Medtronic Today MDT Medtronic $96.25 Dividend Yield 3.19% P/E Ratio 24.56 Price Target $98.19 Add to Watchlist Medtronic's NYSE: MDT FQ1 results and guidance update did not spark a rally in the share price. Still, they did affirm a robust outlook that includes accelerating business growth, improving profitability, and reversing the stock price action. The critical takeaways are that growth was present, outperformed the consensus reported by MarketBeat, and guidance was improved. Get Medtronic alerts: Among ...

Core Insights - Medtronic plc (MDT) reported first-quarter fiscal 2026 adjusted earnings per share (EPS) of $1.26, a 2.4% increase year-over-year, surpassing the Zacks Consensus Estimate by 2.4% [1][10] - The company's worldwide revenues for the quarter reached $8.58 billion, reflecting an 8.3% year-over-year increase and exceeding the Zacks Consensus Estimate by 2.5% [3][10] Revenue Breakdown - Cardiovascular segment revenues grew 7% organically to $3.23 billion, with Cardiac Rhythm & Heart Failure sales increasing 9.1% to $1.71 billion [5] - Medical Surgical revenues totaled $2.08 billion, up 2.4% year-over-year organically, with Surgical & Endoscopy revenues at $1.61 billion [6] - Neuroscience revenues reached $2.42 billion, a 3.1% organic increase, while Diabetes revenues rose 7.9% to $721 million [7] Margin Performance - Gross margin contracted by 10 basis points to 65% due to an 8.7% rise in the cost of revenues [8] - Adjusted operating margin expanded by 81 basis points year-over-year to 23.8% [8] Fiscal 2026 Outlook - Medtronic raised its full-year EPS outlook to $5.60-$5.66, with organic revenue growth projected at 5% [10][11] - The Zacks Consensus Estimate for fiscal 2026 worldwide revenues is $35.29 billion, indicating a 5.2% growth from the previous year [12] Strategic Developments - The company announced the addition of two independent directors and the formation of two special board committees focused on growth and operations, which may introduce short-term uncertainty [2]

Group 1 - The Zacks Style Scores provide a unique rating system for stocks based on value, growth, and momentum, helping investors identify securities with high potential to outperform the market in the short term [2][3][6] - Each stock is rated from A to F, with A indicating the highest potential for outperformance, and the Style Scores are categorized into Value Score, Growth Score, Momentum Score, and VGM Score [3][4][5] Group 2 - The Zacks Rank is a proprietary model that uses earnings estimate revisions to guide investors, with 1 (Strong Buy) stocks achieving an average annual return of +23.75% since 1988, significantly outperforming the S&P 500 [7][9] - Investors are encouraged to focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for the best chances of high returns [9][10] Group 3 - Medtronic, Inc. (MDT) is currently rated 3 (Hold) on the Zacks Rank, with a VGM Score of A, indicating it may be a suitable option for growth investors [11][12] - MDT is forecasted to have a year-over-year earnings growth of 1.1% for the current fiscal year, with a Zacks Consensus Estimate of $5.55 per share [12]

