Good morning and welcome to Medtronic’s First Quarter Earnings Conference Call. At this time, all participant lines have been placed in a listen-only mode. After the speakers’ remarks, there will be a question-and-answer session. More instructions will be given at that time. Thank you.

It is now my pleasure to turn the call over to Ryan Weispfenning, Vice President of Investor Relations.

Please go ahead Sir?.

Thank you, Maria. Good morning and welcome to Medtronic's first quarter conference call and webcast. During the next hour, Omar Ishrak, Medtronic Chairman and Chief Executive Officer and Gary Ellis, Medtronic's Chief Financial Officer will provide comments on the results of our fiscal year 2016 first quarter, which ended July 31, 2015.

After our prepared remarks, we’ll be happy to take your questions. First, a few logistical comments, earlier this morning, we issued a press release containing our financial statements and our revenue by division summary. We also updated our combined historical Covidien-Medtronic financial statement presentation.

You should also note that some of the statements made during this call maybe considered forward-looking statements and that actual results might differ materially from those projected in any forward-looking statement.

Additional information concerning factors that could cause actual results to differ is contained in our periodic reports filed with the SEC and we do not undertake to update any forward-looking statement. In addition, the reconciliations of any non-GAAP financial measures are available on the Investors portion of our website at medtronic.com.

Unless we say otherwise, references to quarterly results increasing or decreasing are in comparison to the first quarter of fiscal year 2015.

In addition unless we say otherwise, all year-over-year revenue growth rates including revenue growth ranges given on today's call are adjusted for the extra selling week in the first quarter and given on a comparable constant currency basis, which adjusts for the negative effect of foreign currency translation and includes Covidien Plc in the prior year comparison aligning Covidien’s prior year monthly revenue to Medtronic’s fiscal quarters.

These adjustment details can be found in the reconciliation tables included with our earnings press release. In addition all foreign currency translation calculations are done on a comparable basis. With that, I’m now pleased to turn the call over to Medtronic Chairman and Chief Executive Officer, Omar Ishrak..

Good morning, and thank you, Ryan, and thank you to everyone for joining us. This morning we reported first quarter revenues of $7.3 billion, which represents growth of 12% at the upper end of our mid single digit range after adjusting for the extra selling week in our first quarter. Q1 non-GAAP diluted earnings per share was $1.02.

Q1 was another strong quarter where our employees around the world executed and delivered results that were at the high end of our objectives. The underlying fundamentals of our business remain solid with robust contributions from all four of our groups.

CVG and diabetes were in the high single digits while RTG and MITG grew in the mid single digits after adjusting the growth rates for the extra selling week this quarter. From a geographic perspective, our performance in the U.S. was particularly strong with high single digit revenue growth again after adjusting for the extra week.

Our teams continue to execute on important product launches and our customers around the world are responding to our differentiated healthcare solutions that seek to demonstrate both clinical and economic value. We remain focused on our three growth strategies; therapy innovation, globalization and economic value.

These strategies aim to create a competitive advantage for Medtronic by* capitalizing on three long-term trends we see playing out in healthcare; namely the continued desire to improve clinical outcomes, the growing demand for expanded access to healthcare and the optimization of cost and efficiency in healthcare systems, including the move to value-based healthcare.

We believe our three growth strategies are the right ones to achieve long-term growth and the resulting diversification, differentiated approach and competitive advantages will enable us to deliver on our baseline financial expectations.

We've translated each of our strategies into three independent growth vectors with clearly stated near term objectives for each one. We continue to quantify and communicate our performance against these goals on a regular basis. In therapy innovation, we delivered above goal performance again in Q1.

With the new therapies growth vector contributing approximately 1,020 basis points for our total company growth, including the benefit of the extra week. But even after adjusting for the extra week, this result was well above our goal of 150 to 350 basis points of growth. We're seeing strong acceptance for our new therapies across all groups.

In addition our pipeline remains full with a number of new therapies and services expected to come to market over the next few years.

In our cardiac and vascular group, the recent launches of our CoreValve transcatheter valve, IN.PACT Admiral drug-coated balloon and Micra Transcatheter Pacing System combined with the continued growth of Reveal as well as the upcoming U.S. launch of Evera MRI ICD are all expected to drive strong growth this fiscal year.

Our Minimally Invasive Therapies Group is driving growth with its differentiated Endo GIA Reinforced Reload and LigaSure Maryland Jaw and also has a full pipeline of minimally invasive innovations that are expected to launch over the coming quarters.

In Restorative Therapies, we're building momentum from new products in Neurovascular such as the Pipeline Flex device for intracranial aneurysms and Solitaire FR stent thrombectomy device. In RTG surgical technologies division, a number of new imaging and navigation products are expected to drive growth over the coming quarters.

Our Diabetes Group is realizing growth from its MiniMed 530G and 640G systems and has a number of advancements in the pipeline as we continue to drive towards an artificial pancreas. Taken together we feel confident we can deliver sustained growth from new therapies, contributing significantly to our baseline goal of mid single digit revenue growth.

Turning to globalization, our emerging markets growth vector contributed approximately 190 basis points for our Q1 total company growth including the benefit of the extra week. After adjusting for the extra week, this result fell below our baseline goal of 150 to 200 basis points from the emerging market growth vector.

This was largely due to a planned delay in distributor sales in Saudi Arabia in preparation for our channel optimization move. We have a controlling interest in the newly formed joint venture with our largest distributor in Saudi Arabia.

Starting in the second quarter, this joint venture is expected to deliver incremental revenue and improved margins over our historical performance in Saudi Arabia. While the Middle East and Africa region was weaker this quarter owing to the delayed distributor sales we did see notable improvements in China, India and Russia.

Mainland China grew in the low double-digits above our estimated growth of the China medical device market. Our China results benefitted from the initial implementation of our channel optimization strategy in the region, which is focused on transitioning our distribution channel to include consolidated platform distributors.

We also saw improvements in India, which grew in the mid teens and Russia, which grew in the upper teens and over the long term, we believe strongly that the penetration of existing therapies into emerging markets represents the single largest opportunity in Medtech.

In addition to standard market development activities, our differentiated approach of local channel optimization, government contracts and private partnerships are all aimed at unlocking this opportunity.

Turning to economic value, our services and solutions growth vector contributed approximately 50 basis points to our growth in Q1 on a legacy Medtronic basis or 30 basis points in an overall Medtronic basis.

While this overall result was below our goal of 40 to 60 basis points we intend to grow into our goal of services and solutions are adopted by the Legacy Covidien businesses. In Cath Lab Managed Services, we're generating rapid growth as we're fast becoming the ideal partner for hospitals that seek to drive operational efficiency.

We’re now expanding our Cath Lab Managed Services business globally with new accounts in Eastern Europe, Turkey and Saudi Arabia.

Since the program is launched two years ago, we have completed 59 long-term agreements with hospital systems representing $1.3 billion in revenue over an average plan of six years and we have a large number of potential contracts at various stages of negotiation with providers around the world.

