Good morning, everybody. Want to welcome everyone here to the 45th Annual Global Healthcare Conference. And Geoff Martha here, Chairman and Chief Executive Officer of Medtronic. Well, I have a series of prepared questions here and obviously happy to open it up to those in the audience as well. For reference, Medtronic was one of the most requested companies among investor one-on-ones for this conference. And that includes the likes of Lilly and all the obesity names as well. So, obviously a lot of interest in, look forward to going into some of the detail here. So there are really kind of three areas I was hoping to cover in our conversation this morning around strategy and culture, how the business is doing, and then capital allocation.
So, maybe just kind of reflecting a little bit on your time here as CEO, talk to us about kind of your priorities, how you've seen them evolve over the past several years. Where are we in kind of recognizing and achieving some of your key objectives?
Sure. Well, thanks for having me, David. I'd say on the key priorities, I'll just keep it high level. We can drill down on them. Coming into my role, you know, I started right at the beginning of COVID. But you know, had time to think about it before then, 'cause I was named in the fall of 2019 and worked with the leadership team. And our goals were really simple. One was to accelerate innovation, in particular, bring new and novel technologies to high-growth areas. So we're a little bit more top-down, directive cap allocation, shifting investments to these high-growth areas. And we've got a number of products which we'll talk about that are in these areas. We're in the early stages of these product launches in high-growth areas like AFib, hypertension, etc.
And I can go on diabetes, so more on that. Then the second, I'd categorize it, the environment is changing globally. There's more volatility, geopolitics, supply chains more fragile. And how do we just become better operators? And I mean broader than global operations supply chain, but that's a big one. And so we there, we made a lot of some structural changes. You know, we made, we brought in some new people to get some capabilities. We made investment in new tools, software, demand planning software, supply planning, all these different things. So and that extends to other functions. So become better operators. And then, you know, the third theme would be, you know, keeping that mission-driven culture and adding a performance-driven culture. So, you know, mission and margin and being an and company. So those would be the big three categories.
And then all the changes specifically are some of them more tangible, like targeted investments, new tools, new people. And some of it's more cultural as well. But that would be the, you know, invest directing investment, accelerating new and novel technology in high-growth areas, better operators, and this performance-driven culture on top of the mission.
And just from a strategy perspective, I've been around Medtronic in some way, shape, or form for like 20 years as an analyst, as an industry peer, as an unsuccessful competitor in one area. But the company's gone through a series of different evolutions under different leadership. And there was sort of the diversification strategy at one point that kind of Bill Hawkins led and Art led. Then you had the size and scale strategy under Omar. And you've brought sort of an innovation-led, sort of forward-leaning strategy back to the company. Like, how do we kind of think about the evolutions of Medtronic and where we are in that and how we should think about the sustainability of this approach going forward?
Well, I think, look, I'm biased 'cause it's a strategy that me and my team put in place on innovation. But I think the innovation's a winning strategy here. And I've gotten a lot of questions even this morning from investors on the market on med tech. Like, is the growth that we're seeing, the healthy end markets, is that pent-up demand? Is that real or is that pent-up demand, you know, from COVID? Look, it's real. It's what you're seeing. And I'm talking about the med tech markets. You're seeing, you know, better technology, better solutions in high-growth segments. So like PFA, you know, AFib's a good one. You know, aging population, people are getting AFib. It's almost a fait accompli . You live long enough, like wine, you're gonna get AFib. It's that simple.
No one likes taking the drugs, but the ablation techniques were good, but there were some barriers to these ablation techniques, you know, whether it be RF or cryo. And in comes PFA where it's just faster. You don't sacrifice any efficacy or safety. And it's easier for docs. And so it's taking off. And I can go to structural heart TAVR, robotics, diabetes. We're getting so close in the insulin and the automated insulin delivery to mimicking a pancreas. It's these things that are pulling patients in plus the demographics. So it's real. And so innovation in that context is, in my opinion, the strategy.