Financial Data and Key Metrics Changes - The company reported Q1 revenue of €8.6 billion, growing 8.4% reported and 4.8% organic, in line with guidance [38] - Adjusted EPS was €1.26, exceeding the midpoint of guidance by €0.03 [42] - Adjusted gross margin was 65.1%, down 80 basis points year over year, but stable compared to Q4 [38] Business Line Data and Key Metrics Changes - Cardiovascular grew 7% this quarter, driven by nearly 50% growth in Cardiac Ablation Solutions [21][22] - Neuroscience grew 3%, with high single-digit growth in neurosurgery and neuromodulation [11][28] - MedSurg grew 2%, with high single-digit growth in Advanced Energy [31] - Diabetes grew 8%, with 11% growth in international markets [34] Market Data and Key Metrics Changes - The U.S. market showed slower growth in certain segments, particularly in diabetes and pelvic health, while international markets performed better [60] - The company expects to ramp up procedures for the SIMPLICITY system following CMS's proposed national coverage decision [25][27] Company Strategy and Development Direction - The company is focused on accelerating growth through innovation and strategic investments in high-growth areas like CAS and Ardian [19][20] - A planned separation of the diabetes business is expected to enhance focus on core businesses and improve revenue and earnings growth [19][37] - New board committees have been established to enhance focus on growth and operational efficiency [48][49] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in accelerating growth in the second half of fiscal 2026, driven by strong demand and new product launches [7][19] - The company anticipates significant revenue growth from its PFA portfolio and other upcoming product launches [13][14] - Management highlighted the importance of maintaining pricing discipline and improving operational efficiencies to support growth [38][45] Other Important Information - The company is increasing investments in R&D, with a 7.7% increase in adjusted R&D spending [40] - The anticipated impact of tariffs has been adjusted, with expectations now at approximately €185 million for fiscal 2026 [44] Q&A Session All Questions and Answers Question: Update on CAS growth and its impact on U.S. growth - Management confirmed that CAS growth is accelerating and will positively impact U.S. growth, despite some segments showing slower growth [56][58] Question: Impact of new board committees on governance and operations - The new committees will provide focused oversight on growth and operational performance, with increased interaction with management expected to drive improvements [68][70] Question: Commitment to CAS annual sales target - Management reaffirmed the commitment to achieving $2 billion in annual CAS sales, indicating strong confidence in the growth trajectory [76][78] Question: Discussion on capital allocation and potential changes - Management indicated that the new board members and committees will facilitate discussions on capital allocation and value creation strategies [81][89] Question: Overall portfolio growth expectations - Management stated that while significant growth opportunities exist, they will not neglect the rest of the business and expect to see incremental growth from various segments [99][100]

Financial Data and Key Metrics Changes - The company reported Q1 revenue of €8.6 billion, growing 8.4% reported and 4.8% organic, in line with guidance [38] - Adjusted EPS was €1.26, exceeding the midpoint of guidance by €0.03 [42] - Adjusted gross margin was 65.1%, down 80 basis points year over year, but stable compared to Q4 [38][39] Business Line Data and Key Metrics Changes - Cardiovascular grew 7% this quarter, with cardiac ablation solutions achieving nearly 50% growth [20][21] - Neuroscience grew 3%, with high single-digit growth in neurosurgery and neuromodulation [10][27] - MedSurg grew 2%, with advanced energy showing high single-digit growth [31] - Diabetes grew 8%, driven by the strength of the 780G system and Simplera Sync Sensor in international markets [34] Market Data and Key Metrics Changes - The U.S. market showed slower growth in certain segments, particularly in diabetes and pelvic health, while international markets performed better [61] - CAS growth was particularly strong in the U.S. and Japan, with low 70s growth in the U.S. and low 30s growth internationally [20][21] Company Strategy and Development Direction - The company is focused on accelerating growth through innovation in med tech and has raised its EPS guidance for the full year [6][7] - A planned separation of the diabetes business is expected to sharpen focus on core high-growth opportunities [17][37] - New board committees have been established to enhance focus on growth and operational efficiency [49][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to accelerate growth throughout fiscal 2026, citing strong demand and a robust product pipeline [6][17] - The company anticipates significant growth from the cardiac ablation solutions and renal denervation segments [12][13] - Management highlighted the importance of operational efficiency and innovation to drive long-term shareholder value [18][46] Other Important Information - The company expects to finalize the national coverage determination for the simplicity procedure for hypertension by October 8 [25] - The company is investing significantly in R&D, with a 7.7% increase in adjusted R&D spending [40] Q&A Session Summary Question: Update on CAS growth and its impact on U.S. growth - Management confirmed confidence in CAS growth, noting strong demand and utilization, and expects it to positively impact U.S. growth in the future [56][60] Question: Impact of new board committees on governance and capital allocation - Management explained that the new committees will provide focused oversight on growth and operational performance, enhancing communication with management [70][72] Question: Commitment to CAS annual sales target - Management reiterated commitment to the $2 billion annual sales target for CAS, indicating strong momentum and confidence in achieving this goal [76][78] Question: Discussion on capital allocation and EPS growth - Management emphasized a renewed focus on value creation, including potential M&A opportunities and increased investment in growth drivers [81][86] Question: Overall portfolio growth expectations - Management indicated that while significant growth drivers are emerging, the overall business will continue to improve, with a focus on maintaining operational efficiency and EPS growth [95][100]