In addition we’ve now signed the first three operating room managed services deals in Europe each spanning nine years. ORMS applied the CLNS business model to an operating room setting, utilizing the breath of MITG’s products and expertise.

In diabetes, Q1 was the first full quarter of operating Diabeter, a Netherlands based diabetes clinic and research center that we intend to expand across Europe.

With the Diabeter and our continued strong progress with partnerships such as IBM, we continue to transform our Diabetes Group from a market leading pump and sensor company to a leading providing of holistic diabetes management solutions that we believe will expand access, integrate care and improved outcomes so that people living with diabetes can enjoy great freedom and better health.

We continue to focus on providing solutions to providers that go beyond purely medical devices including taking a leadership position in aligning our solutions to new value based payment models that are emerging in healthcare. We were pleased to see the U.S.

center from Medicare & Medicaid Services proposed bundle payment initiative for hip and knee replacements. While Medtronic does not participate in hips and knees, CMS may well broaden these bundle payment initiatives to other care pathways where we do have leadership positions.

Proposals like this from CMS demonstrate that a move to value-based healthcare is underway. The proposal mandates the participating hospitals be at risk for the cost and quality of the joint replacement surgery and 90 days of post acute care.

As bundle payments take hold, we expect to offer unique comprehensive solutions to healthcare providers, encompassing our devices, associated diagnostics and home-based patient monitoring programs, all wrapped in risk sharing business models.

Next turning to our integration efforts, the integration of Covidien into Medtronic continues to go extremely well. As I've mentioned before, we've organized our activities in four clearly defined areas; preserve, optimize, accelerate and transform.

We've been successfully achieving our first and highest priority preserve as evidenced by the continued revenue growth across all of our groups and geographies. We continue to monitor talent retention and overall employee satisfaction both of which remained strong.

Our second priority optimize, is focused on achieving the expected minimum of $850 million in cost synergies by the end of FY'18.

As planned, we've already completed over half of our value capture initiatives in the fiscal year and these savings are expected to build as we go through the year with an FY'16 goal of achieving $300 million to $350 million in savings.

We're executing in our indirect sourcing plans, where we're using best case contracts and improved purchasing power to achieve meaningful savings. We’re also realizing significant real estate savings having already closed over 60 facilities most of which were redundant field offices or distribution centers.

Our third priority accelerate, is related to a disciplined process of assessing and prioritizing the numerous revenue synergy opportunities, which include leveraging the legacy Covidien's peripheral vascular sales force to drive sales of drug-coated balloons and leveraging Covidien's Neurovascular Division to enhance our Neuroscience strategy in RTG.

In accordance with our plan, we have aligned the sales forces and integrated the back offices expeditiously in both of these areas, including moving the North American commercial operations of both businesses onto Medtronic’s enterprise system SAP. Our fourth and final priority is transform.

We're positioning the company to play an increasingly larger role in delivering higher value in healthcare, aligning our solutions to the emerging value-based payment markets and partnering with new stakeholders to lead and succeed in the transforming healthcare marketplace.

An early example is our operating room managed services initiative in MITG where we take over the management and operations of hospital rooms -- hospital operating rooms. While we had a number of successes in Q1, we also faced some challenges including underperformance in our U.S. Core Spine business.

Some of our recent product roll outs are taking longer to reach scale, but we’re seeking to actively address our performance through a series of near, medium and longer term actions. In the near term, we intend to sign more large system deals to provide procedural volume share by using our new integrated RTG commercial organization.

Over the medium term, we'll translate our surgical synergy initiative into a more specific commercial offering and focus the efforts of our new integrated commercial organization in promoting it.

Over the longer term, we expect to see the impact of the changes we’re making to our product development processes, which include incorporating several methods that have been successful in other parts of the company. Turning to the P&L, Q1 non-GAAP diluted earnings per share was $1.02.

Foreign currency translation continues to be a significant headwind affecting our Q1 EPS by $0.13 to $0.14. On a constant currency basis, our non-GAAP diluted EPS growth represented over 400 basis points of leverage, above our baseline expectation of 200 to 400 basis points.

We delivered $1.1 billion of free cash flow in Q1 after adjusting for certain litigation payments and non-recurring tax payments. We remain disciplined in allocating our capital with a focus on creating long term shareholder value.

As a result of the Covidien acquisition, we've increased ability to deploy our cash in the U.S., solidifying our commitment to return 50% of our free cash flow to shareholders. In June, we announced a 25% increase in our dividend, a 38th consecutive year of increasing our dividend.

We expect to not only grow our dividend over time with earnings growth, but to increase our dividend payout ratio to 400% on a non-GAAP basis within the next few years. As an S&P dividend aristocrat, we remain focused on delivering dependable long-term dividend growth. In addition, we remain disciplined in evaluating potential M&A opportunities.

Any investment we must make -- any investment we make must be aligned with and ultimately strengthen one or more of our three growth strategies while at the same time offer high return metrics and minimize near-term shareholder dilution. Gary will now take you through a more detailed look at our first quarter results.

Gary?.

Thanks Omar. First quarter revenue of $7.274 billion increased 70% as reported, 12% on a comparable constant currency basis after adjusting for a $529 million unfavorable impact of foreign currency and including the favorable impact from the extra week or at the upper end of our mid single digit range after adjusting for the extra week.

Our first quarter results included an extra week due to our 52, 53-week fiscal year. While the exact benefit of the extra week is difficult to estimate, based on our analysis we calculate that it added approximately six percentage points of growth on the quarter or approximately 1.5 percentage points of growth for the full fiscal year.

Legacy acquisitions and divestitures from both Medtronic and Covidien contributed 30 basis points net to Q1 growth. Q1 diluted earnings per share on a non-GAAP basis were $1.02, an increase of 3%. Q1 GAAP diluted earnings per share were $0.57, a decrease of 34%.

In addition to the $372 million after-tax adjustment for amortization expense, this quarter had several GAAP to non-GAAP after-tax adjustments primarily related to the Covidien transaction.

A $165 million charge related to amortization of the remaining inventory purchase price step-up, a $53 million charge for acquisition-related items and a $52 million net restructuring charge. Our Cardiac and Vascular Group, which accounted for 35% of our total company revenue grew in the high single digits.

This was a result of strong low double digit growth in Cardiac Rhythm & Heart Failure and mid single digit growth in both coronary and structural heart and aortic and peripheral vascular divisions. Cardiac Rhythm & Heart Failure or CRHF had strong above market low double digit growth again in Q1.

We estimate the overall CRHF market continues to grow in the low to mid single digits.

The market is showing strong preference for our leading differentiated technologies, including Evera, XT, CRT-D with its AdaptivCRT algorithm and Attain Performa Quadripolar Lead, the Arctic Front Advance Cryoablation System, the Evera MRI ICD in Japan and revealed LINQ insertable cardiac monitor in the U.S. and Europe.

Strong demand for our Reveal LINQ resulted in diagnostic growth in the high 20s and is also resulting in meaningful pacemaker pull-through. In Europe, the launch of our Premium Micra Transcatheter Pacing System is off to a great start. Micra is one-tenth the size of a traditional pacemaker and is placed directly inside the heart.

