that business. And help me, what else? No, that's Peripheral Vascular. So we've got a number of new products there. It's not just one thing.

So I'd look at the business and the direction of travel of the overall business, putting more competitive products in that scaled sales force and it's -- I appreciate the question, Mike. We don't get a lot of questions around Peripheral Vascular, but it's kind of sneakily kind of improving the growth profile, which is part of the exciting story of Medtronic because we -- you've got these 3 groupings. You've got these big growth drivers that we are all talking about, like CAS, and now you're going to hear more about Ardian and Hugo now. Both those guys had good fourth quarters. And then you've got Altaviva and Stealth AXiS, these thoroughbreds coming out of the gate hot.

And then you've got our big businesses, CST, which we kind of just talked about, Surgery is doing well and Cardiac Rhythm is just crushing it. Like where other companies see a mature market, our Cardiac Rhythm Management sees opportunity and innovates and drives the market. We're not worried about competition. It's about innovation and growing that market, lowering any kind of bar for pacing and CRM, and it's a wonderful story. But then the rest of the company is also doing well. There's puts and takes, but it's also doing well. Peripheral Vascular is part of that story of adding new products to the business.

And it all comes back to our capital allocation strategy of feeding the big markets and the hot hands, but also making sure that there's the right amount of capital for the rest of the businesses, hence focusing the portfolio to enable that, getting back to the Diabetes question that Robbie had. So I appreciate the question, Mike, and I'm sure the Peripheral Vascular team does as well.

Ingrid Goldberg: Great. Thanks, everyone. So with that, I think I'm going to turn the call back over to Geoff for some final remarks.

Geoffrey Martha: Okay. Well, first of all, thank you for joining the call and all the questions. It was a really important moment for the company as we are really accelerating and really well positioned, putting up big numbers and really well positioned for the future, and particularly in a tougher market backdrop. So I appreciate your support and your continued interest in Medtronic. And with that, I'd say just have a great rest of your day, and thanks again.