So, sort of taking that, the comments on overall markets one step further, would you sort of say like, okay, we've had this sort of fluctuations with COVID?
Yeah.
But right now we're in this sort of period of very stable, strong utilization, but the real sort of juice is on the innovation side.
Yeah.
That's where you get outsized performance. And your underlying markets are good, stable. And then there's you named some of them, just a number of new markets being developed and new products coming that help drive the.
Demographics is a tailwind.
Okay.
Okay? But innovation is what's the driver. 'Cause we're not competing with other med tech, so Medtronic, we're competing within med tech, but med tech's competing with other solutions, biopharma, this, that, the other thing. You've gotta have good solutions. You've gotta have evidence. Evidence matters to payers. It's as, you know, payers can't just keep, you know, we can't keep in the U.S., for example, as a percent of GDP, I mean, healthcare's nearing 20%. It can't go to infinity. It can't go to 100, right? So payers are, you know, you know, we're competing against other solutions. And right now we're gaining ground a bit.
You know, I feel like you have to ask the GLP-1 question in any of these settings when you talk about competing with other solutions. You've talked about the impact of bariatric surgery as has changed, as has Intuitive. Can you maybe just sort of talk more broadly about the interplay between your portfolio and some of those other solutions and what you're seeing today and how we should think about it going forward?
You know, look, we've done a lot of analysis on this and, and it's kind of hard to predict these drugs are still new. First of all, it's an important new class of drugs. It's, they, they are getting the weight loss for sure. And, and what we're seeing right now is impact on bariatric surgery. And that's a relatively small part of our business. And you have bariatric surgeons saying that, hey, look, this is gonna come back. You're getting morbidly obese patients to be less obese and make them safer for surgery. I mean, don't quote me on the numbers, but like, it's something along the lines of the GLP-1s will get 15%-20% of weight loss and then bariatric is higher and, and permanent. And, so we'll see how that plays out. Will, will bariatric pop back to its historic growth rates?
But for now it's less than it was, small part of our company. But other than that, we've seen no impact. Diabetes, we get questions and especially given that we're automated insulin delivery. These are Type 1s, intensively managed, insulin-dependent Type 2s. We've seen zero impact. It's the markets continues to grow even faster 'cause the technology gets better.
So I guess given some of these factors as we think about your revenue outlook for this year, the 4%-5% you've talked about coming off a 5%+ quarter in Q4. I appreciate that things can vary quarter to quarter. It would sound like based on stable end markets plus the depth of innovation you have, that 4%-5% is a conservative outlook for the year. Maybe help contextualize the revenue outlook with some of the things that you just.
Well, look, we want to, on the guide, on the top line guide, we want to set ourselves up for success. I'll leave it at that. But to your point, you know, we have six quarters in a row now of mid-single digit growth last fiscal year. And we're coming off of tough comps too. So mid-single digit growth, on top of comps that are mid-single digit growth. And we have this, we're at the beginning stages of these, a lot of these new products. I mean, into these high-growth markets, new and novel technology in high-growth markets. So, you know, we feel good about the guide on the top line, for those reasons.
And maybe we could go into some of these high-growth categories in a little bit more detail. But before we do that, I thought one of the things that has stood out is the performance in how some of your core businesses or more established areas, whether that's spine or parts of CRM. Maybe just before we go into the higher growth areas, you could talk about some of the dynamics you're seeing in the established businesses and how you continue to gain share as a market leader.
Yeah. So, you know, we've segmented our businesses in these three categories, right? Our established market leaders, which is Spine, Cardiac Rhythm and Surgery, right? And that's 50% of our revenue. It's more, it's disproportionate share of our income and our cash flow. And so as we want to invest more in the high-growth areas, these businesses need to be healthy. If we're gonna, you know, drive top-line growth, but also leverage down the P&L and high single digit earnings growth and cash flow, they need to be healthy. And they are. In the case of Cardiac Rhythm, you know, we continue to see growth in leadless pacing as it gets more indications and, you know, global expansion. And we have a really solid lead there.
