Medtronic plc (MDT) Earnings Call Transcript & Summary

Hello, everyone. I'm Geoff Martha, Chairman and CEO of Medtronic. Thank you for joining the Medtronic presentation and what I'm sure is a very busy week for all of you at the Virtual JPMorgan Healthcare Conference and my first as CEO of Medtronic. While I wish we could be together today in San Francisco, I am hopeful that you will find this discussion helpful as you think about Medtronic as an investment, and I look forward to the day when we can meet again in person. Now before I get started, I want to remind you that I'll be making some forward-looking statements today. I encourage you to read this disclaimer, which is also available on our Investor Relations website. Okay. The key thing that I want to leave you with today is how Medtronic is accelerating our revenue growth with our robust portfolio and pipeline. We're going on the offensive and we're winning share, and we're creating and disrupting big markets. We're putting the tech into medtech, and we're investing in innovation. We're executing well and have a lot of momentum with a number of near-term catalysts. But before I get into those details, let me give you a quick overview of the company for those that are less familiar. Medtronic is the global leader in medical technology with the mission to alleviate pain, restore health and extend life. Our company has over 90,000 employees dedicated to this mission with a presence in over 150 countries. Last fiscal year, we generated $29 billion in revenue spread across our 4 groups: Cardiac and Vascular, Minimally Invasive Therapies, Restorative Therapies, and Diabetes. Importantly, we improved the lives of over 72 million patients, which is over 2 patients a second. Our financial model, which we laid out a few months ago at our Investor Day, is to accelerate our top line and deliver 5%-plus organic revenue growth annually and translate this into 8%-plus EPS growth over our long-range plan. We expect to deliver 80% or greater free cash flow conversion with a commitment to return more than 50% of this free cash flow to our shareholders primarily through our growing dividend. We also see a lot of opportunity to increase our level of investment in innovation, both organically using our strong scientific underpinnings with internal R&D programs as well as through increased level of disciplined tuck-in acquisitions. This financial model, taken together, is expected to generate double-digit total shareholder returns. Now before I get into the main part of the presentation, I thought I'd give you a quick update on what we're seeing with COVID. Overall, the underlying momentum of our business continues to be strong. And as we commented before, we really hadn't seen much of an impact from the increased surge in October, November and even into the first half of December. That said, we've seen some impact starting in the holiday period and over the last couple of weeks. We'll have to wait to see what plays out over the rest of January, but based on what we see now, we would expect our business to be roughly flat this quarter on an organic basis instead of flat to slightly up. Now we remain optimistic this will be short-lived as hospitals in general are better prepared and equipped to handle surges in the virus while still maintaining capacity for the non-COVID patients. Now despite the pandemic, 2020 was a big year for us. We made significant changes and accomplished many objectives that better position Medtronic going forward. First, we reduced the level of quarter-end customer bulk purchases and transitioned the company to more of a run rate business with sales spread more evenly throughout the quarter, and we pulled this off without disruption. We now have more visibility on our sales throughout the quarter, and we're experiencing the benefit of improved pricing. Another change in 2020 was that we accelerated our level of tuck-in acquisitions, announcing 7 over the course of the year with a combined total consideration of over $1.6 billion. Now we expect these acquisitions to enhance our growth profile as we create value by having them part of Medtronic. In 2020, we also instituted an innovative R&D funding model with Blackstone, which allowed us to inject over $300 million in incremental R&D investment in our Diabetes business, with an expected return profile that is better than M&A. This was the first time that this development funding mechanism, which is common in pharma and biotech, has been implemented in a significant way in medtech and one that we're looking forward to implementing across other businesses. In addition to the Blackstone agreement, we made several changes to turn around the Diabetes business and set -- that sets us on a trajectory to return to market growth. Regarding our balance sheet, you've seen us complete several opportunistic transactions to restructure our debt over the past several months, which has resulted in significant interest expense savings. Our debt portfolio is now one of the best with a weighted average maturity of over 12 years and a weighted average coupon of less than 2%, which is among