Medtronic (MDT) Q1 Earnings Beat, Fiscal 2025 View Narrowed

Core Viewpoint - Medtronic plc reported a strong performance in the first quarter of fiscal 2025, with adjusted earnings per share (EPS) and revenues exceeding expectations, driven by broad-based growth across its major segments [1][2][8]. Financial Performance - Adjusted EPS for the first quarter was $1.23, a 2.5% increase year over year, and beat the Zacks Consensus Estimate by the same margin [1] - Total worldwide revenues reached $7.92 billion, reflecting a 2.8% year-over-year increase on a reported basis and a 5.3% increase on an organic basis, surpassing the Zacks Consensus Estimate by 0.2% [2] Segment Performance - Cardiovascular Portfolio revenues grew 6.9% organically to $3.01 billion, with notable increases in Cardiac Rhythm & Heart Failure sales, which totaled $1.54 billion, up 7.5% year over year [3] - Medical Surgical Portfolio sales were $1.99 billion, up 1% year over year organically, with Surgical & Endoscopy revenues increasing by 1.3% [3] - Neuroscience revenues were $2.32 billion, up 5.3% year over year organically, with Neuromodulation reporting 9.6% organic growth [4] - Diabetes revenues rose 12.6% organically to $647 million, driven by the adoption of the MiniMed 780G system [4] Margins and Expenses - Gross margin contracted by 76 basis points to 65.1%, attributed to a 5.1% rise in the cost of revenues [5] - Research and development expenses increased by 1.2% to $676 million, while selling, general, and administrative expenses rose by 1.6% to $2.66 billion [5] - Adjusted operating margin decreased by 25 basis points year over year to 23% [5] Guidance - Medtronic updated its fiscal 2025 guidance, projecting organic revenue growth in the range of 4.5-5% [6] - The Zacks Consensus Estimate for fiscal 2025 worldwide revenues is $33.42 billion, indicating a 3.3% growth from the previous year [7] - Full-year adjusted EPS is projected to be between $5.42 and $5.50, slightly raised from earlier estimates [7] Strategic Developments - The company experienced durable growth across its segments, supported by new regulatory approvals and product launches, including the Evolut FX+ TAVR system and FDA approval for Simplera CGM [8] - A global partnership with Abbott was announced to enhance future CGM offerings [8]