Geoffrey S. Martha
Chairman and Chief Executive Officer at Medtronic
Hello, everyone, and thank you for joining us today. This morning, we reported Q2 results, which despite a challenging market backdrop reflect solid execution around new product launches and strong underlying earnings growth. Obviously, our end markets were impacted by the COVID-19 resurgence and the healthcare system staffing shortages, particularly in the US, which affected our quarterly revenue growth.
Procedure volumes were lighter than expected in markets, where our technology is used in more deferrable procedures like our spine business or those that require ICU bed capacity like TAVR. Yet in markets, where procedures are less deferrable like pacing, we experienced stronger growth.
While the US market was a headwind, many of our international markets were much stronger. We delivered 6% revenue growth outside the US, including mid teens growth in emerging markets. And our emerging market growth is up 9% versus pre-pandemic levels in Q2 fiscal '20.
In the midst of these market headwinds, we focused on managing what was in our control and executed to advance our pipeline, launched new products and win share. And when you look at our sequential revenue performance, our 2% decline was slightly better than most of our large cap medtech competitors. While the pace of the recovery from pandemic headwinds is hard to predict, our markets will recover, and as that happens, Medtronic is one of the best-positioned companies in healthcare.
The underlying health of our business is strong,and it's getting stronger. We have an expansive pipeline of leading technology, a robust balance sheet and an expanding roster of proven top talent. Coupled with our revitalized operating model and new competitive mindset, we remain poised to accelerate and sustain growth.
As I've done in prior quarters, let's start with a look at our market share performance. Year-over-year market share is an important metric that our teams are evaluated against in their annual incentive plans, along with revenue growth, profit and free cash flow. And right now, the majority of our businesses are winning share, driven by our innovation and increased competitiveness. And this is exactly the sort of market share performance that gives us confidence in the deep strength of our businesses.
And to avoid any confusion about how we're performing when we talk about our share dynamics, we'll refer to revenue share in the third calendar quarter to keep it directly comparable to our competition. Share momentum in our three largest businesses continued. In the Cardiac Rhythm Management business, we extended category leadership, adding over a point of share year-over-year, driven by our differentiated Micra family of pacemakers, Cobalt and Crome high power devices and our TYRX antibacterial envelopes.
In surgical innovations, we outperform competition with strong performances in endo stapling and sutures, and our Signia powered stapling system, and Tri-Staple technology continues to see great market adoption. In Cranial & Spinal Technologies, we're winning share and launching new spine implants that enhance the overall value of our ecosystem of preoperative planning software, imaging, navigation and robotic systems, and powered surgical instruments, which is transforming care in spine surgery.
Our new implants also go directly at the competition. Starting this past quarter with our Catalyft expandable interbodies to specifically attract Globus users. In addition to our three largest, a broad array of our other businesses have increased their competitiveness, are launching new products and winning share in their end markets. So for example in patient monitoring, we're winning share with our Nellcor pulse oximetry sensors and our monitors. In respiratory interventions, we picked up four points of share in premium ventilation, due to our ability to respond quickly to spikes in demand from COVID resurgence.
And in neuromodulation, we won share across our product lines, including pain stim and DBS, as we continue to launch new products. In pain stim despite the sequential slowdown in the market, we're gaining share with our Intellis with DTM technology and our Vanta recharge-free system. In DBS, we had a very strong quarter, winning over six points of share. We're executing on the launch of our Percept neurostimulator with brain sense technology paired with our SenSight Directional Lead, and we continue to be the only company with sensing capabilities. Since launching SenSight in the US earlier this fiscal year, we surged ahead of the competition in new implant share. Sensing has redefined what it takes to compete in DBS. Our competitors don't have it, and as a result, we're expecting a long runway of share gains, as we build upon our category leadership.
Now, while the majority of our businesses are winning share, we do have a few businesses that are flat or losing share, and we're focusing our efforts and our investments to grow above the market. In cardiac diagnostics, we're focused on improving supply to reverse share declines, and we're investing in new indications and novel AI detection algorithms to expand the market and drive growth.
In cardiac ablation solutions, we expect to win share, as we expand the rollout of our DiamondTemp RF Ablation System and drive awareness and adoption of our Arctic Front Advance Pro cryoablation, as a first line treatment for paroxysmal AF.
In diabetes, while we lost share again this quarter, we remain pleased with the momentum we're building outside the US, not only with the 780G insulin pumps, but also with the positive customers' feedback we've heard on our extended infusion set and fingerstick free Guardian Sensor 4. And we expect our US results to turnaround, as we launch these new products.
Next, let's turn to our product pipeline. I've already talked about the impact, our strong flow of new products is having in the market. We've launched over 180 products in the US, Western Europe, Japan, and China in the last 12 months. At the same time, we continue to advance new technologies that are in development. We're heavily investing in this pipeline with a targeted R&D spend of over $2.7 billion this fiscal year, which is an increase of over 10%, the largest dollar increase in our history. We're expecting these investments to create new markets, disrupt existing ones and accelerate the growth profile of Medtronic.