Group 1 - Medtronic reported quarterly earnings of $1.26 per share, exceeding the Zacks Consensus Estimate of $1.23 per share, and showing an increase from $1.23 per share a year ago, resulting in an earnings surprise of +2.44% [1] - The company achieved revenues of $8.58 billion for the quarter ended July 2025, surpassing the Zacks Consensus Estimate by 2.50%, and up from $7.92 billion year-over-year [2] - Medtronic has outperformed the S&P 500 with a share price increase of about 16.2% since the beginning of the year, compared to the S&P 500's gain of 9.7% [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is $1.33 on revenues of $8.73 billion, and for the current fiscal year, it is $5.55 on revenues of $35.29 billion [7] - The Zacks Industry Rank indicates that the Medical - Products industry is in the top 39% of over 250 Zacks industries, suggesting that stocks in the top 50% outperform those in the bottom 50% by more than 2 to 1 [8]

Financial Performance - Medtronic reported Q1 FY26 revenue of $8.539 billion, a 6.7% increase compared to Q1 FY25, with organic revenue growth of 4.8%[24] - Adjusted diluted EPS was $1.26, a 2.4% increase year-over-year[24] - The company is raising FY26 EPS guidance and expects high-single digit EPS growth in FY27[15, 58] Segment Performance - Cardiovascular segment revenue reached $3.285 billion, with 7.0% organic growth[21, 40] - Cardiac Ablation Solutions experienced nearly 50% global growth, including over 70% US growth[15, 32, 39] - Neuroscience segment revenue was $2.416 billion, with 3.1% organic growth[21, 45] - Medical Surgical segment revenue totaled $2.083 billion, with 2.4% organic growth[21, 50] - Diabetes segment revenue was $721 million, with 7.9% organic growth[21, 55] Strategic Initiatives - Medtronic is executing strategic portfolio management, including Diabetes separation within 15 months[15, 55] - The company anticipates a net FY26 tariff impact of approximately $185 million, a decrease from the previous estimate of $200-350 million[15] Future Outlook - Medtronic expects revenue growth to accelerate in the second half of the fiscal year due to significant product launches[14, 31] - Cardiac Ablation Solutions is expected to grow even faster in Q2 and H2 due to PFA supply expansion[15]