I mean, you know, other competitors have entered, but our lead is really solid. We've got conduction system pacing . Pacing, this is another example of Medtronic, the example we thought we opened with. I remember when I first started at Medtronic in 2011, pacing was like left for dead. It was like low single digits. That's one of the reasons like we had to diversify 'cause we had so much exposure to cardiac rhythm. Pacing is now growing like high single digits because of leadless, because of conduction system pacing . It's just better, you know, without getting all the clinical details. Traditional pacing, which is a standard of care, does have over time some negative side effects. But with conduction system pacing , you don't have that. And that's new and that's why it's growing. So more patients are getting pacing than before.
Doctors have lowered the bar for to put patient on a pacemaker. Plus you have leadless. So that business is really healthy and growing. Then spine is the one that's really accelerated for us. And this is why it gives us. It, spine is more of a surgical business and the strategy has been simple. It's taken some time to do this, but shift it from an implant-driven to, in terms of the competitive dynamics to, enabling technology, technology-driven. So robotics, navigation, intraoperative imaging, powered instruments, AI-based surgical plans, all integrated together to take, you know, a spine surgery from an art to a science, take variable outcomes to make them less variable, take, you know, average surgeons, make them good surgeons. And from a financial standpoint, it builds one hell of a moat around our business.
We have a 10,000 installed base, a 10,000 unit installed base globally of this large capital, whether it be robots, imaging, navigation. That's 4 times our biggest competitor, Globus, 4 times, and that is the basis of competition. So that business, healthy surgery, you know, still a lot of growth. Surgeries are one business that's most closely tied to population growth. There's surgeries everywhere around the world. And it's our biggest business in almost all of our emerging markets. And there's still a ton of growth going from open to laparoscopic. And we'll talk, I'm sure we'll talk robotics.
Yeah. But that's a good, I mean, a good segue to talk about robotics. I mean, you know, it's been, you know, I think you're getting closer to the U.S. launch of Hugo. I know you haven't provided specific timelines, but maybe just kind of talk to us a little about where we are in the product development and regulatory status and how we should think about the commercialization strategy once you do gain your first indication.
Sure. So, we're just to start with the specifics, you know, we're getting close to wrapping up our pivotal trial here in the U.S. for the urology indication, and we'll be submitting that to the FDA shortly with, and then it's this De Novo 510(k). So the timing of how long it'll take for them to approve that is a little bit hard to predict. And we're not getting in the business of predicting that. But the trial's gone well. We continue to get great feedback on the platform, outside the U.S., in the U.S. and the trial sites. And what we need to do to put this at an, I know we haven't provided a ton of detail on this.
You know, what we need to do to get it to an inflection point here is get it in the U.S. That is still the biggest market. And we've gotta add more instrumentation. So the good news is we've got a great platform. That was the big question. Now we gotta add more instruments to it, especially our energy, and stapling.
So.
That's where you'll start to really feel it in our financials.
Okay. Do you think we're seeing any contribution as we look at your OUS surgery numbers now? Is it big enough to have an impact?
A little, a little bit. Not really.
Okay.
Not really.
How should we think about the commercialization? You get approval, you know, day one, what happens?
In the U.S., well, look, we've got, the way surgeries worked historically is, these big centers have a contract with the big surgery providers. It's historically been us and J&J. One of us is 80%, the other's 20%. I mean, I'm simplifying it, but it's basically like that. and,
Is that on, on sutures or, or?
On everything.
And everything.
Sutures is an important thing.
Yeah.
For us. Sutures has been a real growth, is a real growth driver. We can't, we sell all we make and we keep expanding. It's a high margin for us, which is probably something you didn't suspect. These are the barbed sutures.