the lowest of all large-cap issuers across all sectors. Last fall, we announced a major change in our operating model, one of the biggest changes in our company's history. We've made significant progress on this. And we've gone from a $30 billion company broken into 3 large business groups plus Diabetes that had layers underneath and a matrix that cut across geographies and functions. And we've transformed this into 20 focused and accountable operating units that are built around specific therapy areas. We decentralized and we delayered large portions of our organization, giving our operating units full P&L responsibility and control over their product development, their clinical resources and their sales organizations. At the same time, we leveraged some key enterprise activities like core technology development, manufacturing and sales to large customers. Look, the organization has embraced these changes, which will be fully operational at the end of this quarter, and we've already seen a positive impact from this. We've eliminated bureaucracy, and we're operating with more speed and with a higher level of accountability. While all these accomplishments are important and leading to positive change, the most important objective in 2020 was the launch of a long list of meaningful new products as our pipeline started to come to fruition. In fact, we received over 200 regulatory approvals in the U.S., Europe, Japan and China in 2020. These products are now making a difference and will be a key to our accelerated growth in 2021 and beyond. In cardiac rhythm, we're winning share and expanding the market with our Micra family of leadless pacemakers. In fact, last quarter, our Micra pacemakers grew 75% globally and 84% in the U.S., and this is in the middle of the pandemic. Micra is now annualizing at approximately $350 million. And we're also benefiting from our new Cobalt and Crome high-power CRM devices with their unique AF and heart failure algorithms and BlueSync remote programming and remote device management. And we're launching our new LINQ II insertable cardiac monitor, which has market-leading accuracy, exclusive detection capabilities and 50% greater longevity than both Abbott and Boston Scientific. In Cranial and Spinal Technologies, we're leading the way with robotic spine technology and have recently expanded the capabilities of our Mazor X robot with navigated interbody implants and integration with our Midas Rex high-speed power drills. We recently acquired Medicrea with their AI-driven personalized implants and are creating a data-driven digital ecosystem for spine surgeons. In our Neuromodulation business, where we seeded share over the last few years, we're now back on the offensive, having launched major new technology in both pain stim and brain modulation. In pain stim, we're seeing strong adoption of our DTM therapy on our Intellis spinal cord stim platform, and most of this growth is coming from competitive accounts. In brain modulation, we recently launched our Percept PC device, the first and only DBS that can sense brain signals. No other company has this technology, and it sets the stage for adaptive closed-loop DBS therapy, which we now have in clinical trials with the first patient enrolled this month. In our Pelvic Health business, we launched our InterStim Micro neurostimulator in 2020, which has accelerated the market and led to significant share recapture. In addition, our trialing rates remain well above pre-COVID levels, which is a good leading indicator to the strong growth that we expect from this business. And in Diabetes, we recently launched the 770G hybrid closed-loop insulin pump system in the U.S. and the 780G in Europe. Both are seeing great market reception. And the 780G in particular has had tremendous customer response in Europe, which bodes well for when we bring this technology to the U.S. market. And if you haven't had a chance to check out the social media post from our European customers on their results with the 780G, I encourage you to do so. So all of the products I just mentioned are now on the market and are expected to drive growth in 2021, but it doesn't stop there. When we look now at 2021, there are a number of pipeline catalysts coming, and Medtronic is very well positioned. In the cardiovascular portfolio, one of the biggest catalysts of 2021, not only for Medtronic but likely for the entire medtech industry, is expected to come from our renal denervation business. We expect to announce the pivotal trial results of our ON MED trial likely at the TCT conference in October. Now assuming positive results, we'll submit this to the FDA this year, which has already given breakthrough device designation to our system. We're in the lead on realizing this multibillion-dollar opportunity to treat hypertension, which affects 1/3 of adults globally and is the single largest contributor to death. We believe Ardian can be a $1 billion market in 5 years and a $3 billion market by the end of the decade. Another 2021 catalyst in the cardiovascular area that we're awaiting is the first-line indication for paroxysmal AF using our Arctic Front