[Medtronic Q1 FY2026 Earnings Release](index=1&type=section&id=Medtronic%20Q1%20FY2026%20Earnings%20Release) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) The company reported its 11th consecutive quarter of mid-single digit organic revenue growth and raised its full-year EPS guidance Q1 FY2026 Key Financial Metrics | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Revenue | $8.6B | +8.4% as reported | | Adjusted Revenue | $8.5B | +4.8% organic | | GAAP Diluted EPS | $0.81 | +1% | | Non-GAAP Diluted EPS | $1.26 | +2% | - The company raised its full-year FY26 EPS guidance while reiterating its organic revenue growth guidance[3](index=3&type=chunk)[10](index=10&type=chunk) - Cardiac Ablation Solutions revenue demonstrated significant strength, increasing by **nearly 50%** overall and **72% in the U.S.**, driven by pulsed field ablation (PFA) products[3](index=3&type=chunk) - Management expressed confidence in accelerating revenue growth in the second half of the fiscal year, citing progress on major growth drivers[4](index=4&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) The company saw reported revenue growth of 8.4%, improved GAAP operating margins, and generated $584 million in free cash flow [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Q1 FY2026 Revenue Performance | Metric | Q1 FY26 | Q1 FY25 | Growth | | :--- | :--- | :--- | :--- | | Total Reported Revenue | $8.578B | $7.915B | +8.4% | | Total Organic Revenue | $8.347B | $7.967B | +4.8% | - The organic revenue growth calculation for the quarter excludes a **$159 million** benefit from foreign currency and **$72 million** in 'Other revenue'[7](index=7&type=chunk)[28](index=28&type=chunk) [Profitability Analysis](index=3&type=section&id=Profitability%20Analysis) Q1 FY2026 Profitability Metrics (GAAP vs. Non-GAAP) | Metric | GAAP Value | GAAP Change | Non-GAAP Value | Non-GAAP Change | | :--- | :--- | :--- | :--- | :--- | | Operating Profit | $1.445B | +13% | $2.016B | +3% | | Operating Margin | 16.8% | +70 bps | 23.6% | -80 bps | | Net Income | $1.040B | Flat | $1.626B | +2% | | Diluted EPS | $0.81 | +1% | $1.26 | +2% | [Cash Flow Analysis](index=15&type=section&id=Cash%20Flow%20Analysis) Q1 FY2026 Cash Flow Summary | Metric | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $1,088M | $986M | | Additions to PP&E | ($504M) | ($520M) | | **Free Cash Flow** | **$584M** | **$466M** | - The company's net cash used in financing activities was **$1.381 billion**, primarily driven by payments on long-term debt ($1.162 billion) and dividend payments ($910 million)[60](index=60&type=chunk) [Business Segment Performance](index=2&type=section&id=Business%20Segment%20Performance) All business segments contributed to growth, led by the Cardiovascular portfolio with 7.0% organic growth and Diabetes with 7.9% [Cardiovascular Portfolio](index=2&type=section&id=Cardiovascular%20Portfolio) Cardiovascular Revenue (Organic) | Sub-segment | Q1 FY26 Revenue | Organic Growth | | :--- | :--- | :--- | | **Total Cardiovascular** | **$3.217B** | **+7.0%** | | Cardiac Rhythm & Heart Failure | $1.676B | +9.1% | | Structural Heart & Aortic | $908M | +6.1% | | Coronary & Peripheral Vascular | $633M | +2.9% | [Neuroscience Portfolio](index=2&type=section&id=Neuroscience%20Portfolio) Neuroscience Revenue (Organic) | Sub-segment | Q1 FY26 Revenue | Organic Growth | | :--- | :--- | :--- | | **Total Neuroscience** | **$2.389B** | **+3.1%** | | Neuromodulation | $496M | +8.6% | | Cranial & Spinal Technologies | $1.199B | +4.5% | | Specialty Therapies | $694M | -2.7% | [Medical Surgical Portfolio](index=3&type=section&id=Medical%20Surgical%20Portfolio) Medical Surgical Revenue (Organic) | Sub-segment | Q1 FY26 Revenue | Organic Growth | | :--- | :--- | :--- | | **Total Medical Surgical** | **$2.044B** | **+2.4%** | | Surgical & Endoscopy | $1.580B | +2.3% | | Acute Care & Monitoring | $464M | +2.6% | [Diabetes Business](index=3&type=section&id=Diabetes%20Business) Diabetes Revenue | Metric | Q1 FY26 Revenue | Growth | | :--- | :--- | :--- | | Reported | $721M | +11.5% | | Organic | $698M | +7.9% | [Geographic Performance](index=10&type=section&id=Geographic%20Performance) International markets demonstrated robust organic growth of 6.1%, outpacing the U.S. market's 3.5% organic growth [U.S. Revenue](index=10&type=section&id=U.S.%20Revenue) U.S. Revenue Performance (Organic) | Segment | Q1 FY26 Revenue | Organic Growth | | :--- | :--- | :--- | | **Total U.S.** | **$4.205B** | **+3.5%** | | Cardiovascular | $1.479B | +5.5% | | Neuroscience | $1.624B | +3.8% | | Medical Surgical | $884M | +0.4% | | Diabetes | $217M | +0.9% | [International Revenue](index=11&type=section&id=International%20Revenue) International Revenue Performance (Organic) | Segment | Q1 FY26 Revenue | Organic Growth | | :--- | :--- | :--- | | **Total International** | **$4.142B** | **+6.1%** | | Cardiovascular | $1.737B | +8.3% | | Neuroscience | $765M | +1.7% | | Medical Surgical | $1.159B | +4.0% | | Diabetes | $481M | +11.4% | [FY2026 Financial Guidance](index=3&type=section&id=FY2026%20Financial%20Guidance) The company reiterated its organic revenue growth guidance of approximately 5% and raised its non-GAAP EPS guidance to a new range - The company continues to expect FY26 organic revenue growth of **approximately 5%**[10](index=10&type=chunk) - Reported revenue growth for FY26 is expected to be in the range of **6.5% to 6.8%**, assuming recent foreign currency exchange rates[10](index=10&type=chunk) Updated FY2026 Diluted Non-GAAP EPS Guidance | Guidance | Prior Range | New Range | | :--- | :--- | :--- | | Diluted Non-GAAP EPS | $5.50 - $5.60 | $5.60 - $5.66 | - The EPS guidance was raised due to Q1 outperformance and a reduced potential impact from tariffs, now estimated at **approximately $185 million**[13](index=13&type=chunk)[14](index=14&type=chunk) [Non-GAAP Financial Measures](index=5&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like organic revenue and adjusted EPS to provide insight into core operational performance - Management believes non-GAAP measures are useful for understanding underlying operational performance and facilitating comparisons with other companies in the med-tech industry[22](index=22&type=chunk) - Key non-GAAP adjustments in Q1 FY26 included amortization of intangible assets, restructuring costs, acquisition-related items, and gains/losses on minority investments[45](index=45&type=chunk) - The company does not provide reconciliations for forward-looking non-GAAP guidance to GAAP guidance because the timing and impact of potential charges are inherently uncertain[23](index=23&type=chunk)