Looking ahead the robust productivity of our CRHF pipeline will continue as we expect to launch the Evera MRI ICD in the U.S. imminently. In addition the MRI safe version of Viva CRT-D in the U.S.

and Europe, the full market release of the Arctic Front Advance Cryoablation System in Japan and the full market release of the third generation Arctic Front ST Cryo Balloon in Europe are all expected by the end of this fiscal year.

Coronary and Structural Heart or CSH grew in the mid single digits driven by growth in Transcatheter Heart valves, drug-eluting stents and balloons. Transcatheter heart valves grew in the low 30s globally and in the high 30s in the U.S. In Q1 we received U.S. FDA approval for Evolut R, the first and only recashable heart valve in the U.S.

and the first commercial implant started late in the quarter. Our team is focused on training U.S. Centers on this next-generation valve with its differentiated 14-French equivalent delivery catheter and we expect to be in all of our current U.S. accounts by the end of the calendar year.

In Europe Evolut R is driving strong growth helping us gain share in Western Europe and we estimate we now hold the number one TAVR position in 11 European countries. In Japan we received PMDA approval for CoreValve and are anticipating reimbursement approval and launch in our third quarter.

Last week we announced that we've entered into an agreement to acquire Twelve, a development stage company that is executing first in human clinical evaluations of a unique transcatheter mitral valve replacement design that we believe represents leadership technology in this phase and accelerates our time to market in this important new growth area.

In drug-eluting stents, we grew in the low single digits and are holding global share on the strength of Resolute Onyx in CE mark countries and Resolute integrality in the U.S. It is worth noting that we continue to grow our U.S. DES share as an increasing percentage of U.S.

DES sales are included in multi-line CVG customer agreements that leverage our broad cardiology product lines, those innovative therapies and wrap around program and services. In Q1 we also commenced enrollment in the two important clinical trials.

Our first in human trial for our drug filled stent and our spiral HTN off and on med study and renal denervation. In Aortic and Peripheral Vascular Division or APVD, revenue grew in the mid single digits with low double digit growth in peripheral vascular partially offset by low single digit declines in aortic.

In peripheral, we continue to execute a strong U.S. launch of our IN.PACT Admiral drug coated balloon and maintain our leading market position on the strength of our exceptional clinical data. Q1 was the first full quarter of launch utilizing our combined Medtronic and legacy Covidien peripheral sales force.

We expect to file for expected indications for IN.PACT Admiral with a PMAS U.S. filing in the second half of this fiscal year for in-stent restenosis indication as well as a CE mark filing by the end of this fiscal year for an AV fistula indication.

In atherectomy, we continue to see strong growth in new accounts from HawkOne Directional Atherectomy System, which has helped us stabilize share and see share gains above the knee. Last month we started the U.S. launch of the Entrust Delivery System, which is used to place our EverFlex self-expanding peripheral stent.

In our Aortic business while we faced increased competitive pressure outside the U.S. and felt the impact of market reimbursement cuts in Japan, the business grew in the U.S. driven by the continued market adoption of our Endurant IIs Triple A stent graft, which resulted in sequential share gains.

During the quarter our aortic business announced a number of important developments in both its organic and inorganic product pipeline including first implants of our next generation Endurant AAA stent graft platform, initiation of the U.S.

feasibility clinical study for the valiant LSA branch, thoracic stent graft platform, acquisition of the Aptus Endo Anchor product line and the initiation of a joint development and staged acquisition agreement with Arsenal Medical to commercialize the company's novel and aneurysmal sac billing pump technology in AAA stent grafting applications.

Now turning to our Minimally Invasive Therapies Group where it grew in the mid single digits and accounted for 34% of the total company revenue. MITGs revenue performance was driven by high single digit growth in surgical solutions and low single digit growth in patient monitoring and recovery.

The Group benefited from strength in surgical volumes in the U.S., which has been incurring now for the past three quarter. Surgical Solutions grew in the high single digits with high single digit growth in advance surgical, low single digit growth in general surgical as well as low double digit growth in early technologies.

Advance surgical strong quarter was driven by balanced low double digit growth in both advance stapling and advanced energy, as the business benefited from new products, the continued trend of surgical procedures moving from open to minimal invasive and the underlying strength of surgical volumes in the U.S.

Early Technologies was driven by strong growth in GI solutions and interventional lung solutions. Patient monitoring recovery grew in the low single digits. Respiratory and patient monitoring, nursing care, and patient care and safety all grew in the low single digits. Respiratory and patient monitoring growth was driven by strong U.S.

patient monitoring sales. Nursing care had strong sales in internal feeding. Now moving to our Restored Therapies Group; revenue grew in the mid single digits and accounted for 25% of total company revenue.

Results were driven by mid 20s growth in neurovascular and high single digit growth in surgical technologies with low single digits growth in Spine and Neuromodulation. Spine grew in the low single digits in line with the global market. However, in the U.S. our core spine business underperformed the market.

We recently realigned our RTG commercial sales management and we expect these changes to result in better alignment of incentives and an improved focus on cross-selling in our surgical synergy program, which integrates our spine implants and surgical technologies imaging and navigation equipment.

We also expect the core spine business to improve as its numerous recent and upcoming product launches reach scale, including our alleviate expendable cage and Solera Voyager System in thoracolumbar as well as our Divergence Stand-Alone Interbody Cage the ZEVO Anterior Cervical Plate System, the PRESTIGE LP Cervical Disc and the ANATOMIC PTC interbody spacer in cervical.

In neuromodulation, revenue increased in the low single digits driven by mid single digit growth in Gastro/Uro and DBS and low single digit growth in Pain stim. Our U.S. Pain stim business grew in the mid single digits, in line with the market.

In pumps for Pain stim spasticity we have implemented the required changes to the distribution processes and are executing against our commitments under the consent decree we received in late April. Following an initial decline in Synchromed II implants, we saw stabilization in the back half of the quarter.

In Surgical Technologies, revenue grew in the high single digits driven by mid teens growth in advanced energy, high single digit growth in Neurosurgery and mid single digit growth in ENT.

Surgical technologies continues to benefit from diversified growth coming from disposals, service revenue and the strong adoption of new products including the StraightShot M5 Microdebrider and NuVent sinus balloon. Our Neurovascular Division posted strong revenue growth in the mid 20s.

New products such as our Pipeline Flex device for the treatment of Intracranial Aneurysms and SOLITAIRE FR 4/40 revascularization device for stent thrombectomy are driving solid double-digit growth in Flow Diversion and Stents. We're also seeing increased pull through of our neurovascular access products given the strength of pipeline and SOLITAIRE.

Earlier this week, we acquired Medina Medical and its Aneurysm abolition mesh technology for hemorrhagic stroke, which we believe can disrupt the Twelve market. Now moving to our Diabetes Group, revenues grew in the high single digits and accounted for 6% of total company sales.

Low double digit growth and Intensive Insulin Management Division was driven by continued strong adoption in the U.S. of the MiniMed 530G insulin pump system was the Enlite CGM sensor. Growth was also driven by the continued international launch of the next generation MiniMed 640G insulin pump system with enhanced Enlite CGM sensor.

