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Medtronic PLC Earnings - Analysis & Highlights for Q3 2025
Overview
PositivesNegativesOutlook
- Revenue of $8.3 billion in Q3 grew by 4.1% organically.
- Adjusted EPS was $1.39, up by 6.9% in Q3.
- The company continues to see stronger overall growth in international markets, which grew by 5%, including high single-digit growth in Japan.
- The company is gaining share worldwide in areas like LigaSure and barbed sutures.
- The company believes the safety profile of its PFA technology is a significant point of differentiation competitively.
- The company is facing market and competitive pressures in its stapling franchise.
- The company is facing volatility within the China line due to VBP.
- The company is facing a 5-point impact from foreign currency on EPS.
- The company expects its restored earnings power and strong operating margin expansion to continue in Q4, resulting in high single-digit adjusted EPS growth in the back half of the fiscal year.
- The company expects to deliver mid-single-digit revenue growth in Q4.
- The company expects to accelerate revenue and EPS growth in Q4.
- The company expects to resolve the distributor issue in Q1, when these distributors reach their target inventory levels.
- The company expects to accelerate CV and drive upside going forward.
Q&A Highlights from Medtronic PLC Earnings Call Q3 2025
- Analyst asked about the company's growth prospects and whether they can manage their P&L to drive earnings.
- The company's objective is to drive profitable growth and operating leverage at Medtronic. They are committed to their LRP and expect to achieve their targets for organic revenue growth and realized EPS growth in the back half of the year. They also have the ability to manage their P&L and drive earnings.
- The company's objective is to drive profitable growth and operating leverage at Medtronic. They are committed to their LRP and expect to achieve their targets for organic revenue growth and realized EPS growth in the back half of the year. They also have the ability to manage their P&L and drive earnings.
- Analyst asked about the company's ability to manage their P&L and drive earnings.
- The company has the ability to manage their P&L and drive earnings. They are focused on delivering the earnings power and have been pleased with their performance in the gross margin, which was up 140 bps sequentially and 50 bps year-over-year on an AFX basis. They continue to be disciplined on pricing and have seen some favorability in foreign exchange. They are also focused on improving their operating efficiencies and continuing their COGS efficiency programs.
- The company has the ability to manage their P&L and drive earnings. They are focused on delivering the earnings power and have been pleased with their performance in the gross margin, which was up 140 bps sequentially and 50 bps year-over-year on an AFX basis. They continue to be disciplined on pricing and have seen some favorability in foreign exchange. They are also focused on improving their operating efficiencies and continuing their COGS efficiency programs.
- Analyst asked about the company's share loss in the US and their ability to manage their P&L and drive earnings.
- The company's business is doing well outside the US, with mid-single-digit growth in Emerging Markets and high to single-digit growth worldwide. They are gaining share in areas like LigaSure and barbed sutures. They want to get the business back to their corporate average and accelerate Hugo, which is approaching important milestones and has solid progress measured by a comprehensive set of leading indicators. They are also making progress with their advanced capabilities, such as completing their first ICG cases and introducing LigaSure this year. They are on track to submit to the FDA for the urology indication and are increasing their capability in driving the clinical evidence to support multiple indications in the US.
- The company's business is doing well outside the US, with mid-single-digit growth in Emerging Markets and high to single-digit growth worldwide. They are gaining share in areas like LigaSure and barbed sutures. They want to get the business back to their corporate average and accelerate Hugo, which is approaching important milestones and has solid progress measured by a comprehensive set of leading indicators. They are also making progress with their advanced capabilities, such as completing their first ICG cases and introducing LigaSure this year. They are on track to submit to the FDA for the urology indication and are increasing their capability in driving the clinical evidence to support multiple indications in the US.
- Analyst asked about the distributor de-stocking in the quarter and why it happened.
- Geoffrey Straub Martha explained that the distributors de-stocked their inventory to hit their goals and it is a temporary issue that will resolve as they get back to normal buying patterns in Q1.
- Geoffrey Straub Martha explained that the distributors de-stocked their inventory to hit their goals and it is a temporary issue that will resolve as they get back to normal buying patterns in Q1.
- Analyst asked about the US Surgical business and the competitive pressures facing the stapling franchise.
- Geoffrey Straub Martha explained that the US Surgical business has been facing competitive pressures from the stapling franchise, which has brought growth levels down below the corporate average. However, the company is committed to returning the Surgical business to a stronger growth profile, aligned with the corporate average.
- Geoffrey Straub Martha explained that the US Surgical business has been facing competitive pressures from the stapling franchise, which has brought growth levels down below the corporate average. However, the company is committed to returning the Surgical business to a stronger growth profile, aligned with the corporate average.
- Analyst asked about the company's confidence in robotics as a growth driver for the Surgical business in FY 2026 and beyond.