But that's part of the package. And I see us bundling all this together for these big contracts. So where it was, if you think about it historically, Intuitive's selling robots that historically weren't doing a ton of procedures. It's more market expansion capital. A lot of the procedures being done by J&J and Medtronic, at least all of them. Now Intuitive's doing more procedures 'cause the robots gotten more functionality. And here comes Medtronic with the robot. And I still think centers are gonna contract with two players by, you know, by and large. And so I like our, I like where we are. We'll put this together as part of our contract with all of our open or our laparoscopic and now Hugo. And Hugo works, you know, with our laparoscopic technology.
You don't have to dedicate a room like you do with the competition for a robot.
I think in terms of where you are, you know, it'll obviously Intuitive's been out there some time. You'll be second. What's your best assessment on where the next closest competitor would be after you?
It's hard to say because we haven't seen anything. We're not hearing anything. We haven't seen anything. So I, I think it's gonna be a while.
And you've talked to either, you know, Intuitive's talked about like 7 million procedures of line of sight. You've given some bigger numbers on soft tissue. But maybe just conceptually, is this a market expansion opportunity with robotics? Is it a share gain opportunity? How should we frame it?
I think it's market expansion. We expect to gain some share here. Again, you know, we're competing against both players, right? So cumulatively, we expect to gain some share. But I think it's market expansion because we're getting more as we from open to laparoscopic to robotic, the pricing is better, higher as you go down across that continuum. And so as robotics takes on more, you're gonna get market expansion just from pricing.
Okay. And speaking of market expansion, it's probably, you know, EP is very top of mind right now.
Yep.
You know, HRS was extraordinary, the enthusiasm, I think, for PFA. Maybe you could just talk about kind of what you're seeing, the overall landscape from a market growth and modality perspective, and then how you see things unfolding with Cryo versus PFA and.
Sure. Well, like I said earlier, I kind of hit on this. I think this is, because of the demographics, because of the lack of, it's not that they're not efficacious, but the lack of uptake on the drug solution, you know, people are looking for an ablation solution and now they have it. PFA, we haven't seen this type of conversion in med tech. I'm told I have to talk to some historians and let that old. But we went from bare metal stents to drug-eluting stents. That was like a really fast conversion. We haven't seen anything like that until now. People are moving pretty fast, you know, 'cause we've got good clinical evidence. It's safe. You've got some strong companies rolling this out, you know, big hefty companies, versus maybe a startup that doesn't have the resources.
So you're seeing it convert. Obviously, us in Boston, Medtronic and Boston Scientific have a good, you know, good position here with our products. And, you know, I think, as we ramp up, you saw us, our PulseSelect outstripped our last quarter, outstripped the growth in our PFA, our PulseSelect product, outstripped the growth or the decline of Cryo. And I think we're gonna grow from here. One surprising statistic that, I think people caught people off guard is, you know, in addition to how quickly it's pivoting, is that half that, those procedures are coming from RF. So not just Cryo. So yeah, Cryo's taking a hit. So is RF moving to PFA. Our PFA product is ramping. It's, we'll grow from here.
What I'm really excited about, I'm excited about that. Then beyond that, so you know, we've got the next gen, that I think will be the market leader. The next gen is coming down the pike. That's our Affera, you know, product. And it's an all-in-one catheter and mapping. I do think that will be the industry leader. So we've got a nice competitive product now. We've got even an industry-leading product coming.
Just on the timing perspective for Affera, is it fair to think like later this calendar year, early next calendar year?
That's what we're saying. You know, it's about that for FDA. What you're talking about is FDA approval.
Yep.
kind of hard to predict. They've been moving it sometimes faster approval on these things. So, but somewhere in that timeframe is Affera.
What's been the uptake like in Europe for Affera since you've had CE Mark, I think, for some time? How has it gone?