We continue to make progress of bringing this technology to the U.S. and plan to submit the PMA for this system to the FDA later this calendar year. In our Non-Intensive Diabetes Therapy Division, revenue growth in the high 60s was driven by sales of professional CGM and infusion ports for type 2 diabetes and our diabetes services.

In our Diabetes Services and Solutions division, high single digit growth was driven by strong consumable sales in the U.S. Our Diabetes Group announced several new partnerships in the quarter including Samsung, Becton Dickinson and Gluco.

We also received the FDA approval in Q1 for the MiniMed Connect, which allows users to view their insulin pump and CGM data on a smartphone and provides remote monitoring and text message notifications for their care givers. This product is expected to launch in the second quarter.

Turning to rest of the income statement, after adjusting for certain non-GAAP items mentioned earlier, the Q1 operating margin was 27.2%, which included 110 basis point negative impact from foreign currency. On a comparable constant currency basis, this represents a 40 basis point improvement in operating margins versus the prior year.

Reflecting a relatively stabled gross margin a 110 basis point improvement in SG&A expense as a percent of sales and a negative 60 basis point change in net other expense due to onetime items all on a comparable constant currency basis.

Included in the Q1 operating margin were non-GAAP gross margin SG&A as a percent of sales and R&D as a percent of sales of 69.3%, 33.7% and 7.7% respectively. It is worth noting that the non-GAAP gross margin SG&A and R&D were negatively affected by 130 basis points, 30 basis points and 40 basis points from foreign currency respectively.

Also included in the operating margin was net other expense of $61 million including net gains from our hedging program of $64 million. We hedge the majority of our operating results in developed market currencies to reduce the volatility and our earnings from foreign exchange.

In addition a growing portion of our profits are un-hedged especially emerging markets currencies, which can create some modest volatility in our earnings.

Assuming current exchange rates for the remainder of the fiscal year, which includes $1.12 Euro and 1.22 Yen, we expect the FY'16 net other expense to be in the range of $185 million to $235 million, which includes an expected impact from the U.S. medical device tax of approximately $210 million.

For Q2 FY'16, we expect net other expense to be in the range of $55 million to $65 million based on the previously mentioned exchange rates.

Overall, we continue to expect the full year FY'16 operating margin to be in the range of 28% to 29% on an as reported basis, which includes over 100 basis of margin improvement on a comparable constant currency basis offset by a similar amount of negative FX impact.

This results in approximately 400 basis points of operating leverage on a comparable constant currency basis related to the cost synergies, which are the majority which are now expected in SG&A as a result of the Covidien acquisition as well as the continued execution on the legacy leverage initiatives of both Covidien and Medtronic.

We continue to expect operating margins in the first half of the year to be below the full-year range improving in the back half of the year as the foreign exchange headwinds lessen and cost synergies accelerate.

Below the operating profit line, Q1 net interest expense was $191 million a significant increase from the prior year comparable quarter, but consistent with Q4 FY'15 as we are including the incremental interest expense from our December 2014 $17 million bond offerings.

At the end of Q1, we had approximately $18 billion in cash and investments and $35.6 billion in debt. Based on current rates, we would expect Q2 net interest expense to be in the range of $175 million to $185 million. Our non-GAAP nominal tax rate on a cash basis in Q1 was 18.1%.

On a full-year basis, we continue to expect our FY'16 non-GAAP nominal tax rate on a cash basis to be in the range of 16% to 18% and we expect to be at the higher end of this range until the presently expired U.S. R&D tax credit is reinstated.

In Q1 free cash flow was $592 million, which includes $92 million of certain litigation payments as well as $407 million of non-recurring tax payments that primarily relate to an IRS settlement. We remain committed to returning 50% of our free cash flow, excluding one-time items to shareholders and also continue to target an A credit profile.

In Q1, we repurchased $750 million of our ordinary shares and paid $538 million in dividends. As of the end of Q1, we had remaining authorization to repurchase approximately 100 million shares. First quarter average daily shares outstanding on a diluted basis were 1.436 billion shares.

For FY'16, we continue to expect diluted weighted average shares outstanding to be in the range of 1.433 billion to 1.437 billion shares including approximately 1.433 billion shares in Q2. Let me conclude by providing our fiscal year 2016 revenue outlook and earnings per share guidance.

We continue to believe that full-year revenue growth in the range of 4% to 6% on a comparable constant currency basis plus the incremental approximate 150 basis point benefit from our Q1 extra selling week remains reasonable.

This operational revenue growth expectation is consistent with our stated baseline financial goal of consistently delivering mid single digit revenue growth.

Our revenue outlook assumes CVG, MITG, and RTG grow in the mid-single digits and diabetes grows in the upper-single to low-double digit range all on a comparable constant currency basis and including the benefit of the extra week.

While we cannot predict the impact of currency movements to give you a sense of the FX impact if exchange rates were to remain similar to the beginning of this week for the remainder of the fiscal year, then our FY'16 revenue would be negatively affected by approximately $1.3 billion to $1.5 billion, including a negative $425 million to $475 million impact in Q2.

Turning to guidance on the bottom line, we continue to expect cash earnings per share in the range of $4.30 to $4.40, which includes an expected $0.40 to $0.50 negative foreign currency impact based on current exchange rates and approximately $300 million to $350 million of targeted value capture synergies from the Covidien acquisition.

As you think about your FY'16 models and quarterly gating, it is worth noting again that a higher percentage of the negative FX impact is in the first half of the year while more of the value capture synergies to occur later in the fiscal year.

While we don’t give quarterly earnings per share guidance I would note that Q1 and Q2 are often similar, but this year Q1 profitability was favorably affected from the extra week and thus we would expect street models to adjust Q2 down a few pennies from Q1.

As in the past, my comments on guidance do not include any unusual charges or gains that might occur during the fiscal year. I would now turn it back over to Omar..

Thanks Gary. And before opening the lines for Q&A, I’d like to briefly conclude by reiterating that Q1 was a strong quarter and we feel good about the remainder of the fiscal year. We remain focused on reliably delivering in our baseline financial model.

Mid single digit constant currency revenue growth, EPS growth of 200 to 400 basis points faster than revenue on a constant currency basis and returning 50% of our free cash flow to shareholders.

As the world continues to move towards value based healthcare, Medtronic is well positioned to provide medical technology solutions that improve outcomes while lowering cost. In fact using biomedical engineering to improve outcomes is the essence of the Medtronic mission that our Founder Earl Bakken drafted 55 years ago.

To alleviate pain, restore health and extend life, this is something I am extremely passionate about and dedicate to. As our more than 85,000 employees, we're confident that our three growth strategies, therapy and innovation, globalization and economic value are the appropriate strategies to achieve our mission.

The focus on these strategies is expected to result in both revenue diversification and sustained revenue growth. We expect to further leverage this revenue growth with our productivity initiatives, which have been significantly improved by our transmissional acquisition of Covidien.