cryoablation system. We're expecting FDA approval for this in the first half of 2021. The clinical data was just published in New England Journal of Medicine, and the benefits of cryo versus drug therapy were profound. This can open up a large market opportunity for Medtronic in a patient population that is highly motivated to seek treatment. It's also another example of how medtech is moving further upstream in the care continuum and bumping off pharma in many different disease areas. We're also expecting FDA approval in the first half of 2021 for our DiamondTemp system, a disruptive technology for focal point ablation. It's the only product with closed-loop temperature control, which allows the physician to titrate the actual temperature of the tissue. We believe DiamondTemp and then our pulsed field ablation product give us the opportunity to meaningfully disrupt the $6 billion EP ablation market. In TAVR, 2021 should be a big year for us as we continue to execute our sales force expansion in the U.S. and discuss the hemodynamic and valve durability advantages of our device. We also expect to launch our next-generation TAVR device, the Evolut PRO FX, later in 2021. In our medical-surgical portfolio, we're nearing regulatory submissions of our soft tissue robotics system. Our unique offering is designed to increase access to robotics by going after the barriers that have limited robotic surgery adoption to date, namely cost and utilization challenges. With its breakthrough modular design, upgradable components and instrumentation that builds upon decades of our innovation leadership in minimally invasive surgery, we're poised to win share and expand one of the most exciting markets in medtech. 2021 will also see a number of catalysts in our soft tissue robotic program starting with our CE Mark submission and U.S. IDE filing in March. In our neuroscience portfolio, later this week, we'll show 5 abstracts at the NANS conference detailing the next big advancement that we're developing in spinal cord stimulation, our ECAPS closed-loop system, which we are disclosing for the first time today. Our Neuromodulation team will be hosting an investor briefing this Friday to discuss this truly exciting new technology in our near-term pipeline. I think our ECAPS system will be one of the big technology reveals at NANS conference this year. If you want a preview of our ECAPS system, you can check out the publication of our preclinical and clinical work, which were published last month in the Journal of Pain Research. We're also expecting another catalyst in our Neuromodulation business later this calendar year when we launch our new DBS directional lead. We're calling this lead SenSight. And paired with our recently launched Percept PC device, we will have a BrainSense system far ahead of the competition. So these are just some of the many near-term catalysts that make up the best pipeline in our company's history. As you can tell, we have a number of products that are launching now, and many more are coming later this year in some of the most attractive growth markets in medtech. And we're getting ready to create and enter even more big markets over the coming years. And beyond product launches, it's important to keep in mind that we have a strong growth tailwind by utilizing the commercial channels we have in emerging markets around the world. Growing in emerging markets remains a key priority for Medtronic. We have scale, engineers, partnerships and a deep understanding of individual markets around the world. Under Omar's leadership, we invested heavily in building out the focus and capabilities of our emerging market businesses, going from sales of $1.5 billion 10 years ago to now approaching $5 billion of revenue. And going forward, we're moving to even greater localization, customizing our therapies and services to those markets, especially our larger emerging markets like China. And we expect emerging markets to be a key growth driver for Medtronic. So we've talked about our markets, our new products, and we've talked a bit about our expected financials. We have visibility into a number of catalysts to accelerate our growth over the coming quarters. But if we look longer term, there are a couple of themes that we're focused on that will define us and position Medtronic for the next decade. One is a technology theme and the other one is a cultural theme. Both are still early, but I wanted to use a few minutes today to discuss them as you are certainly going to hear more from us on these themes in the quarters ahead. So starting with the tech theme, which we call putting the tech into medtech, which is bringing advancements from the tech world into health care. And this is opening up a whole new area of growth across our -- all of our businesses. Historically, medtech innovation has primarily been based on the application of electrical and mechanical technologies to human physiology. But a new vector of innovation is occurring now with digital, and we're rapidly advancing our capabilities across our businesses to lead in the development of this new area of growth. You're already seeing