It's great. I mean, I wish we had more of it. Yeah. It's just, you know, we're refining the manufacturing process. It is a complicated product to make. And we're putting a lot more of our effort right now also into our existing PFA product, PulseSelect. But it's been phenomenal. It's an all-in-one catheter. So it's got, because even with PFA, some parts of the procedure, docs wanna use RF. And today they gotta grab different catheters. That's very cost-prohibitive. If you have PFA and RF and mapping all-in-one catheter, we think that's a winner.
So, if you achieve the regulatory timelines we just talked about, will you be launch ready from a safety stock perspective?
It really depends on the launch timing or the FDA approval. And, there's a lot of dynamics going on now for us with PulseSelect and ramping that. So it's hard for me. You know, we'll be ready, you know, but, you know, will we be able to satisfy the whole market? I'm not sure.
To the sense where the market is.
Yeah. To the sense where the market, you're asking like.
At that point of the market.
To the sense where the market is, it could, if you see the change from the Gen 1, like, PulseSelect, I'm sorry, Gen 1 PFA products to what I think Affera's call that Gen 2, if that happens as fast as we're seeing from RF and Cryo to PFA, I maybe we won't be able to. I don't know.
Okay. I wanna make sure we get into the PN, P&L, but two, 'cause it's another important thing you brought up earlier. But just two more product questions around renal.
Sure.
What's the latest and when do you think we'll get our next update?
I think the big one is there's updates underneath this umbrella, but the big one is CMS, broad-based CMS reimbursement. We're in, you know, I get a lot of questions on that. The product rollout, you know, despite not having certainty of reimbursement today, it's we're getting great results out there. Physicians love it. Patients love it. Double-digit drops in blood pressure. So there's no question there. Hospital systems are talking about setting up hypertension centers now versus managing this out on the edge with primary care docs pulling it to a hypertension center now that you have a medical procedure that they believe is gonna be profitable. So all that's good. I think the key for the global acceleration of this is, you know, various things in CMS reimbursement and that add up to broad coverage.
That's happening over the next. It's hard to predict, but, you know, couple quarters.
Is there an established process for that?
Yeah. Well, you know, there's established processes and there's new processes 'cause of the breakthrough device designation. So this thing could, we could get reimbursement like in a couple of weeks, you know, it could be a couple of months, you know, it could be a couple quarters. But it's, we're deep in discussions and, you know, I think the U.S. government wants to see this technology out there.
I wanna be mindful of trying to overread into every timing comment you make, but it sounds like you're characterizing this as a FY 2025 event where we'd have cryo.
We'll make progress on the reimbursement in FY 2025.
Okay.
Yeah.
Maybe just rounding out on TAVR, Edwards has been talking about price competition outside the U.S. They've not specifically mentioned any competitor when they talk about the pricing dynamics ex-U.S. But what, what are you seeing in some of the markets outside the U.S.? Is, is that Medtronic cutting price? Is it somebody else? What, what, what are you seeing?
It's not us. It's not us. I for sure. I'd say like the rollout of TAVR has been a really beautiful thing over the last couple of, you know, years. Us and our primary competitor here, Edwards, you know, going from high risk to moderate risk to low risk, you know, clinical data bolstering the efficacy of it. Now I think we have much superior data, which we'll get to in a second. And then from an investor standpoint, holding a price, you know, because of the value of it. You know, so I think it's not us on lowering price. And in the smaller players or big companies, but smaller TAVR players in Europe, their share has been pretty stable over the years despite new product launches, this, that, despite price declines that they've offered.
I don't think it's a price-sensitive market. When you have the technology that the two leaders have, you know, I don't see the incentive to lower price.
Okay. That's helpful. And let's talk about this, the SMART trial . Obviously, yeah, the first head-to-head study in this space. But can you maybe help us think about, is this actually a market, another market expanding trial, or is this a market share trial? How do you think about it?
