Medtronic PLC Earnings - Q4 2025 Analysis & Highlights
Medtronic reported its strongest quarterly revenue growth in 10 quarters, driven by exceptional performance in cardiac ablation solutions and continued momentum across multiple growth platforms including renal denervation, tibial neurostimulation, and surgical robotics, while maintaining disciplined capital allocation and providing guidance for accelerated growth in fiscal 2027.
Key Financial Results
Q3 2026 revenue reached $9 billion, growing 8.7% reported and 6% organic year-over-year, representing a 50 basis point acceleration from the prior quarter and 50 basis points above guidance.
Adjusted gross margin was 64.9%, ahead of expectations, with pricing contributing 30 basis points of benefit, offset partially by negative mix of 100 basis points driven by Cardiac Ablation Solutions and Diabetes businesses in early launch phases.
Adjusted operating margin reached 24.1%, ahead of expectations, with adjusted operating profit of $2.2 billion.
Adjusted earnings per share was $1.36, $0.03 above the midpoint of guidance range, primarily due to better-than-expected revenue from Cardiac Rhythm Management and Acute Care & Monitoring, partially offset by tax pressure.
Tariffs impacted the business by $93 million or 110 basis points in Q3, in line with forecast, with an anticipated $185 million full-year impact including $75 million in Q4.
Adjusted R&D was 8% of revenue and increased 7.4% year-over-year, outpacing revenue growth by 50 basis points on an organic basis.
Adjusted SG&A was 32.3% of revenue, 30 basis points lower than the prior year, demonstrating disciplined leverage in general and administrative expenses while fueling growth initiatives.
Business Segment Results
Cardiovascular portfolio delivered 11% year-over-year revenue growth with 13% growth in the US, representing the strongest growth in 10 years excluding COVID comparables.
Cardiac Ablation Solutions grew 80% year-over-year, with pulsed field ablation accounting for 80% of that revenue, and grew nearly 200% worldwide this quarter.
Pulsed field ablation gained 4 points of market share in the rapidly growing $13-plus-billion market with the Affera platform and Sphere-9 catheter, with 50% to 60% of cases now utilizing both pulsed field ablation and radiofrequency energies.
Cardiac Rhythm Management grew 5% and continued to contribute 15% of total revenue, driven by double-digit growth in Micra, mid-teens growth in 3830 conduction system pacing lead, and over 70% growth in Aurora EV-ICD.
Peripheral Vascular Health posted high-single-digit growth, driven by broad strength across the endoVenous portfolio with anticipated contributions from Neuroguard carotid stent and Liberant mechanical thrombectomy system launches.
Structural Heart grew low-single digits in Q3, with stronger international performance and continued European share gains offset by US competitive pressure from Evolut FX+ annualization.
Neuroscience portfolio grew 3%, below expectations, but positioned to benefit from pipeline activation expected in Q4.
Cranial & Spinal Technologies delivered mid-single digit growth including 8% growth from Core Spine, with Stealth AXiS FDA clearance expected to contribute as soon as Q4.
Specialty Therapies delivered flat results in Q3 with expected improved performance in coming quarters from new product developments.
Neurovascular faced headwinds from China volume-based procurement and Vantage recall, both mostly behind the company, with line of sight to higher growth from Onyx expanded indication and Neuroguard commercialization.
Pelvic Health saw slightly softer sacral nerve stimulation market environment but expects increased contribution from Altaviva tibial neurostimulation device.
Neuromodulation grew 4%, driven by continued rollout of differentiated fully closed-loop technologies including Inceptiv spinal cord stimulation and BrainSense advanced deep brain stimulation.
MedSurg portfolio grew 3%, ahead of expectations, with Endoscopy revenue growing 10% led by mid-teens growth in esophageal portfolio, and Acute Care & Monitoring growing 7%.
Surgical business grew 1% with strength in energy, wound management, and hernia offset by expected softness in stapling, with Hugo rollout expected to drive next phase of growth.
MiniMed Diabetes business delivered 15% reported and over 8% organic growth, led by double-digit international strength and US acceleration from Simplera Sync and Instinct launches in December.
Capital Allocation
Medtronic is pursuing an accelerated M&A strategy focused on tuck-in deals that can reach several billion dollars but remain close to existing business, with emphasis on higher-growth areas and multiple shots on goal in key markets.
CathWorks acquisition in Coronary and Structural Heart and Anteris minority investment in Structural Heart underscore the company's long-term strategy to digitize, enable, and build effective ecosystems within core markets.
