Geoffrey Martha
Chairman & Chief Executive Officer at Medtronic
Hello, everyone, and thank you for joining us today as we discuss our Q2 results and outlook. Our Q2 organic constant currency revenue growth of 2.2% came in about 1 point below expectations due to a slower than expected recovery in both procedure volumes in certain markets and in our supply chain.
In terms of reported revenue, the continued strength of the dollar over the course of the quarter drove over half the difference to expectations. Now despite the top line results, we were able to control expenses and deliver EPS at the high-end of our guidance range. We also issued guidance for the back half of our fiscal year this morning. We expect continued acceleration in organic revenue growth in the second half although less than previously anticipated, and this partially flows through the EPS.
Now this is something that I don't take lightly. Delivering on our expectations is important to building and maintaining trust and credibility with you. Karen will walk you through the details, but some of our markets and some of our supply constraints recovered more slowly than we expected in the quarter, and that along with incremental China volume-based procurements, let us to reduce our expectations. While the current operating environment remains challenging, we had strong growth in several businesses and geographies, where our strategy, our operating model and execution are yielding solid results.
We have near-term product catalysts in our pipeline. We are decisively allocating capital internally and selectively making focused acquisitions. We're making improvements to the operational health of the company and we're streamlining the company structure and taking cost out. All of this gives us confidence that we're on the path to creating durable growth and shareholder value.
Now diving deeper into our Q2 results. For reported revenue, as I said earlier, currency drove over half the miss to consensus. Organically, the miss was primarily split evenly between two challenges. One, procedure volumes in some markets have been slower to return to normal levels. And two, some of our supply challenges have persisted longer than we anticipated. With regard to procedure volumes in addition to an incremental China VBP, we are still seeing lower volumes in elective coronary PCI, GI procedures, TAVR, spinal cord stim, and some less emergent surgical procedures. The slower than anticipated recovery in procedure volumes primarily occurred in developed markets. As healthcare systems continue to work through staffing and other challenges.
Now with regard to supply, we've made meaningful recovery and many of the most acute issues are now behind us, including the acute packaging issues which we highlighted last quarter. But some of the improvements did come later than we expected in Q2 and as a result, we missed cases in businesses like surgical innovations, it has delayed our expected momentum. Now focusing beyond challenges impacting our markets and product availability, we have a number of businesses, where our strategy and execution are yielding results.
Recall that we move to the new operating model two years ago, we created highly focused accountable and empowered operating units, that could move with greater speed and decisiveness. And today, we're clearly seeing the benefit of this model across many of our businesses. Starting with Cranial & Spinal Technologies. CST grew 5%, and this is despite a large negative impact from China VBP. In fact, our U.S. core spine business grew 15%. Additionally this quarter, we launched our spine technology ecosystem which we call Aible at the NASS conference.
From planning to our best-in-class implants to navigation and robotic assistance to intraoperative imaging and surgical tools up to and including patient follow-up. Aible brings spinal surgery together in one seamless and connected platform. And another highlight was our Structural Heart business, we're our TAVR business grew 15% globally, including 17% in United States. The launch of our Evolut FX valve drove 18% sequential revenue growth in our U.S. TAVR business, despite being at full market launch for only the last month of the quarter. So we expect Evolut FX to drive momentum for us over the coming quarters.
Our Cardiac Rhythm Management business continues to execute and win share, with 4% growth in this quarter. Within CRM, our pacing business grew 6% well above the market with 18% [Phonetic] growth of our micro family Leadless Pacemakers. And we're looking forward to the commercial introduction of our AURORA EV-ICD in the back half of this fiscal year. So while we have businesses where the changes we've made over the past couple of years are clearly having a positive impact, we're also focused on ensuring these efforts translate into improved performance in all of our businesses.
It's worth highlighting a few businesses, where we are making strong progress to drive future growth over the near to mid-term, and some of that already have immediate momentum. Let's take, Cardiac Ablation Solutions, a business that we expect to be a strong future growth driver. Pulsed field ablation represents a large market opportunity and we're looking forward to seeing our PULSED AF pivotal trial results in the first half of next calendar year. Putting us on the path to be one of the first companies with the PFA catheter in the U.S. market, which we think is under-appreciated. This is a meaningful growth opportunity for Medtronic in the next 18 to 24 months.
And as you know we closed our acquisition of Affera in August, and Affera's differentiated mapping and navigation system gives us the breadth and differentiation that we need to win share in cardiac ablation. And we expect to complete enrollment this quarter and the pivotal. This fully integrated system will be the first of its kind to offer unique catheter that can perform high density mapping and deliver both pulsed field and radiofrequency ablation in a single device.
Now in diabetes, we remain focused on resolving our warning letter. We've now completed a 100% of our warning letter commitments and have informed the FDA that we're ere ready for re-inspection. We also remain in active review with the FDA on our submission of the MiniMed 780G system with the Guardian 4 sensor. And outside the U.S., we continue to receive positive customer feedback on the performance of the 780G, which is now available in over 60 countries.
In Q2, 780G drove mid-teens growth for our diabetes business in international markets. And across diabetes, we're investing heavily in the development of multiple next-generation insulin delivery and sensor technologies. And we remain focused on restoring strong growth to this important franchise over the coming years.
Turning to our Hugo surgical robot. Now I'm sure we're going to get into this in Q&A, but we saw a lot of positive momentum this quarter as we scale manufacturing production, expand regulatory approvals and ramp installations. In addition, we just received FDA IDE approval last week on our product enhancements. Now this allows us to start our U.S. urology clinical trial by the end of the calendar year, it is a catalyst for continued progress with our international sales.
Now before I talk about our capital allocation and portfolio management. Let me share my thoughts on the R&D and opportunity. Despite the impact, we believe COVID and medication changes had on the ambulatory endpoint in on-med, the totality of the data is compelling. The large drop in office blood pressure in the Ardian arm was impressive, and it was consistent with what we've seen in our other trials.
Importantly the current standard-of-care for reducing blood pressure [Technical Issues] working, which was evident in the long-term Sprint trial results published just last month in JAMA Cardiology. Patients don't seem to stay on multi-drug therapy for long periods of time, and eventually just stop taking their medications. And that's the advantage of Ardian, it's always on. We've demonstrated that our Ardian procedure, it's safe, it's effective and it's durable. Physicians are excited and Ardian is preferred by patients. Now we've submitted our PMA to the FDA and we're looking forward to working with governments and payers in the U.S. and around the world, who are searching for improvements to control high blood pressure and avoid the costly and devastating consequences of this disease.
In addition to advancing our pipeline, we're focused on decisively allocating capital and streamlining the company to deliver durable growth. We're freeing up resources to invest more in R&D, feeding our fast growing businesses in areas where we can see the strongest returns, Cardiac Ablation Solutions and diabetes are two clear examples of this. We're also making moves with our portfolio to focus our company and our capital on opportunities that are better aligned with our long-term growth acceleration strategies.
Over the past two quarters, we've announced our intent to separate three businesses that we believe will thrive outside the company. With our Renal Care Solutions business, we're progressing on the separation forming a new kidney health technology company together with DaVita. We continue to expect this transaction to close in calendar 2023. And last month, we announced our intention to separate our combined patient monitoring and respiratory interventions business. We remain focused on active portfolio management, evaluating both potential additions and subtractions to further accelerate our growth and create value for our shareholders.
Now with that, I'll turn it over to Karen to discuss our second quarter financial performance and our guidance. Karen?