I think it's, first of all, it's, you know, we call it the SMART trial , but it's also New England Journal of Medicine, you know, published this. So that's, you know, this is the first. We dramatically raised the bar on clinical data with this trial. New England Journal of Medicine published instantly, simultaneously, head-to-head. And we went head-to-head against Edwards' best-performing valve. So I think the two surprises, I guess there's been multiple surprises, I think, to investors, all positive for us. One is that we went head-to-head against their 20 and 23-mm valve. The 23 is their best-performing valve. So we didn't cherry pick. The second surprise, I guess, was just, you know, how big this market is. We're saying it's, you know, small annulus patients, you know, 40%.
It should theoretically be half, you know, 'cause if, but if you tie women to, you know, to small annulus. But, you know, 40%, it's much larger. And then just the sheer gap between us and them on performance and how much better ours performed, I think was surprising. So I know there's a lot of resistance to change out there. And, you know, at first, a little shock and awe. But as the dust has settled on this data, and we get out there and be able to explain to physicians, we are seeing leading indicators on referral pattern changes, which is a big deal. You know, our competition has really good relationships out there. There's a lot of faith in both companies and pros and cons of both companies.
We're shifting that dynamic, I think, to some degree with this. You know, it's so we're seeing that.
That was gonna be my follow-up question, recognizing that you only had six weeks-ish remaining in your quarter subsequent to the data, and then hasn't been that much time since then. But like, how long do you think it's, are you seeing an impact already? And you sort of talked about referral channels, but how long does it take, do you think, before practice change might?
I think it'll take a couple quarters. You got contracting, and then you've got the, you've got to do some change some contracting 'cause there's these, you know, commitments that systems have to us or them. And you gotta shift those contracts. And the referral patterns are, but we're seeing it. We're seeing the leading indicators of it. So I think it's gonna play out over the next couple of quarters.
Okay.
I do think it's market expanding. You know, I underestimated the trial had like 80%+ women. I can't remember. It was almost 90% maybe. Almost 90% women. I didn't recognize, especially in the area of cardiology, and I've heard this now from several female cardiologists, male cardiologists as well, and female patients, that in the world of cardiology, women feel like their symptoms are dismissed. And it's usually a male thing. It's really not, in this case, an aortic valve stenosis. It's both. So we think the word's getting out, and we think this is gonna expand the market.
I wanna make sure we have some time to talk a little about the P&L.
Sure.
Can you talk about performance-driven culture? I think everyone understands the dynamics with foreign exchange. But up until FY 2025, you'd had three years of declining.
Yep.
Reported earnings per share. Maybe talk about how we should think about the earnings profile going forward.
A couple of things. I'd say the last couple of years have been tough on an earnings perspective. I was just thinking about it this morning, just some of the things we've had to overcome. You know, we had to shut down our VADs business. We shut down our Vents business. Our aortic valve Navitor, we, we had to pull it off the market. We got out of renal care. We had the diabetes warning letter. We had a bunch of supply issues coming out of COVID. And then we had China VBP , right? So we, we, that's a lot to eat. And I think a lot of that, that is behind us now. VBP's almost 100% behind. I mean, there's still, there's still a little bit to go and a couple, but the bulk of it's behind us, and it's all in our guidance now.
And so, you know, the changes that we've made into the company make the company better operators, more resilient. And I feel as we go forward, it's implicit in our guide, we're learning how to be more resilient. Things like changes to the op, global operations and supply chain, changes to quality, and quality leadership here. And learning how to leverage our scale a bit so we can grow the top line without growing our G&A as much as we used to. You're starting to get more leverage there. And that, implicit in our guide is, you know, mid-single-digit for the year, actual EPS growth, which is different than the past, as you pointed out, despite some FX headwinds. And then, but we're exiting the year at high single digits. So you're seeing it accelerate.
It is the culmination of a lot of the changes that you asked about that we put in place in terms of culture and performance and capabilities. It's just a commitment to restore the earnings power of the company.
And as I take that, as I think about, you know, maybe some of the components here, you've guided to flat gross margins on an FX neutral basis for this year.