We expect to deliver consistent and reliable results, which when combined with our solid underlying fundamentals, strong secular growth drivers and disciplined capital allocation will enable us to create long-term dependable value in healthcare. With that, we'll now open the phone lines for Q&A.

In addition to Gary, Geoff Martha, who recently replaced Chris O'Connell as the President of our Restorative Therapies Group is here.

Geoff is a proven leader who has had responsibility for developing Medtronic's growth strategies, executing the Covedian transaction and overseeing the integration and I am confident in his ability to leverage the opportunities within RTG.

Also joining us today to answer your questions is Mike Coyle, President of Cardiac & Vascular Group, Bryan Hanson, President of our Minimally Invasive Therapies Group; Hooman Hakami, President of our Diabetes Group and also given the growing importance of our Cath Lab Managed Services Business, Rob Ten Hoedt.

EVP and President, Europe, Middle East, and Africa Region is also present. We are rarely able to get to everyone's questions, so please limit yourself to only one question and one follow up. If you have additional questions please contact our Investor Relations team after the call.

Operator, first question please?.

[Operator Instructions] Our first question comes from David Lewis of Morgan Stanley..

Hi, good morning. Just had a quick question for Omar, then one for Gary, Omar just your business momentum has been very, very strong and that continued obviously in this quarter and you've always talked about 4% to 6%, I guess on a go-forward basis, what's now providing as you look about the product portfolio.

What gives you that confidence in that 4% to 6% and what has to go right to continue deliver on the upper end of that range over the next several quarters given some of your larger products are beginning to anniversary or the costs are getting more challenging?.

Well no, we think that we have got a pipeline of new products coming out that will replace the products that are lapping in growth and besides some of them have continued momentum even after the anniversary period like the transcatheter valve where the market continues to grow.

But as I pointed out in almost every group, we have a very strong pipeline of products coming out all the way from diabetes team to RTG minimally invasive CVG all of them have several new products in the pipeline. So we see this new therapies momentum continuing.

And in addition I am looking to supplement that with significant growth from both emerging markets as well as services and solutions, which kind of diversify our sources of revenue and can contain any surprises that may come up and so we think that that range is a pretty reliable range and after the acquisition of Covedian it's given us even more diversification..

Okay.

So the upper end of the range Omar is not necessarily out of contention here even over the next several quarters?.

Well I would say the whole range, but you're right. The momentum right now suggests that the upper end of the range is the place to go, but the range is there for a reason and so it's -- we're going to stick to the mid single digit range and we'll do everything we can to get to the upper end of the range.

And given our momentum especially with new therapies and given the fact that in both services and solutions and emerging markets we expect our momentum to actually pick up in the back half of the year. There is a good possibility we could drive the higher end, but the ranges like I said is there for a reason..

Okay. Omar, very clear. Thank you. And then Gary just one comment on the quarter, obviously revenue momentum is very strong. You had the extra selling week, I think there some are saying and in this particular quarter with the extra selling week there could have been more leverage to the bottom line. Gross margins were fine.

There was some -- it looks like some discretionary spending obviously some currency, can you just give us a sense of why we wouldn't have seen more upside in the first quarter and how we're tracking versus some of the Covedian synergies. We talked about the $850 million number. I think there is an expectation that number could have upside.

So this quarter relative to the extra selling week will obviously not have more leverage and how you're feeling about potential upside to the Covedian synergy number as we progress through the balance of the year, thank you?.

Yes David, I think you addressed kind of why we -- you didn't see quite as much of it hitting the bottom line here in Q1. Obviously we saw very strong growth both at the topline and we feel good about where we ended up on the bottom line, but there is obviously a lot of headwind.

The majority of the biggest one being obviously the foreign exchange as we've highlighted foreign exchange especially in Q1, but Q1 and Q2 is probably at the peak here in these next couple of quarter and we clearly saw that in Q1 and we think that will probably become little bit less as we go through the year.

In addition, the synergies are occurring basically and exactly as we expected and back to you point we're probably a little bit ahead of schedule and achieving the overall synergies that we've laid out, but we always knew that a majority of those were going to be backend loaded in the quarter here, excuse me, in the year because it just takes time for the physicians to be consolidating or having pulled together two different companies.

There is lot of investments being made as we do that and so we knew that the synergies we have no expectation that we won't meet or exceed the $850 million that we've laid out as an organization.

We're well on our way towards that schedule, but we knew from a timing perspective that that's a little bit higher, more in the backend of the year as you would expect and so we weren’t going to get much benefit here obviously in Q1 to offset some of the foreign exchange issues.

So in our view, yes, you might have expected a little bit more to the bottom line especially on the strength of the revenue growth, but there is a lot of moving parts that we're still dealing with here as we pull these two companies together and everything is on schedule, everything is going as we would expect, but the timing is also as we expected and we expected it to be a little bit less in few months and improving as we go through the fiscal year..

Okay. Thank you very much..

Next question please..

Our next question comes from Mike Weinstein of JPMorgan..

Thank you, guys and congratulations again on the quarter. Let me focus again on a couple of businesses. One I wanted to touch on was neurovascular, which you said grew mid 20s and obviously has accelerated on the back of the stroke trials that came out over the past year.

Can you just talk about how you see that market for stroke developing and the implications for sustainability of the recent performance? And then second, if you can give us any more insight into the upside performance within CRM, how much of that came from Reveal, which has obviously been a very big driver, Reveal LINQ, which has obviously been a big driver last few quarters versus kind of the underlying base CRM business, the ICD market, the pacemaker market..

I am going to give you a little overview and then I'll ask Geoff and Mike to help out with more detail here, I think Mike from a overall perspective the stroke market is one of our biggest opportunities and we're very excited about it.

We think we're in the early stages of penetration with our new therapies and so we expect the momentum just from the therapy itself to continue.

But looking into the future, we're looking at the entire stroke care pathway more carefully and we've got other products that are also impacting the stroke disease area, which we expect will have some level of pull through from our business in the stroke market.

But beyond that I think both Geoff and Mike can add more color to that and certainly Mike can add their color to the CRM question. So Geoff will you start..

Yes sure, we're seeing a lot of the growth in the last quarter come from the ischemic stroke market here and thrombectomy and we see that market continuing to grow worldwide in the 25% to 30% range and in the U.S. even a little higher than that.

And obviously the growth that's coming now in the stroke intervention piece here is from the clinical evidence that’s come out recently and we see a number of barriers though and that’s driving a lot of growth and there are number of barriers though that we're working on that I’d like to comment on.

One is the diagnostic space and I’m going to let Mike comment on that because there is a play there for our diagnostic in this area, but then there is others like the ER physician education, EMS routing, some focus on neurologists and these are areas that in addition to the intervention, we’re focused on all of those areas with our team at Irvine.

And so we’re feeling very good about it. You saw the in the Hemorrhagic space that’s all ischemic. You saw we did this Medina acquisition, which is around mesh coils, which should help us in the Hemorrhagic space, but we're not leading right now and we think this will help us in a big way there as well. So we feel very bullish about it.

