Medtronic PLC (MDT) Q1 2026 Earnings Call Highlights: Strong Revenue Growth and Raised EPS Guidance

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Revenue: $8.6 billion, grew 8.4% reported and 4.8% organic. Cardiovascular Growth: 7% growth, driven by nearly 50% growth in cardiac ablation solutions. Neuroscience Growth: 3% growth, with mid-single-digit growth in cranial and spinal technologies. Medsurge Growth: 2% growth, with high single-digit growth in advanced energy. Diabetes Growth: 8% growth, including 11% growth in international markets. Adjusted Gross Margin: 65.1%, down 80 basis points year over year. Adjusted Operating Margin: 23.6%. Adjusted EPS: $1.26, $0.03 above the midpoint of guidance. R&D Investment: Up 7.7%, 100 basis points ahead of revenue growth. Fiscal Year '26 Organic Revenue Growth Guidance: Approximately 5%. Fiscal Year '26 EPS Guidance: Raised to $5.60 to $5.66.

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Release Date: August 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Medtronic PLC (NYSE:MDT) reported consistent mid-single-digit revenue growth, with EPS exceeding guidance. The cardiovascular segment showed strong performance, with nearly 50% growth in cardiac ablation solutions driven by innovative product rollouts. The company raised its EPS guidance for the full year, reflecting confidence in continued financial acceleration. Medtronic PLC (NYSE:MDT) is poised for growth in the second half of the fiscal year, with several product launches and market expansions planned. The planned separation of the diabetes business is expected to be EPS accretive and improve operating margins, enhancing shareholder value.

Negative Points

Neuroscience growth was below trend due to specialty therapies, though improvements are expected in subsequent quarters. The Medsurge segment grew only 2%, aligning with expectations but indicating slower growth compared to other segments. The diabetes segment faced challenges in the US market, with growth primarily driven by international sales. Gross margin decreased by 80 basis points year-over-year, impacted by business mix and manufacturing ramp-up costs. Tariffs are expected to have a negative impact of approximately $185 million for fiscal '26, though this is an improvement from previous estimates.

Q & A Highlights

Q: Can you provide an update on the CAS business and its impact on overall growth? A: Geoff Martha, CEO, explained that the CAS business is accelerating, with 72% growth in the US. The company is confident in its ability to accelerate growth over FY26, with new technologies and a strong pipeline expected to have an outsized impact on US growth. Thierry Pieton, CFO, added that the US growth was impacted by slower growth in certain areas, but expects improvement as new products ramp up.

Story Continues

Q: What is the purpose of the new Board committees focused on growth and operations? A: Geoff Martha, CEO, stated that the committees will provide focus and support management, particularly in growth and operational performance. The committees will include new directors with deep medtech experience and will have more frequent interactions with management to drive focus and execution.

Q: Is the $2 billion target for annual CAS sales achievable in fiscal '26? A: Geoff Martha, CEO, confirmed that the target of an additional $1 billion on top of the FY25 base is on track. While it might extend into FY27, the company is confident in achieving this near-term goal.

Q: How will the new directors and committees impact capital allocation and EPS growth? A: Geoff Martha, CEO, emphasized that the company is entering a new chapter focused on value creation. This includes more M&A, portfolio optimization, and increased investment in growth drivers. The committees will help ensure these strategies are executed effectively.

Q: Can you discuss the potential impact of renal denervation on Medtronic's growth profile? A: Geoff Martha, CEO, highlighted that renal denervation (RDN) is a significant growth opportunity, with a massive patient population. The company is investing in market development and expects RDN to be a major driver of growth, potentially becoming one of the largest product categories for Medtronic.

Q: What is the status of the diabetes business separation and its impact on growth? A: Thierry Pieton, CFO, confirmed that the separation is on track, with completion expected within 15 months. The diabetes business is entering a strong innovation cycle, and the separation is expected to be a value-creating event for shareholders.

Q: How is the Hugo robotic system performing in international markets, and what are the expectations for the US launch? A: Michael Marinaro, EVP, stated that Hugo is performing well in over 30 countries, with significant double-digit growth in current accounts. The system's modular design and partnership approach are key strengths. The company is preparing for the US launch, with FDA approval processes underway.

Q: What are the growth prospects for Medtronic's slower-growing businesses? A: Geoff Martha, CEO, noted that several slower-growing businesses have specific growth accelerators, such as new products and market expansions. The company is focused on driving growth across all segments, with organic and inorganic strategies.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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