this with the advances we've made in remote monitoring and remote programming of many of our devices. We've added advanced capabilities to our cardiac rhythm devices, diabetes insulin pumps and ventilators, just to name a few. These remote features have been incredibly important during the pandemic and will be increasingly incorporated across our portfolio as we move forward. You're also seeing us putting the tech into medtech today with robotics, where we're leading the development of robotics in the spine and cranial space and preparing for our entry into the soft tissue robotic surgery with our Hugo system. Robotics is quickly becoming a core technology at Medtronic that we intend to leverage not only in spine and for soft tissue surgery but for many more areas across the company. We're putting the tech into medtech in our manufacturing processes, where we're implementing advanced wafer scale fabrication techniques. These have been common in the semiconductor industry, but we're the first to bring them into medtech. Wafer scale is allowing us to reduce product cost and reduce the size of our products. We're rolling this out today in products like our LINQ II insertable cardiac monitor, and we'll soon use this to manufacture our diabetes continuous glucose sensors. You're also seeing us put tech -- putting the tech into medtech with our efforts in data, machine learning and artificial intelligence. This is the new frontier for medtech, and we're leading our industry in collecting data sets and developing algorithms. We're doing this in Diabetes with Nutrino and Klue as we develop personalized algorithms. We're doing this in spine with our recent acquisition of Medicrea and its use of data and AI in preoperative planning to create personalized spine implants. And we're doing this in minimally invasive surgery with our Touch Surgery Enterprise application, which provides secure, seamless access to surgical video and data today while building the AI foundation for surgical workflow analysis and instrument and anatomical structure identification. Data, AI and machine learning are being implemented in products and services across our businesses. These technologies are a key asset that we use to not only improve our therapies and clinical outcomes but also create better patient and physician experiences. Data will certainly play a core role in our product development pipeline over the next decade. We're just at the beginning of putting the tech into medtech. And we believe that by translating recent advances from the tech world to medtech will meaningfully expand the scope of our opportunities and dramatically increase the value ascribed by patients, by our physician customers and by health care systems to our therapies and our services. Finally, I'd like to end with the cultural theme that will position us for the next decade. I've discussed today a number of areas where we've made tangible progress, and we have a number of catalysts coming. But if we want to maximize our performance and realize the full potential of our technologies, we recognized that we had to make changes to our culture. We needed to improve accountability and we needed to act more boldly and be more competitive and move with speed and decisiveness. Now I humbly admit that these were not traits that Medtronic was known for, but we're changing that. Now it will take time to inject these traits into our culture, but it's been impressive to see how our -- quickly our employees are embracing these changes and the resulting high employee satisfaction scores. And let me be clear about what won't change. We're not changing our strong mission-driven culture, which is part of our DNA. This includes our commitment to quality and our focus on patients, on employees and on the communities in which we live and we work. Our mission is what drives us to put in place goals like being carbon-neutral in our operations by the end of the decade and our focus on diversity and inclusion. These are not only the right things to do, but they're good for business. Our commitment is to be the most innovative company in health care, and we need the best people in order to do this. And the best people, they want to work for a company that stands for something. And now more than ever, people see this and they feel this inside of Medtronic. To close, I want to express my gratitude to our employees who have stepped up during COVID for patients, for our health care systems and also for how they're embracing the changes that we're implementing at Medtronic. I also want to thank our investors who have expressed confidence in our ability to accelerate growth. Look, we have a winning hand with strong scientific underpinnings, a tremendous pipeline, talented employees and a fantastic mission-driven culture. These alone can accelerate our growth and create value. And when you add our incremental focus on putting the tech into medtech and changes we're making to our culture, this can take us to the next level, creating tremendous value for society and for shareholders. So thanks for your interest in Medtronic, and we'll now move on to Q&A. Robbie?