Just based on the clinical data, but there is a lot of other levers that we're working on like I mentioned and may be Mike if you want to comment on the diagnostic piece. Yes and broadly Mike your reviews on stroke and then go on to the CRM question..

Sure, I think, you asked that CRM growth and one of the drivers is certainly linked in stroke in cryptogenic stroke. In fact, the size of the revenue contribution of Link just in the cryptogenic stroke indication is very similar to the size of the solitaire contribution in the stent thrombectomy area.

So -- and we’re the only company that has a complete, now profile of both diagnostic and therapeutic devices to treat ischemic stroke. So we view this as one of the largest opportunities within the company.

Broadly speaking on Cardiac rhythm in general, we have modestly better market conditions and we're taking share in virtually all of the segments that we participate in. So firstly obviously link has now fully anniversaried its introduction, which occurred in the fourth quarter of last year.

So it's encouraging to see that continued growth momentum in syncope as well as atrial fibrillation monitoring and so it continues to be a strong driver. In addition especially in the syncope, which is more than half of the uses of the product we get pacemaker pull-through from that.

Roughly 8% to 9% of those patients will wind up having a pacing indication in the first year.

The results of the pacemaker and over the three year life of the device we typically would expect to see that 20% of those patients becoming indicator for pacemakers which is driving new obviously market growth for us and we’re capturing virtually all of that share of new pacemakers.

In the ICD market, that we’ve seen modestly improved conditions, mid single digit growth in initial implants, which is very encouraging, which obviously we're benefiting from, but also from share obviously from the attained performer of product line in CRT-D segment as well as the MRI safe Evera product line in Japan where we're seeing some nice growth.

And then of course in the AF Segment, we continue to grow well above the market with our collaboration technologies really becoming the preferred intervention for paroxysmal atrial fibrillation ablation. So all of those are driving growth for us including things like Thyrex in any effective count.

So those items are all contributing to improvements in the market conditions and improvement in our share position..

Can I ask one quick follow up for Omar or Gary, if I think about the time period since the Covidien acquisition, you've made a number of small call it technology pipeline acquisition? I think I can count 8 to 10 to sum top of my head.

Can you just talk about the cumulative dilution from all these really small acquisitions have been -- Twelve is not that small, but Medina and RF Surgical and all these other ones, what’s the incremental dilution from that, that you're absorbing in your FY'16 guidance? Thanks..

Well, first of all the way we look at this is that the business units themselves make product tradeoffs. In several of them we kind of cancel existing program to cover for that. So the first responsibility to cover the dilution actually goes right down to business units and there, there is a real savings.

And then as we go up we cover in the group and then we cover at a corporate level and through that we can cover the whole dilution. The actual amount I don’t know Gary, do you have sense of how much that is..

No, Mike as far as -- we’re having to add it up myself to say what is it recovering because back to Omar's point most of this is being either covered by the business unit or the group as they go forward with this.

There are several of the small technology acquisitions that you mentioned whether it’s actually existing revenue etcetera that there is almost no dilution and it will be neutral and it’s highly positive.

Some of them are more technology based that are going to have more of an impact from the standpoint of more clinical trials like Twelve for example on the transcatheter mitral.

That will have more of a dilution impact, but yes that will be basically Mike and his team will view them as an R&D program and they’ll cover that in their R&D basically budget as they move forward.

So I haven’t even added it up myself as far as it is actually us being focused on this discipline and if we do these types of acquisitions, we got to cover that, if is dilutive to the company, which some of them will be that we got to make trade-offs within the rest of the organization. So I don’t have to tell you what the exact number is..

Understood. Thank you, guys..

Thanks..

Okay. Next question..

Our next question comes from David Roman of Goldman Sachs..

Thank you. Good morning, everybody.

I want to maybe to start with spine given the Management change that occurred over the course of the quarter and maybe Omar and team if you go in just a bit little bit more detail in helping us understand the progression to turning that business around and what specific factors will influence an acceleration of that business and when you think we can get back to sort of a market growth type in the core franchise?.

I’ll let Geoff add depth to the answers here. Look, my expectation is that getting back to the core growth can’t be soon enough.

So we want to get there as quickly as possible and I think we’re taking aggressive action especially in the near term to do with the way in which we’re leveraging our integrated sales force with our products and the way we’re kind of grouping these products together much more aggressively than before to make a difference in these accounts.

In the mid-term, we will drive more technological synergy through surgical synergy and we’ve got sales force positioned for that and longer term we’re addressing some of the speed to market issues in our product development area, which we see are existing right now. They take a little time to come through the products. So, Geoff please add to that..

Yes sure. Sure David first two macro comments, one losing being a shared donor in Core Spine in the U.S. is not acceptable to us and we have a real sense of urgency around turning that around. So that’s number one and the team is committed to that.

Number two, we’re making some tangible changes in the Restorative Therapies Group and the biggest one I would say is managing it as an integrated group versus a holding company with a series of business units underneath.

And when you do that this allows us to leverage our breadth to differentiate and drive growth in very targeted areas, which I’ll get to in a second, but the biggest beneficiary of this change, I believe will be our spine business globally in the U.S. especially.

So some of the changes, some of the specific impacts were one, we've moved to an integrated sales force in the U.S. and in Europe and that is enabling us to do some much more efficient health system wide selling.

In our case, we can combine some capital equipment from our Surgical Technologies business, navigation and imaging in with our spine products and so that’s helping a lot.

And then more specifically enables us to drive this surgical synergy concept and this is where navigated procedures in spine using NAV, using our imaging and driving that to more of a standard of care. So there are several components of that and again spine will benefit from this.

A tighter technology integration between our NAV and imaging technology with our spine implants and instruments and an R&D roadmap based off as surgical synergy offering versus just an R&D roadmap is independent spine and independent Surgical Technologies. We can get to one rep in the cases versus having a ST rep in there and a spine rep.

We’re developing and putting together more robust clinical and economic data and just really trying to drive the surgical synergy strategy as a standard of care and today we estimate only 14% of Core Spine procedures are navigated.

So we see a lot of upsides here and a lot of it is driven by working much closer together with our spine and our Surgical Technologies business. And then finally, we've got just a laser focus on just improving our innovation cycles in spine.

The speed and the impact, and I don't want to pull any punches, we're not as fast as we need to be and that's another contributor to some of these other players gaining share on us.

And this is something that we're focused on at the spine level, at the RTG level and also pulling in some broader Medtronic resources to improve the speed and effectiveness of our innovation cycles in spine. So we feel like we've got a lot of levers to pull here and we're focused on it.

And over the -- so I just laid out some short, medium and longer term. I think the innovation cycles you won't feel that for a couple of quarters. But the other stuff, the other initiatives, the integrated selling and surgical synergy you should feel in the more near, medium term..

That's good perspective, Geoff. Thank you. And then maybe just following up on that, Omar or Gary, anybody could talk about some of the parallels that may exist between this selling model and what you've been able to realize on the cardiology side of the business.