Yep. Stabilized.
Is it the stabilization year and a lot of those initiatives that you've put in place around global supply chain? Look, it just takes time. I appreciate gross margin's the hardest line to move.
It is.
but is that the right way to think about it? This is a year of stabilization, and FY 2026 + is when we see gross margins start to expand, of course, you know, all else being equal.
Yeah. Our goal is to expand it from here.
And then down the rest of the P&L, I think you mentioned at the dinner we had last night that this is a year when you are benefiting from a lot of the G&A initiatives that you've put in place. So you might, I don't know exactly the words you used, sort of a honeymoon period here where you get a lot of the benefit of G&A this year. But as you think about OpEx in the outer years, you need that to grow what, 4% on a sustainable basis once you kind of anniversary some of the G&A savings. I mean.
I don't know if that's to be tied to four, but maybe three. I mean, it's we're gonna get decent leverage. Last year, we benefited from the G&A programs last year and this year.
Okay.
Last year was completely masked by inflation and FX. But we're getting benefits of the programs last year and even more so this year. You know, and so look to our G&A growing meaningfully slower than revenue growth and getting in. So, but that isn't enough. I mean, to, in my opinion, I'd like to see the gross margin expansion. Like to your point, it's the harder one to move. And we've got some one or two mix dynamics that are negative. Like as diabetes keeps growing, that's a lower margin and the robot's a little lower margin. So we've got to offset that. But we've got a number of programs to do that.
And.
Whether it be cost of goods sold reductions, pricing, and other things like we did with Vents where we're looking through the portfolio and getting out of certain products, and enlightening our exposure to certain countries, to help improve the mixed dynamic.
So maybe at a broad level and not asking you for longer-term guidance, maybe just conceptually, you take the 4%-5% top line growth.
Yep.
Gross margin, gross profit grows a little faster than that over time. OpEx grows a little slower. You have sort of operating earnings growing high single digits, maybe buy back a little stocks, keep the share count flat, and the, the dividend gets you to the high single digit total return. Is that a rough?
Yeah.
Yeah. I know it's not precise, but a rough algorithm.
Yeah. So I think we did on the buyback, we did a, a buyback this, this quarter for a number of reasons to offset some short-term, FX headwinds and 'cause we think the share price is low. But my four years as CEO, that's the first time we've done that. It's always been this replaced the share count. So I think that in terms of div buyback, that's where our head is on that. But yeah, we're committed to this, you know, mid-single digit top line and getting that high single digit EPS growth. But you can get that, look, we with these products, there's a couple of levers that we can pull. Could be higher organic growth with some of the product cycles we're in. That would help a lot, some help on the gross margin line.
That sustained discipline on G&A, where leveraging AI, leveraging technology, leveraging centers of excellence to keep the G&A growth minimal. But you need to have some. You know, but that's what we're doing.
Okay. And maybe just to close, it's hard not to, you know, ask an M&A question. I mean, you have bought back stock. You do, you have this commitment around the dividend. You still generated $6 billion in free cash flow next last year. You have very high EBITDA margins. You generate a lot of cash. How do you put this to work on in sort of the play offense type of way from an M&A perspective?
Yeah. Well, like I said, we're not, you know, the buyback was, I think, more of a one-time thing. I wouldn't kind of consider that going forward other than replace shares. I mean, unless some big opportunity comes, like we thought we had this quarter. We're committed to the dividend, and it still leaves a lot of cash. Look, we're where I see. I see still good opportunities in our existing businesses to invest in organically or near adjacencies, in these tuck-in deals. I see some good, like the Affera world. We did this ENT deal a couple of years ago that's panned out really well. So I do see, that is where we're gonna use our money.
Excellent. Well, I think with that, we're out of time. But, thank you for participating in the conference this year. And I think we'll all look forward to August and get the next update on Q1.
All right. Thank you.