Let's start with our Symplicity Renal Denervation procedure for hypertension. While we weren't able to end our ON MED study early, we remain confident in our program, in our ability to serve the millions of patients, who make up this multi-billion dollar opportunity. As a reminder, our previous three sham-controlled simplicity studies, all reached statistical significance, including the pivotal OFF MED study. And the ON MED study remains powered to detect a statistically significant and clinically relevant benefit at the final analysis. We expect that ON MED follow-up will complete in the second half of next calendar year, and then, we'll submit the PMA to the US FDA for approval.
When we think about renal denervation, let's start with the patients, who have indicated that they want options like the simplicity blood pressure-lowering procedure to treat their hypertension, as confirmed by our patient preference study presented earlier this month at TCT. We believe demand will be high and we continue to expect this to be a massive opportunity that we will lead.
Another opportunity for Medtronic is surgical robotics, where we are entering the soft tissue robotics market, as a second meaningful player. We achieved a major milestone when we received CE Mark for Hugo last month, and we also completed our first procedures with Hugo in our Asia-Pacific region at Apollo Hospitals in India. The first surgeons to use Hugo in the clinical setting have told us they believe Hugo addresses the cost and utilization barriers that have held back the growth of robotic surgery.
Look, demand is high, and we're building a long list of hospitals that want to join our partners and possibility program and be among the first in the world to use Hugo and participate in our global registry, which will collect clinical data to support regulatory submissions around the world. Our robotic program is making progress toward a broader launch, and we remain well-positioned in this critical field relative to every other potential new entrant.
As we prepare for this broader launch, we're working hard to ensure an outstanding customer experience. We're also focused on optimizing our supply chain, manufacturing and logistics to prepare for scaling this business. We're making steady progress on these activities, but not at the pace that we had originally planned. And as a result sales this fiscal year are likely to come in below our $50 million to $100 million target. Now, that said, we still expect double digit millions in sales this fiscal year, and we continue to expect a strong ramp in FY '23.
We're off schedule, but we're not off track. And while we're disappointed in the revenue push out for this important program, we're confident that we have line of sight to the solutions we need to be successful and to optimize the customer experience. Demand remains high, surgeons continue to do cases, our order pipeline continues to build, and we're looking forward to starting our US IDE soon. We remain confident in the success of this program, and we believe that we're poised to meaningfully expand the soft tissue robotic market and drive growth for years to come.
In Cardiac Rhythm, we just launched our Micra AV leadless pacemaker in Japan earlier this month. We also completed the US pivotal study enrollment for our EV ICD, which follows our CE Mark submission in Q1. Just as we disrupted the pacing market with Micra, we intend to do the same in the implantable defibrillator space with our EV ICD. Our device can both pace and shock without any leads inside the heart and veins, and it does this in a single device that is the same size, as a traditional ICD.
In structural heart, we're starting the limited US launch of our next-gen TAVR system, the Evolut FX this month with a full market launch planned for fiscal Q4. Evolut FX enhances ease of use with improvements and deliverability, implant visibility and deployment stability. We're also making progress on our transcatheter mitral program. At TCT earlier this month, we presented very encouraging early data of our transfemoral delivery system for our intrepid mitral valve, and we will be rolling that system into our APOLLO pivotal trial.
In diabetes, our MiniMed 780G insulin pump combined with our Guardian 4 sensor continue to be under active review with the FDA. When approved and launched in the US, we expect the 780G system to drive growth, as it will be highly differentiated and further address the burden of daily diabetes management. And for the first time ever, is helping hard to manage pediatric and adolescent patients achieve outcomes mirroring well-controlled adults.
The user experience has also improved markedly, and these outstanding results were achieved with our 780G paired with our Guardian 3 sensor. So we expect the experience will be even stronger with Guardian 4. And the value of our offering will be further enhanced when we bring our Synergy sensor, which is now called Simplera [Phonetic] to market. Simplera is disposable. It's easier to apply and half the size of Guardian 4, and we expect to submit it to FDA later this fiscal year.
In pelvic health, we're awaiting FDA approval for our next-gen InterStim recharge-free device, which we expect in the first half of next calendar year. With its best-in-class battery, constant current, and full-body MRI compatibility at both 1.5 and 3 Tesla, we expect this device will extend our category leadership in this space.
In neuromodulation, we recently submitted our ECAPs closed-loop spinal cord stimulator to the FDA. We're calling this device Inceptiv SCS, and we expect it to revolutionize SCS with closed-loop therapy to optimize pain relief for patients. We also continue to make progress on expanding indications for SCS into non-surgical refractory back pain, painful diabetic neuropathy and upper limb and neck chronic pain.
Finally in DBS, we continue to enroll patients in our ADAPT-PD trial studying our closed-loop adaptive DBS therapy in patients with Parkinson's. We're expecting enrollment in the trial to complete later this fiscal year.
Now before I turn it over to Karen, the one thing, I most want to emphasize is that despite the ups and downs of the pandemic and its collateral impacts on hospital procedures, nursing and staffing shortages, and the supply chain, our underlying business remain strong. Medtronic is advancing a pipeline of meaningful innovation that we believe will not only enhance our competitiveness, but will accelerate our total Company growth going forward.
And with that, I'll turn it over to Karen to discuss our financial performance and our guidance. Karen?