Financial Data and Key Metrics Changes - The company reported revenue of $9 billion, reflecting an 8.7% increase year-over-year and a 6% organic growth, which is a 50 basis point acceleration from the previous quarter [18][19] - Adjusted gross margin was 64.9%, ahead of expectations, with a 30 basis point benefit from pricing [19][20] - Adjusted operating profit was $2.2 billion, resulting in an adjusted operating margin of 24.1%, also ahead of expectations [21] Business Line Data and Key Metrics Changes - The cardiovascular portfolio delivered 11% year-over-year revenue growth, with 13% growth in the U.S., marking the strongest growth in the last 10 years, excluding COVID comparisons [12] - Cardiac rhythm management (CRM) contributed 15% of total revenue and grew 5%, driven by double-digit growth in Micra and over 70% growth in Aurora EV-ICD [12][13] - The neuroscience portfolio grew 3%, with expectations for the pipeline to impact growth in the fourth quarter [14][15] Market Data and Key Metrics Changes - U.S. growth was 6% year-over-year, the strongest performance since fiscal year 2019, excluding COVID comparisons [19] - In China, low single-digit growth was reported while navigating volume-based procurement challenges [19] - Western Europe experienced high single-digit growth, contributing to balanced geographical performance [19] Company Strategy and Development Direction - The company is focused on expanding its innovation pipeline, particularly in high-growth areas such as hypertension treatment with Symplicity and urinary incontinence with Altaviva [2][3] - The launch of the Hugo robotic system is seen as a significant growth driver, with initial installations and positive feedback from early cases [5][6] - The company is committed to M&A strategies, focusing on tuck-in deals that align with existing business segments [59][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining revenue and earnings growth, highlighting strong contributors like CAS and CRM [10][24] - The company anticipates continued growth from new product launches and market expansions, particularly in the U.S. [10][39] - There is an expectation for high single-digit EPS growth in fiscal year 2027, despite some headwinds from tariffs and M&A activities [24][68] Other Important Information - The planned separation of the MiniMed diabetes business is on track, with expectations for completion by the end of calendar year 2026 [18] - The company is investing in R&D and marketing to support growth areas, particularly in renal denervation and Altaviva [66] Q&A Session Summary Question: Comments on accelerating revenue growth next year and high single-digit earnings growth - Management indicated that growth will continue, driven by strong performance in CAS and other growth drivers like Symplicity and Altaviva [30][39] Question: Monitoring progress for RDN and Altaviva - Management mentioned strong leading indicators, including training of over 500 physicians and opening of new accounts for RDN [43] Question: Thoughts on capital allocation and M&A strategy - The company is focused on tuck-in M&A opportunities that align with existing business segments, prioritizing high-growth areas [59][60] Question: Impact of Hugo on surgical business growth - Management expressed excitement about the Hugo system's potential, noting positive feedback from initial cases and strong leading indicators [87]

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]

Company Overview - Medtronic PLC is the largest medtech company globally by revenue, with a history of innovation and market leadership since the 1940s [3] - The company's revenue segments include Cardiology (37%), Neuroscience (29%), Medical Surgical (25%), and Other (9%) [3] Stock Performance - Medtronic's stock price has appreciated only 15% over the past decade and has decreased by 8% in the last five years, indicating long-term investor frustration [4] - The company has delivered mid-single digit revenue growth for the past 10 years, which has been underwhelming compared to peers [4] Strategic Changes - Following engagement with Elliott Investment Management, Medtronic appointed John Groetelaars and Bill Jellison to its board and formed a Growth Committee and an Operating Committee [2][5] - The Growth Committee will focus on portfolio management, identifying tuck-in M&A opportunities, and reviewing existing business inefficiencies [5] - The Operating Committee aims to address margin challenges and improve gross margin expansion, which has eroded approximately 500 basis points since the Covid-19 pandemic [6] Future Growth Prospects - Medtronic plans to spin off its diabetes business within the next 15 months to concentrate on core operations [7] - Two product developments, PulseSelect and Symplicity Spyral, are expected to contribute significantly to long-term growth [7] Activist Engagement - Elliott Investment Management has successfully completed the activist phase of its engagement and is now focused on the business turnaround [8] - The addition of directors with extensive medtech experience is aimed at enhancing the company's strategic direction [8]