Welcome, everyone. Well, I'm the medtech analyst at JPMorgan, Robbie Marcus. I'm very happy to host the management of Medtronic here today. We have CEO, Geoff Martha; and CFO, Karen Parkhill. Both of you, thanks for joining so much today.

Yes. Thanks, Robbie. Thanks for having us.

So it's a little different format this year. We don't have the benefit of all of the lovely investors in the room. [Operator Instructions] But Geoff, let's kick it off. You took over the end of April, in the middle of what was one of the most tumultuous times I can remember in my lifetime. As CEO and during the course of the past several months, you've started an aggressive turnaround story for Medtronic. You've made a lot of changes. There's been a lot of new product launches despite COVID. There's a ton of innovation in the pipeline. You made a lot of management changes. So maybe just as you think back over the past several months since you've been the CEO, and also, let's think about the next 3, 5, 10 years of Medtronic, what are you most proud of that's happened so far? And what are you hopefully going to be most proud of if we're looking back at this conference 3, 5 years from now?

Okay. That's a big question to start off. Well, looking back over the last year, I'd say 3 or 4 things here. One, just navigating -- we've navigated through the pandemic, and we're still navigating through it quite frankly, but I think the team has done a great job navigating through this; and with the ventilator situation in particular, the way we stepped up our production, enhanced our capabilities and really showed up for our customers, and all the while making sure that our employees were front and center and taking care of them, so how we navigated through the pandemic. We positioned -- we made -- as you highlighted, we made a number of changes that I think positioned the company better for the future, decentralizing the company into these 20 operating units. We eliminated 2 layers in the company, which is quite a bit. And that -- what that does is make us faster, more agile. And I think that's going to be a huge benefit for us. And then the third thing is we advanced our pipeline. And we got over 200 regulatory approvals over the last year, had a lot of product launches, invested more in R&D, did this tuck-in -- did several tuck-in acquisitions, over 7 tuck-in acquisitions. So those are the things that -- but if I had to summarize it all up, the thing that I'm most excited about is the sense of energy in the company. People are -- we're leaning forward. We've reaffirmed our mission throughout this pandemic. And we've made a commitment to be more competitive in the marketplace. And there's just a lot of energy in the company. People believe. And so when I look back over the last year, that last point is probably the thing that I'm most proud of, of our leadership and all the employees for how they reacted to everything and where we stand right now. Kind of looking forward over the next 3, 5, 10 years, look, our commitment -- not aspiration, but our commitment is to be the undisputed technology leader in health care and to drive innovation that has -- just makes a meaningful difference in terms of improving outcomes but also reducing cost and dramatically improving access no matter where you live in the world. And I believe the scientific underpinnings of the company, the enviable position we have with our balance sheet to invest that -- and just where medtech is going, I think we're moving ahead and bumping off pharma in a number of places. I think that medtech is a good place to be. And I think we -- our commitment is to be the technology leader here and to drive this level of innovation to have meaningful impact on outcomes and cost and access. And then finally, from a social perspective, I mentioned before we're a mission-driven company. And our commitment to things like being carbon-neutral by the end of the decade and inclusion and diversity and really equity inside the company and out, we've really stepped up our game and particularly outside the company, working in our communities. I think it will make Medtronic a destination for talent. And we're in an innovation business. Like I said, innovation is a people-driven thing, and we need to have the best people. So I look back -- in 10 years, we want to be the undisputed leader, much faster than 10 years quite frankly, in tech -- in innovation in health care and really make a meaningful difference in those 3 universal health care needs.

So going back to the Analyst Day you held earlier in 2020, you basically laid out you want to have an acceleration in top line growth from where you are now. That's driven both by a stronger competitive focus plus a slate of potentially transformative new product launches. And then down the P&L, you have industry margin -- industry-leading margins in many of the key metrics to play out to a minimum of an 8% CAGR over the time horizon of the LRP. Hopefully, I got all that right.

You did. And then the dividend on top of that.

