Medtronic Sees AI, Ablation and Targeted M&A Fueling Growth

Medtronic’s growth momentum is accelerating: Excluding an extra week in the quarter, growth increased from 4.5% to 7%, driven by cardiac ablation, renal denervation, Hugo robotic surgery and Altaviva pelvic-health products. AI is enhancing product value and workflow efficiency. Applications such as GI Genius and AI-enabled spine tools are designed to improve detection, planning, navigation and patient outcomes while strengthening customer retention and pricing. The company is expanding through targeted investments and acquisitions. Medtronic spent about $2.7 billion across 16 investments over the past year, focusing mainly on tuck-in deals in robotics, structural heart, neuroscience and other growth areas. Medtronic’s Stars Are Aligning for a Price Recovery Medtronic NYSE: MDT Chief Financial Officer Thierry Piéton said the medical-device maker’s focus on acute procedures, expanding innovation pipeline and increased use of targeted acquisitions are supporting its recent growth momentum. Speaking with Peter Harrison of Morgan Stanley Investment Banking Group, Piéton said Medtronic’s portfolio is comparatively insulated from concerns about Affordable Care Act subsidies and potential pressure on elective procedures. He said the company’s products are primarily used in acute settings, including stroke, arrhythmia and valve-replacement procedures. Medtronic Bottoms, Healthy Rebound Ahead “Procedure strength has been good,” Piéton said, citing first-quarter performance in Cardiac Rhythm Management, surgical and spine franchises. He said approximately two-thirds of Medtronic revenue comes from Medicare, about one-quarter from private payers, roughly 10% from Medicaid and less than 1% from ACA-related coverage. The company also saw strong first-quarter free cash flow performance, helped by accounts-receivable collections in the U.S. and internationally, he said. AI Seen Improving Workflows and Product Value Piéton described artificial intelligence as an opportunity both to enhance Medtronic’s products and improve internal efficiency. In products, he said AI can improve procedure workflows, physician decision-making, hospital service and patient outcomes. 3 Reasons Analysts Love DexCom He pointed to GI Genius, an AI-enabled endoscopy platform that he said detects 50% more polyps during a typical endoscopy procedure than a trained physician using the naked eye. In spine care, AI can assist with preoperative planning, procedure navigation and post-procedure feedback, according to Piéton. Those capabilities can also support pricing and customer retention, he said. Medtronic’s StealthAXiS spine solution combines preoperative, intraoperative and postoperative tools, including navigation, imaging and robotics. Piéton said the broader platform makes implants “stickier” with customers and helps protect pricing. Innovation Pipeline Supports Growth Outlook Piéton said Medtronic’s growth rate has increased from 4.5% to 7%, excluding the impact of an extra week in the first quarter. He attributed the improvement to innovation across established franchises as well as four “generational” growth drivers: cardiac ablation, renal denervation for hypertension, Hugo robotic surgery and Altaviva for pelvic health. Cardiac Rhythm Management grew 15% in the first quarter, Piéton said, driven by products including OmniaSecure, the 3830 lead, EV-ICDs and Micra leadless pacemakers. He added that Medtronic’s vitality index, which measures the share of revenue from products launched within the past three years, has risen from the teens to the low-to-mid-20% range. Among the company’s newer growth platforms, Piéton said cardiac ablation surpa...