- Geoffrey Straub Martha explained that the company is focused on areas of growth, such as gaining share in Emerging Markets, and is confident in its ability to hold its strength in these areas. The company is also confident in its progress in other parts of the business, such as maintaining strength in Emerging Markets and taking share with LigaSure and barbed sutures on a worldwide basis.
- Geoffrey Straub Martha explained that the company is focused on areas of growth, such as gaining share in Emerging Markets, and is confident in its ability to hold its strength in these areas. The company is also confident in its progress in other parts of the business, such as maintaining strength in Emerging Markets and taking share with LigaSure and barbed sutures on a worldwide basis.
- Analyst asked about the international opportunity for the Spyral unit.
- Geoffrey Straub Martha explained that the international opportunity for the Spyral unit is a journey, and the company is excited about the NCA-to-NCD conversion, which will unlock a huge opportunity in the US. The company has also seen a halo effect in commercial payers and globally, and is confident in its ability to meet individual expectations and guidelines in Europe and other countries.
- Geoffrey Straub Martha explained that the international opportunity for the Spyral unit is a journey, and the company is excited about the NCA-to-NCD conversion, which will unlock a huge opportunity in the US. The company has also seen a halo effect in commercial payers and globally, and is confident in its ability to meet individual expectations and guidelines in Europe and other countries.
- Analyst asked about the international progress and opportunity for the Spyral unit.
- Sean Salmon explained that the international progress and opportunity for the Spyral unit is driven by country-by-country increases, including France, which has established reimbursement. The company is also working on approval within China and outside the US and Europe, and is focused on getting regulatory approval in Japan.
- Sean Salmon explained that the international progress and opportunity for the Spyral unit is driven by country-by-country increases, including France, which has established reimbursement. The company is also working on approval within China and outside the US and Europe, and is focused on getting regulatory approval in Japan.
- Analyst asked about the opportunity to actively manage FX risk exposure and how it could impact FX.
- The company has taken proactive measures to manage FX risk, including changing the incentive structure to US dollars and dynamic pricing. These actions have already started to mitigate FX risk, and the company expects to see a meaningful reduction in the headwind on the FX line in FY 2026.
- The company has taken proactive measures to manage FX risk, including changing the incentive structure to US dollars and dynamic pricing. These actions have already started to mitigate FX risk, and the company expects to see a meaningful reduction in the headwind on the FX line in FY 2026.
- Analyst asked about the drivers of growth and the magnitude of the incremental growth contribution in the first year versus the fifth year.
- The company has three main growth drivers: Diabetes, PFA and CAS, and Neuromod. Diabetes has been growing double-digits for several quarters, and the company has a pipeline of other products like patch and expanded indications for 780G. PFA and CAS are expected to reach $2 billion in the near term, and Neuromod is growing in the teens, with a fundamental change in technology and sensing. Hugo and RDN are expected to be meaningful growth drivers for the Surgical business, and Tibial is expected to double the size of the overactive bladder business. The company has a flywheel of investments that keep the growth going, with gross margin improvements and dry powder for M&A.
- The company has three main growth drivers: Diabetes, PFA and CAS, and Neuromod. Diabetes has been growing double-digits for several quarters, and the company has a pipeline of other products like patch and expanded indications for 780G. PFA and CAS are expected to reach $2 billion in the near term, and Neuromod is growing in the teens, with a fundamental change in technology and sensing. Hugo and RDN are expected to be meaningful growth drivers for the Surgical business, and Tibial is expected to double the size of the overactive bladder business. The company has a flywheel of investments that keep the growth going, with gross margin improvements and dry powder for M&A.
- Analyst asked about the risk of distributors pushing their own privately manufactured products and displacing Medtronic products in the Medical Surgical division.
- Geoffrey Straub Martha responded that there is no evidence of such a risk, and the company has active conversations and specific agreements with distributors regarding the products they sell. Mike Marinaro added that there is no indication of any pressure from distributors based on their work together. He also mentioned that the company has tight contracts with both distributors and end-user hospitals, ensuring a smooth supply chain.
- Geoffrey Straub Martha responded that there is no evidence of such a risk, and the company has active conversations and specific agreements with distributors regarding the products they sell. Mike Marinaro added that there is no indication of any pressure from distributors based on their work together. He also mentioned that the company has tight contracts with both distributors and end-user hospitals, ensuring a smooth supply chain.
- Analyst asked about the potential risk of the Medical Surgical division's portfolio to the future.
- Geoffrey Straub Martha responded that the company is not concerned about this risk, as they have tight contracts with distributors and end-user hospitals, ensuring a smooth supply chain and contractual agreements.
- Geoffrey Straub Martha responded that the company is not concerned about this risk, as they have tight contracts with distributors and end-user hospitals, ensuring a smooth supply chain and contractual agreements.
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