And great standing on the balance sheet. There's a lot of capital allocation potential here for the company. So as I think about maybe the top 2 or 3 ways that you drive the top line, that's going to be different than what you did before because when I talk to a lot of investors, it's, "I've heard this from Medtronic before." Why is this time different? So help people and maybe the naysayers of Medtronic -- and I think there are fewer and fewer of them as I go out and talk to investors today, but help us understand what's different this time? And how do you keep the engine moving down the P&L to drive such good free cash flow we've seen from you the past 2, 3 years here?

Well, first, the #1 -- I won't say naysayer, but the #1 person who wants to make sure that it's different this time is me and our leadership team. And we're really focused on this and committed to making it different. And I'd say -- and it's very tangible, the reasons why it's going to be different. Number one is just our pipeline and the catalysts that we have. You're -- you've seen already over the -- like the last year -- our last fiscal year -- I talked about the 200 regulatory approvals, a much faster cadence of meaningful innovation, meaningful iteration in our products. Like for example, our whole Neuromodulation business. In all 3 segments of Neuromodulation for Medtronic, we've got really exciting new product launches and more to come. And as we look forward, we've got major catalysts, things like renal denervation, things like soft tissue robotics, the PillCam Genius, several new products in AF. And we don't have to have all of these things be home runs. We're not -- we haven't built our plan around perfection. We just need a couple of these catalysts to hit, and that will be the single biggest driver of the increased and sustainable revenue growth. The second is how we're operating and how we've set up the company and the culture. I think the decentralizing will -- and with the decentralization also comes with the operating units owning their P&L, controlling their sales resources, their clinical resources, their R&D budgets. But with all that comes a lot higher degree of accountability. I believe this will make a -- this is -- these are very tangible changes, as you pointed out. I mentioned earlier that we've cut out some bureaucracy here, 2 layers of the company. So this isn't just PowerPoint, they're just words. I mean these are tangible actions, tough, tough actions that we've taken. And I think that's going to bear fruit. And then on top of that, on this operating model, beyond the reorganization, we're driving some new cultural traits that work alongside of our mission. And our mission has served us well for 70 years -- or always written 60 years ago. The company is 70 years old. But 60 years ago, we wrote that mission -- Earl did, and it served us very well. But in today's day and age, with the level of competition that's out there and the speed at which things move, we wanted to add to how we do things a little differently. And our cultural traits really are focused on being bold -- more bold, being -- moving with speed and more decisiveness and just expecting more of ourselves and our technology and being more competitive. And I think the technology plus this operating model change with the org structure and the culture, I think this is why it's different.

Great. So there's probably 500 different product questions I could dive into, but I want to touch on some of the incremental comments you made in the presentation just prior. And one was on your view of the current quarter, which goes through October -- or November, December and January. And at the end of the November call, on the fiscal 2Q call, you talked about flat to slightly up in this quarter. Unfortunately, COVID trends have worsened globally. Is that all that's the difference from flat to slightly up to flat? And quite honestly, I would say that's a good outcome given what I would expect to see from a company of your size with your spread across all the different end markets and global markets. So maybe you could just walk us through exactly what the delta is. Is there a geography that's standing out the most? And is there a business line that's outperforming? And what's underperforming?

