Chairman and Chief Executive Officer at Medtronic
Hello everyone and thank you for joining us today. Q2 was another good quarter for us as we executed and delivered mid-single digit revenue growth. The underlying fundamentals of our business are strong, and our growth was broad based across multiple businesses and geographies, with Cardiovascular, Neuroscience and Medical Surgical, all growing mid-single digits and diabetes accelerating to high single digit growth.
Our new product launches are performing well and driving growth across many businesses, and we look ahead to the back half of our fiscal year. Those launches, combined with several recent regulatory approvals give us confidence in our ability to continue delivering dependable growth. And at the same time, we're executing on our comprehensive transformation, including enhancing our global operations, quality and supply chain.
And we're decisively allocating capital into fast growth medtech markets and fueling innovative technologies in areas like robotics, AI and closed loop systems that will drive our growth over the next decade. We're forging the path to durable growth as we execute on the actions needed to create long-term value for our shareholders.
So now let's get into the details behind our Q2 results. We continue to look at our portfolio of businesses in three categories -- established market leader businesses, synergistic businesses, and highest growth businesses. Looking first at the established market leaders, we had a very strong performances across Cranial and Spinal technologies, Surgical and Cardiac Rhythm Management. Combined, they made up just under half of our revenue and grew 6% organic again this quarter.
Starting with Cranial and Spinal Technologies, continued adoption of our AiBLE ecosystem is driving consistent above market growth. In Q2, we grew 7%. Digitization is transforming the competitive landscape in Spine, and we're leading the way with AiBLE.
With our global footprint of over 10,000 systems -- over 10,000 systems, we're over four times greater than the nearest competitor. We are the first and only solution with integrated AI based surgical planning with unit adaptive spine intelligence. Our Mazor robotics system is the first and only to offer bone cutting, a feature that was well received when we unveiled it at the North American Spine Society Conference in Los Angeles just last month. And we remain the clear leader in the intraoperative imaging and navigation space with our O Arm and Stealth Station technologies, both of which grew double digits in the quarter.
As surgeons adopt AiBLE, and we continue to expand our sales teams and invest in future innovation, we expect to maintain our leadership and extend our share gains in spine.
Now moving to surgical, we grew 6% here. There was broad-base strength across our surgical franchise. Hernia and Electrosurgery both grew in the double digits on strong sales of our ProGrip and Dextile mesh and Valleylab smoke evacuation systems. Advanced stapling and wound management, both grew mid-single digits.
Cardiac rhythm grew 4%, with high single digit growth in cardiovascular diagnostics and cardiac pacing. In pacing, our Micra leadless pacemaker franchise grew 13%, driven by our U.S. launch of our next generation Micra AV2 and VR2 devices. We're also seeing strong growth in conduction system pacing, an alternative to traditional single or dual chamber pacing. Our 3830 lead, the only approved lead for this novel form of pacing, grew strong double digits again this quarter.
And late in the quarter, we received FDA approval for our Aurora EV-ICD system, a game changer for the single chamber ICD space. Now we're ramping up our training of implanting cardiologists on the Aurora technology. So, Aurora delivers the benefits of a traditional ICD, including similar size, longevity and pacing features, but without the leads in the heart or veins. And these benefits can be realized with one device, and only one implant procedure. And just to drive this point home on size, there's a big difference here versus the competitor's device. And I mean big. Here's an x-ray of an Aurora EV-ICD patient with the competitors right next to it, just for comparison. So, in addition to all the clinical benefits of our EV-ICD, you can see that it's meaningfully smaller, and of course, lighter than the competitors. And here's the model that we're giving our reps to explain the difference to customers. Now, this is the size of the competitor's device, and we can actually pop out the Aurora to show how much smaller it actually is. So, it's like those nesting dolls, except here we just pop out. We get started with a big guy and then we go right to the small guy. So let me pop this out. So, you see inside the model, here's Aurora, much smaller, much lighter. And speaking of weight, we actually had to put a series of weights inside of here to get the bigger device to exactly replicate the weight of our competitors.
So, we're really excited about this as we've got a meaningfully, better option for patients. Our advantages will not only displace the competitors' device, but will expand the population far beyond the existing segment. We think this can grow to become $1 billion plus segment.
Turning to our synergistic businesses, combined they grew mid-single digits in Q2, and we had several standout performances. Aortic grew 9% on strong momentum in our Endurant AAA franchise following the 10-year real world durability data presented at the Charring Cross Symposium earlier this year.
Our coronary business grew 6% as we gained share in international markets on the continued rollout of our Onyx Frontier drug eluting stent. Cardiac surgery grew 9%, driven by strength in perfusion and cannula, as well as the Nautilus ECMO oxygenator.
Our endoscopy business grew 13%, driven by continued adoption of GI Genius. GI Genius uses the power of artificial intelligence to detect polyps in real time during a colonoscopy, integrating seamlessly into a GI doc's existing workflow. GI Genius results in a 50% reduction in missed polyps versus a standard colonoscopy, which plays an important role in the prevention of colon cancer.
Turning to businesses in our highest growth markets, cardiac ablation solutions grew 6% on strong market procedural growth. Now, over the coming years, we expect this business to be a very meaningful growth driver for Medtronic. We are leading the way in bringing Pulse Field Ablation catheters to market in both the focal and single shot segments. In focal PFA, we continue to ramp manufacturing of the Sphere-9 catheter and remain in limited market release in Europe. Sphere-9 can perform both PFA and RF ablation, and drives high-density mapping, all from the same catheter, and it integrates seamlessly with our differentiated Affera mapping system.