Core Viewpoint - Medtronic plc has appointed John Groetelaars and Bill Jellison as independent directors to enhance its strategic focus and operational execution, following constructive engagement with Elliott Management [1][4][5] Group 1: Board Appointments and Committees - John Groetelaars and Bill Jellison have been appointed to the Board of Directors, effective immediately [1] - The Board has formed new Growth and Operating committees to improve strategic portfolio management and capital allocation, with CEO Geoff Martha serving as Chair [2][3] - Groetelaars and Jellison will also serve on one or both of the newly formed committees [2] Group 2: Strategic Focus and Growth Initiatives - The formation of the committees aims to align governance with management's focus on operational improvement and capital allocation [2] - The Growth Committee will guide evaluations of M&A opportunities, R&D investments, and potential divestitures, including the separation of the Diabetes business [6] - The Operating Committee will focus on optimizing operational performance and driving earnings acceleration [6] Group 3: Future Outlook and Investor Engagement - Medtronic plans to host an Investor Day in mid-2026 to discuss strategic priorities and financial algorithms [3] - The company is experiencing strong momentum with multiple growth drivers and plans to launch additional breakthrough therapies [3] - Elliott Management expresses confidence in Medtronic's potential for exceptional value creation through operational improvements and strategic clarity [5] Group 4: New Board Member Backgrounds - John Groetelaars has over 30 years of experience in the medical device sector, previously serving as interim CEO of Dentsply Sirona and CEO of Hillrom [8][9] - William Jellison is a former CFO of Stryker Corporation and has extensive experience in corporate finance within the medical technology industry [10][11]

Core Insights - Medtronic plc reported its first quarter fiscal 2026 financial results, achieving mid-single digit organic revenue growth for the 11th consecutive quarter, with expectations to accelerate growth in the second half of the fiscal year [1][2][3] Financial Performance - The company reported worldwide revenue of $8.578 billion, an increase of 8.4% as reported and 4.8% on an organic basis [3][4] - GAAP operating profit was $1.445 billion with an operating margin of 16.8%, reflecting a 13% increase and a 70 basis point improvement [3][4] - Non-GAAP operating profit was $2.016 billion with a margin of 23.6%, showing a 3% increase but an 80 basis point decrease [3][4] Earnings and Guidance - GAAP net income was $1.040 billion, with diluted earnings per share (EPS) at $0.81, remaining flat, while non-GAAP diluted EPS increased by 2% to $1.26 [4][8] - The company raised its FY26 EPS guidance to a range of $5.60 to $5.66, up from the previous range of $5.50 to $5.60, and reiterated its organic revenue growth guidance of approximately 5% [7][8][9] Segment Performance - Cardiac Ablation Solutions revenue surged nearly 50%, with a 72% increase in the U.S. driven by pulsed field ablation products [4][5] - The Cardiovascular Portfolio generated $3.285 billion in revenue, a 9.3% increase as reported and 7.0% organic [5][19] - The Diabetes business reported revenue of $721 million, an increase of 11.5% as reported and 7.9% organic [5][19] International and U.S. Revenue - International revenue reached $4.354 billion, a 13.6% increase, while U.S. revenue was $4.224 billion, reflecting a 3.5% increase [22][19] - The Cardiovascular segment in the international market grew by 12.6%, with notable increases in Cardiac Rhythm & Heart Failure and Structural Heart & Aortic categories [22][19] Operational Efficiency - The company is focused on improving efficiencies in manufacturing, supply chain, and operating expenses to drive earnings growth while increasing investments in R&D, sales, and marketing [9][8]