Medtronic (NYSE:MDT) Q3 2026 Earnings call February 17, 2026 08:00 AM ET Company ParticipantsGeoff Martha - Chairman and CEOIngrid Goldberg - VP and Head of Investor RelationsThierry Piéton - EVP and CFOConference Call ParticipantsChris Pasquale - Equity Research AnalystChris Pasquale - Partner and Senior Analyst of Medical Devices and SuppliesDanielle Antalffy - Equity Research Analyst of Medical Devices and SuppliesJoanne Wuensch - Managing Director and Senior Equity Research Analyst of Medical Technology ...

Financial Data and Key Metrics Changes - The company reported revenue of $9 billion, growing 8.7% reported and 6% organic, which is a 50 basis point acceleration from the prior quarter and 50 basis points above guidance [15][18] - Adjusted gross margin was 64.9%, ahead of expectations, with a 30 basis point benefit from pricing and a negative 100 basis points impact from mix [16][17] - Adjusted operating profit was $2.2 billion, resulting in an adjusted operating margin of 24.1%, also ahead of expectations [18] Business Line Data and Key Metrics Changes - The cardiovascular portfolio delivered 11% year-over-year revenue growth, with CAS growing 80% year-over-year, primarily driven by PFA [10][11] - Cardiac rhythm management (CRM) contributed 15% of total revenue and grew 5%, driven by double-digit growth in Micro and over 70% growth in Aurora EV-ICD [10] - Neuroscience portfolio grew 3%, with cranial and spinal technologies delivering mid-single-digit growth [11][12] - The diabetes business, MiniMed, delivered 15% reported and over 8% organic growth, led by strong performance in international markets [14] Market Data and Key Metrics Changes - U.S. growth was 6% year-over-year, the strongest performance since fiscal year 2019, excluding COVID comparisons [16] - In China, low single-digit growth was reported, with mid-single-digit growth excluding volume-based procurement impacts [16] Company Strategy and Development Direction - The company is focused on driving sustained innovation across its portfolio, with significant investments in R&D and M&A to capitalize on high-growth opportunities [5][22] - The launch of Hugo and the expansion of Symplicity and UltraViva are key growth drivers, with expectations for these products to significantly impact revenue in the coming quarters [8][9] - The company is committed to a two-step IPO and split for the MiniMed business, expected to be completed by the end of calendar year 2026 [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, highlighting strong contributors and businesses positioned for meaningful growth [8][22] - The company anticipates continued growth in the cardiovascular market, with expectations for high teens growth in fiscal 2027 [50] - Management acknowledged challenges in certain segments but emphasized plans to strengthen competitiveness and improve growth trajectories [9][22] Other Important Information - The company is actively pursuing M&A opportunities, focusing on tuck-in deals that align with its strategic goals [59] - The impact of tariffs on gross margin is expected to be approximately $185 million, with ongoing efforts to mitigate these effects [19][21] Q&A Session Summary Question: Comments on accelerating revenue growth next year - Management highlighted strong growth in CAS and other key drivers like Symplicity and UltraViva, expecting continued growth into FY 2027 [26][28] Question: Clarification on product launch progress for RDN and UltraViva - Management noted strong leading indicators for both products, including physician training and account openings, with plans to provide more concrete goalposts in the future [41][42] Question: Thoughts on capital allocation and M&A strategy - Management confirmed a focus on tuck-in M&A opportunities and strategic investments in high-growth areas, emphasizing a balanced approach to capital allocation [58][59] Question: Insights on CAS growth and market dynamics - Management expressed confidence in sustaining CAS growth, anticipating continued strong performance in the cardiovascular market [50][52] Question: Guidance for fiscal 2027 and EPS growth - Management reiterated high single-digit EPS growth guidance for FY 2027, factoring in various headwinds and growth drivers [66][69]