Because I think in your prepared remarks you talked about an increased number of stents for examples being on broader product line contract sales and if you look at your performance of those businesses clearly you're benefiting from the breadth of product lines that you have to offer? Are there any parallels that you could draw between that experience and the spine/imaging navigation side of the business that may give us more confidence in sort of the success of the strategy on the spine side of the business?.

Yes, look, I think you described it very well. That's exactly it.

I think our near term strategies are exactly what you described that we've learned from our CVG experience that putting an integrated sales force together with a complete suite of products with specialists in the field can drive and some aggressive contracting based on that can drive pretty quick growth in sales and capture good accounts.

We really haven't done that in spine, because the sales forces have never really been put together. That mean informal context, as that’s on the same as organizationally being integrated. And I think that's one of the things that we have done in the last 3 to 4 months and we're absolutely going to leverage as we go forward.

And so the CVG parallel is a good one..

This is Geoff, just to build on that. I mean, not ashamed to say that we're definitely looking at the playbook that Mike Coyle and the CVG team have followed over the last four plus years and we definitely are getting a lot of confidence and inspiration from that.

And then don't overlook MITG either, because they've done a lot of this over the last couple of years as they compete against a J&J. And so I think we have two parallels to look at that aren't exactly the same, but we're drawing lessons from both of those and have already taken steps.

And then finally one advantage we have that even CVG, no offense, Mike, doesn't have - is we have real technology integration between the navigation and imaging and the power tools and the implant.

So there's real technology integration there to drive procedural innovation that not only gets at economic outcomes, procedures more efficiently and faster, but also clinical outcomes. We need to do a better job of developing that data and getting it out there, because once surgeons try this, they really like it.

There's a lot of surgeons and particularly in spine that are more experienced and sometimes they say hey, look, I don't need this. But once they try it typically they don't want to go back to do an un-navigated. So we feel very good about that and we just have to really focus on this more over the next couple quarters..

Okay. Great..

Next question?.

Our next question comes from the line of Robert Hopkins of Bank of America..

Thanks. And good morning. So wanted to start out first with Omar. I was wondering if you could just elaborate a little bit on your comments on emerging markets since it's so topical.

And so I guess my question is just specifically what was the growth in emerging markets for Medtronic and was Middle East and Africa the only area where you saw a slowdown and then I was just wondering if you could just comment generally on your confidence in the near and intermediate term that emerging market growth can continue?.

Well, first, I'm very confident. And in fact, the Middle East and Africa was really the only region which was significantly impacted because of the reasons that I stated, because of the distributor sales. The underlying operational performance was fine and we expect that to bounce back this very quarter.

I think Latin America was a little softer than we'd like. But the other regions were much stronger than they've been historically and in particular I know that's in everyone's mind here, we were actually quite pleased with what we saw in China.

We had low double-digit growth in China, which actually is better than what we've been seeing in most quarters last year. We feel that we've outperformed the overall market. All of - the med device market there was reasonably strong. We did outperform it, but the underlying market was quite robust.

We feel at this stage with what we know and what we can - intelligence that we can get from our own people and the market itself, we feel pretty good that we can continue this and in fact accelerate it in the back half. Because we'll get some tailwind out of the Middle East and China seems to be okay, at least from what we can see.

Latin America may be a little more pressured, but China seems strong. India is definitely coming back. Russia is definitely strong. Southeast Asia is also well into the teens in growth.

And so we've got every reason to believe that with our diversified position right now we have a right to expect sort of double-digit type growth out of emerging markets and I haven't given up like I said earlier on the objective of high double-digits because I think that's what we're entitled to. We've just got to find a way to unlock it..

Great. That's very helpful.

And then for my second question, I think I heard mention that Bryan was on the line and so I wanted to ask a question about Covidien's businesses both this quarter and how they've been trending, just especially on the kind of the core general surgery markets of energy and stapling? Just some thoughts on how is the legacy Covidien business doing and specifically energy and stapling in the quarter and recent trends?.

Hey, Bob. It's good to hear from you. Yeah, so far, so good, right. We've been able to stay focused on the business. We've been able to continue to perform as part of Medtronic as we have in the past. I feel really good about the new products that we've launched.

Omar mentioned a couple, but we have a whole family of products in advanced stapling and advanced energy, they are doing quite well for us. And of course as you know, Bob, we're not going to sit and wait for those to continue. We've got others coming behind them.

So I see the momentum in surgery in particular in the US elevating just because you see more surgical procedures, but I also see that shift from open procedures to MIS and that's creating momentum not just for us, but really for all players in the surgical marketplace. So a good market that we're in.

We've not lost our focus which is key and we continue to deliver technologies that our patients and customers need..

Great. Good to hear. Thanks, Bryan..

Yes..

Thanks Bob.

Next question?.

Our next question comes from the line of Kristen Stewart of Deutsche Bank..

Hey. Good morning, everybody. I guess just as a -- I guess to follow up on Bob's question.

I was just wondering kind of for Omar and then also for Bryan just kind of under the new kind of Medtronic umbrella has there been any change of thinking for the Covidien Group now on the idea of robotics and the importance of robotics, especially now that J&J has announced that they are teaming up with Google to have a platform.

And I don't know whether or not being under the Medtronic umbrella has changed kind of thoughts in that realm and then I have a second follow-up?.

I think -- okay. First of all, just a few words and I'll let Bryan make the brunt of the commentary on this one. First, from an overall Medtronic perspective, look, the importance of robotics is pretty clear. And it's a trend that we can drive in an application focused way and I feel confident that our team can address that market.

I think from an overall change perspective, I think a focus on some longer term investments is probably the biggest single change that I hear from Covidien, ex-Covidien employees. But I think Bryan is best suited to give more color to that, as well as the robotics strategies. Go ahead, Bryan..

There's been a number of changes if I think about just broadly how we think about our strategy. But specifically to robotics we're continuing down the path that we were on previous to the acquisition and we're going to continue that path as part of Medtronic.

And you spoke a little about some competitors out there that are focusing in the areas as well.

I actually like to see that because we are making significant investments in this area, it gives me confidence that robotics is here to stay, the embodiment of what's that going to look like, and how it’s going to get traction, you know, still a question mark in my mind. But I do feel like it's here to stay.

The way I look at it from a strategic standpoint is we as an organization are highly focused on optimizing surgical procedures around the world and I kind of look at it a as three legs of a stool from a surgical perspective.

One is open surgical procedures because there's a whole heck of a lot of procedures that are still done open and they're done inefficiently. And we have advanced energy and stapling products that help the efficiency of those procedures and we're going to continue to invest there. The other leg of the stool is what I would define as traditional MIS.

This is an area that I think we've done quite well and have shown our ability to lead the market and we're going to continue to invest from a therapy innovation standpoint on that leg of the stool. And we have been making significant investments in robotics and that will continue.

Looking forward to the day that we actually enter the market with robotics and we're driving revenue and not just investment, but that will come. But to me, all three legs of the stool need to be in play for someone to be sustainably successful in the marketplace.

In addition of to that, you've heard a little bit of talk about it today, that we would overlay our capabilities from a service perspective and bring OR managed services to the table, so that we can further optimize the efficiency of the operating room.