Sure. Yes. No. It's really COVID-related. And like we outlined in our last earnings call, we hadn't seen an impact November -- October, November -- well I say we've seen an impact, but in terms of our recovery and where we were going, we hadn't seen that recovery slow down October, November, even into the first couple of weeks of December. It really was the last -- the back end of December and the week -- the holiday week, the holiday period there where we started to see a slowdown, and in pockets around the world and pockets in the United States, pockets in Europe. Those are the ones that are affecting us. And we've double-clicked on this and really believe it is more of an elective case pullback issue versus some other issue that's Medtronic, that's unique to Medtronic. And based on the feedback that we're getting from hospitals, we do -- we remain optimistic that this is going to be short-lived because of, like I said, we've seen where the spike happened in certain cities. Like in October time frame, we're already seeing those hospitals bounce back very quickly. So we're optimistic that this will be short-lived based on -- not even on vaccine, but based on just how hospitals are so much better equipped to handle elective cases alongside the COVID cases. And so that's really it. You asked, is it a product line? I don't want to get into the product line specifically because it's not really a product line question. I mean obviously, our more elective product lines are hit harder than our less elective ones, like stroke and coronary. But it's more of a geography issue, and so that would be the confluence of size of market and the COVID situation. And so it's pockets in the United States and Europe that are -- that -- where it has slowed down a bit. And again, some of those pockets already picked back up. We do think this is going to be short-lived. And then there are parts of the world that remain a problem for COVID, like -- and for us, fortunately, they're small markets, health care markets for us even though, unfortunately, they are large people populations, places like India, places like Colombia. Like Latin America is still troubled with COVID. But again, they don't have a major impact on our financials. So that's really what I meant by those comments.

Great. Just very quickly. You threw out a teaser. We have the neuromodulation conference later this week. You teased a new product with ECAPS, which is sort of like a closed-loop spinal cord stimulation system. Last year, you launched the DTM product. This year, it looks like you're launching this ECAPS product. Maybe just quickly because I have one more question for you before we run out of time, just maybe give investors a teaser of what to expect and why this is an interesting product for you.

Well, first of all, the pain market is a huge market. And with our acquisition of Stimgenics and this DTM product that we launched, I mean we're in a share-gaining mode and -- especially when you put that algorithm on top of our Intellis platform with the Overdrive battery. And what ECAPS does, which is so exciting, it is a -- basically, it allows us to -- ECAP stands for evoked compound action potential. But at the end of the day, what it does is it allows us to basically understand the impact of the pain algorithm on the body. And so it positions us for a closed-loop therapy. Like we've done, like we've launched in DBS recently here with our BrainSense, it positions us for this closed-loop therapy, which will improve the efficacy of pain stim. And what's exciting about this versus -- there's very few people that have -- very few companies that have this. And what differentiates us from our competition is we're bringing this closed-loop technology on our market-leading algorithm DTM on top of our market-leading hardware, Intellis, with our market-leading battery technology with the Overdrive technology. So we're really excited that that's what's going to differentiate us from the competition, a small company called Saluda, on this one and really, I think, grow the pain market.

Great. Geoff, why don't you take out your crystal ball here? And obviously, it's not perfect, but hopefully, you have a little better sense than I do. And as you look out post-COVID, let's say second half of this year, early 2022, hopefully, a lot of people are vaccinated by then. Can you envision a scenario where there's an over-earning of medtech volumes where you have a whole host of patients who are diagnosed yet not treated throughout 2020 and parts of 2021? So is there going to be some sort of bolus? Or do you think it's just going to be moderately elevated or no elevation?

Well, I don't think there's going to be a huge bolus because we have been working through this backlog over the last couple of months. And with this recent spike, there'll be another bubble to work through -- another backlog -- bubble is a bad word in this case. From a business perspective, I guess it's a good word -- because there are some patients in pockets around the world that have, in the recent weeks, elected not to go into the hospital and cancel their procedure. And so we'll have that backlog to work through. So I do think, to use your words maybe, I think you used a word like a mild uptick to make up for the backlog. But like I said, we have been working through the backlog, and that's what's driving the fast recovery. In some of our therapies, going into the holidays here, we were at or even above historical levels, not a lot but some. And it just showed how -- where the recovery was coming. So yes, there'll be some patients, but I wouldn't -- I don't think it's going to be like this huge bump that you see in medtech.

Great. Well, unfortunately, we're out of time. Karen, I'll have to save all of my difficult financial questions for you next time. And as a JPMorgan 2021 large-cap top pick here, I agree with you. There's a ton of exciting things going on at Medtronic, and I hope we have a much better 2021 than we did 2020.

Yes. Me too. Thank you, Robbie.

All right. Thanks for joining.