In the US. We expect to complete the 12-month follow up in the pivotal trial for Sphere-9 in the coming weeks, and then we'll prepare for FDA submission.
In single shot PFA, we just received CE mark for our PulseSelect catheter, and it will be commercially available early next calendar year. We are now the only company with approved catheters for both single shot and focal PFA, and in the U.S., the FDA is reviewing our PulseSelect submission, and we expect to be one of the first companies with a PFA catheter in the U.S. market.
Now, with our PFA catheters and the Affera map Nav system, combined with our leading Arctic Front cryosolution and differentiated FlexCath Cross transseptal system, we expect to drive strong, long-term growth in the fast growing $8 billion EP ablation space.
Now, turning to structural heart. Overall, the TAVR space continues to grow in the high single, low double-digit range. In Q2, we grew mid-single digits, which was below the market. Now, we declined slightly in the US. comping difficult prior year comparisons when we initially launched Evolut FX and customers purchased for stock. Yet we grew 4% sequentially, evidence of the strength of our product.
In Europe, we grew high single digits and received CE mark for Evolut FX at the end of the quarter. And in Japan, we continued to win share and grew in the mid 30s on the continued adoption of Evolut FX and expanded ESRD indication. Our Evolut platform has now shown superior valve performance compared to surgery in randomized trials that extend to five to 10 years after initial procedure. And last month, our landmark Evolut low-risk trial was presented at TCT and published in [Indecipherable]. The trial randomized patients to Evolut or best in class surgery. As you can see in this chart, Evolut, which is the blue line, had a lower rate of death or disabling stroke, and the difference continues to diverge each year, going from a 2% difference at two years to 2.9% at three years, and growing to a 3.4% difference at four years. This resulted in a 26% reduction in death or disabling stroke with Evolut at four years, and no other transcatheter valve has shown better valve performance and outcomes compared to surgery.
Valve design matters, and this differentiates us competitively. Physicians understand this data. This is compelling to them and it's compelling to patients. So, as we look ahead, we expect the combination of this data coupled with the global rollout of Evolut FX to drive our TAVR growth above market.
In neurovascular, we grew high single digits when you exclude sales in China, where the coils market is subject to volume-based procurement. We continue to see very strong growth in flow diversion, which was up low 20s globally. This is being driven by our innovative Shield technology for treating brain aneurysms, which is available on both the Pipeline Flex and Pipeline Vantage flow diverters.
In robotic surgical technologies, we increased our installed base as we continue the international launch of our differentiated Hugo robotic system. In the U.S., our EXPAND Euro Pivotal trial continues to enroll and is on plan, and we're happy to announce that we have FDA approval to start our U.S. Hernia Indication Pivotal trial for Hugo.
Adoption of Hugo is positive with surgeons appreciating features that are core to the system, including Touch Surgery Enterprise Digital Technology. This AI powered video solution, currently available for both robotic and laparoscopic surgery, creates a new paradigm for case review and performance improvement. We've already deployed it in over 20 countries, and we're continually developing our connected digital ecosystem, and we're excited about the upcoming launch of Touch Surgery Livestream to enable live streaming and sharing of procedures securely and seamlessly. We expect Hugo equipped with advanced digital capabilities to be a meaningful growth driver for us in the years ahead.
We believe surgeon preference with our open console and modular design, our leading position in minimally invasive surgery and instrumentation, our connected digital ecosystem and data-enabled insights, along with our world-class surgical training program and partnerships, will meaningfully advance the low penetration of robotic surgery around the world.
And in diabetes, our customer base is expanding sequentially as users around the world purchase the MiniMed 780G system. 780G is the only AID system to make correction boluses every five minutes, offer flexible glucose targets as low as 100, and feature meal detection technology. This combination is resulting in high time and range. Users are achieving or exceeding their glycemic targets, and importantly, realizing the relief that comes from burden reduction in their diabetes management.
In Q2, our diabetes business grew 7%, its highest growth in 10 quarters or five years when you exclude the COVID comp in Q4 of FY '21. In international markets, we continue to see robust mid-teens growth, driven by the recurring revenue from CGM and consumable sales to customers that have adopted our AID technology. And in the U.S. this was our first full quarter of the 780G launch, and we're meeting or exceeding our launch goals. Our U.S. pump sales increased over 30% sequentially. The number of unique 780G prescribers has increased over 20% since last quarter, with many returning to Medtronic as they learn about the differentiated outcomes users are getting with 780G.
And we also continue to see very high CGM attachment rates in our 780G installed base, meaningfully above the rates prior to launch. All of these leading indicators give us confidence that we'll see a significant ramp in our CGM and consumable sales in the U.S., and return to year over year growth in the back half of this fiscal year.
We've been driving this turnaround, and as we look ahead, we expect diabetes to drive even more meaningful growth for us. We expect the majority of the intensive insulin management space to move to smart dosing through either AID systems or Smart MDI. And we're well positioned to take advantage of this trend, as we're the only company investing in a complete ecosystem of differentiated technology for people living with diabetes, including next generation durable pumps, smart pens, patch pumps, sensors and algorithms.
So, with that, let's go to Karen for a deeper look at our Q2 financial performance and our fiscal '24 guidance raise. Karen?