And to me the combination of those three things I referenced from a therapy standpoint with services really will differentiate us in the space. But robotics is a piece of the puzzle, I guess is what I am saying, its not the whole puzzle..

Got you. And then my follow up question was just more broadly, Omar, for you. Now that you've had Covidien under your belt for I guess now about eight full months.

How are you thinking just about all the businesses? And I guess as you look more holistically too at the Medtronic portfolio, do you think at this stage you have come to any conclusions or do you think you're close to coming to any conclusions that there's some businesses that maybe don't or no longer fit in the portfolio that we could see some divestitures or do you think that all the pieces still make sense?.

First, from an overall perspective, I think you understand the way in which we organized into the four groups. So that's our kind of primary strategic alignment. The goals and objectives of each of those groups are clear, into which sorts of market spaces they participate in. And within MIPG we're still looking through that portfolio.

I know there was some questions around some of those businesses. I think right now we're still looking to see a number of things. First of all, do they add to our overall strategy of MITG and we're going through that carefully. We're not prepared to conclude on it completely. But right now they're all contributing.

Do they fulfill our mission and are inline with our missions? They are. So right now, we've got what we've got and we're driving to see if we can get growth from all of them. I think it's a little premature to decide, although I I know it's been six or eight months.

But we made some changes in the way in which we invest and to see if that investment change will result in or what they will result in, I think we need a little longer to assess. So I'd say Kristen that we're still - at this stage we've got everything there. It all fits from a clinical relevance perspective, from a mission perspective.

Whether we can - in our new paradigm of investment of some of those businesses can we change the equation more, we'll have to see. So it's a little bit works in progress still. But by and large we're treating them like they should be in that they're completely part of MITG. Bryan you want to add anything to that..

Well said. I mean, we're working through our own strategy and again some mindset shifts associated with our own strategy and we haven’t worked through that yet. As we do we'll get a better feel for the fit of these - of all aspects of what was legacy Covidien and make decisions based on that.

One thing too, and not just from the perspective of MITG, but if you look at the broader hospital solutions opportunity and the services that we bring to bear we also have to look through that paradigm to make sure that the products that we have if they don't fit the MITG strategy still might fit the overall hospital solutions strategy.

So lots to still work through, but clearly we're looking at it..

Okay. Great..

We probably have time for one more question. Thanks..

Our final question will come from the line of Joanne Wuench of BMO Capital Markets..

Can you hear me?.

Yes, we can Joanne..

Oh! Terrific. Thank you so much. One of the things that struck us during this earnings season was the commentary from a number of companies regarding hospital surgical volume.

If we take a big picture or big step back, big picture, what do you see going on in terms of that in the United States and how do you see that in the coming months and quarters?.

Well, you know, again, I'll let Bryan, maybe Mike also can comment on that a little bit, because I've got two of the bigger businesses here. But clearly the US is strong and procedure growth is strong. We -- on both the MITG and CVG we've taken share, but I think we'll all acknowledge that the procedure growth is really strong.

And we think that the revitalized economy, as well as the Affordable Care Act are both contributing to that depending on the nature of the procedure. We think it's too early to tell, but we think there's some sustainability to this. But I think maybe Bryan your perspective first and I'll let Mike Coyle comment also for a little bit.

So Bryan, go ahead..

Yes, again, I don't know that I have a whole lot to add to what you said.

But it's clear to us, and we've got folks that are the in the operating room in the US every day, and the best litmus test for me on whether or not surgical procedures are up or when these guys go in the morning, look at the boards and see the number of procedures either during the week and on the weekends.

And we're definitely seeing a heightened number of surgical procedures from every company that I've seen present - everyone's seeing that momentum in their organization. I would expect it to continue, though we've had it now three quarters.

The question for me will be when it annualizes what does it look like at that point, but it is contributing so far for us and driving our mid single digit growth and I would expect it to continue..

Mike, you've also seen some good growth in the cardiac space….

Right..

So go ahead, why don't you make some comments….

Sure. I would echo that certainly in the pacemaker and ICD arena, we've seen the improvement come in initial implants which is very encouraging. And from my perspective, we're seeing sort of mid single digit growth in initial implants in ICDs in particular, which is quite a change from what we've seen in recent years.

And just anecdotally talking to customer accounts about this, they do seem to think that the availability of insurance for people who absolutely need it because they have a sickness and they can't be turned down for coverage is helping drive those volumes..

That's very helpful. And then as a follow-up, when the Covidien agreement was announced last year, one of the ideas was to cross sell what we call the buffet table of products as you went into the hospital administrator.

Given that its early days, what kind of feedback are you receiving when you go into say hey, we've got - I think quote was six of the top 10 areas really well covered now by products? Thank you..

First, we - you might have said that on day one, I'm not sure, but certainly as we laid out our strategies that was not one of our core strategies. It was more around value creation because we had Covidien products which created value within the hospital and with our Medtronic products which were like chronic disease products.

And we said that in value based healthcare, we have a broader set of assets that we could use to participate in value based healthcare model, where a broader continuum of products helps. So that was our primary notion around the breadth that we had.

The fact that we have more - that we're more significant partner to a hospital, I think is important, but that alone is not one of our key strategies. I think that gets us in the door, but each of our product lines have to perform, perform competitively with the physicians and against our competition.

And then if you do have a seat at the table which others don't then we go and leverage that. But that's not our primary integration point with Covidien. I mean, there are others like periferovascular* and neurovascular which are much more directed revenue synergy efforts where we're seeing very good results.

And then in the operating room managed services we're - this aspect of moving towards value based healthcare is again where we're seeing real benefit. I think those are the ways in which we can make a true differentiated impact in healthcare. I think the fact that we are just broader helps, but that's not a critical growth driver for us on its own..

Kristen [ph] This is Gary. Just to add to what Omar said. I mean, I think as he indicated, the idea to say there's a lot more contracted -- of the entire portfolio, no, that hasn't happened nor did we necessarily expect that was going to be the case.

But it clearly has helped us get into as we know with governments or CEOs and hospital systems, it's clearly helped us as we deal with insurance companies et cetera that we have the broader portfolio, so we're talking about a lot of different options.

But could we point to a bunch of contracts where we negotiated across the product portfolio, the answer is no. And we didn't expect that. What we did expect however, was just the strength of the portfolio will clearly get us in conversations with high level officials across organizations and much better format.

And I think that is happening and you're seeing that on some of the hospital solutions. You now see we have our first hospital solutions in the operating room with basically the former Covidien product line.

So we're seeing that all happening and back to Omar's point we're seeing the synergies across the individual product portfolio, but not from the standpoint of we're all contract bundling perspective..

Terrific. Thank you so much..

Okay. Thank you..

Okay Thanks to all of you for your questions and with that and on behalf of our entire management team I'd like to thank you again for your continued support and interest in Medtronic. We look forward to updating you on our progress in our Q2 call which we currently anticipate holding on December 3rd. Thank you all and have a great day..

Thank you. This concludes today's conference call. You may now disconnect..