Anteris investment was chosen over full acquisition to maintain flexibility while gaining exposure to the balloon-expandable TAVR market, the larger segment of the TAVR market.
Medtronic embedded $0.04 to $0.05 of dilution from M&A activity in fiscal 2027 guidance, with CathWorks and Anteris already announced.
The company continues to fuel growth through organic R&D investment, with adjusted R&D increasing 7.4% year-over-year and outpacing revenue growth by 50 basis points.
Medtronic is investing significantly in sales and marketing to support launches of Symplicity for hypertension, Altaviva for urge urinary incontinence, and Hugo surgical robot, including direct-to-consumer campaigns and mapper hiring.
Industry Trends and Dynamics
The pulsed field ablation market is growing approximately 20% year-over-year, with Medtronic expecting the market to grow at least high-teens in fiscal 2027 and strong double-digit growth thereafter.
Renal denervation market is experiencing strong patient demand, with Medtronic's direct-to-consumer website visits increasing 50-times from Q2 to Q3, jumping from approximately 50,000 to 2.5 million visits.
The hypertension treatment market represents a significant opportunity with 18 million US patients with uncontrolled hypertension, indicating substantial market development potential.
Urge urinary incontinence affects 16 million people in the US, representing a large underpenetrated market for tibial neurostimulation solutions.
Navigation technology drives 70% of US spine procedures, with Medtronic pioneering and leading this category, establishing a strong foundation for Stealth AXiS adoption.
The surgical robotics market is expanding with Medtronic positioned as the only company with approved offerings across open, laparoscopic, and robotic-assisted surgeries.
Competitive Landscape
In pulsed field ablation, Medtronic competes against four primary players with differentiated value propositions, positioning itself favorably with integrated mapping and a versatile catheter portfolio.
Medtronic's Sphere-9 catheter demonstrates versatility across persistent and paroxysmal procedures, contrary to competitor narratives positioning it as a niche product, with proven usage across simple and complex cases.
Sphere-360 represents Medtronic's next-generation single-shot pulsed field ablation and mapping catheter, with CE mark received and US pivotal trial initiated, drawing significant physician interest for its safety and durability.
In spine robotics, Medtronic's Stealth AXiS extends the company's competitive lead over primary competitors through AI-powered planning, seamless workflow integration, and lower barriers to robotics adoption.
Medtronic is outperforming analyst predictions on renal denervation market share relative to competitors, with stronger-than-expected competitive dynamics and market positioning.
In structural heart, Medtronic maintains a strong position and reputation while seeking to expand through the Anteris investment to gain exposure to the larger balloon-expandable TAVR market segment.
Macroeconomic Environment
Tariffs represent a significant headwind, with $93 million impact in Q3 and anticipated $185 million full-year impact in fiscal 2026, including $75 million in Q4.
Tariff impacts are expected to carry into fiscal 2027 at approximately $75 million per quarter, representing roughly $300 million annual headwind compared to $185 million in fiscal 2026.
US growth reached 6% year-over-year, the strongest performance since fiscal 2019 excluding COVID comparables, indicating solid domestic market conditions.
Western Europe delivered high-single digit growth while Japan showed mid-single digit growth, demonstrating balanced geographic performance.
China delivered low-single digit growth while navigating ongoing volume-based procurement, with mid-single digit growth excluding volume-based procurement impacts.
Foreign exchange provided approximately 40 basis points tailwind to gross margin in Q3.
Growth Opportunities and Strategies
Medtronic identified four generational growth drivers with potential to each drive well over $1 billion in revenue: pulsed field ablation platform for atrial fibrillation, Symplicity Spyral for hypertension, Altaviva for urge urinary incontinence, and Hugo surgical robot.
Pulsed field ablation is on track to double revenue to $2 billion trailing by first half of fiscal 2027, with significant installed base expansion and long runway for footprint expansion and penetration deepening.
Sphere-9 catheter expansion includes planned Japan launch and expanded indication submission in ventricular tachycardia for first half of calendar 2026.
Sphere-360 commercialization is beginning in Europe this spring following CE mark receipt and US pivotal trial initiation.
Symplicity renal denervation is building a new market with strong patient outcomes, broad FDA label, and expanding reimbursement, supported by direct-to-consumer Go Beyond campaign and 200-plus new account openings.
Symplicity pipeline includes transradial catheter launch planned for second half of fiscal 2027 and SPYRAL GEMINI trial evaluating multi-organ ablation to boost efficacy.
Altaviva tibial neurostimulation is receiving strong early physician and patient interest with training of 500-plus physicians, omni-channel consumer activation, and support for hospital staff education.
Hugo surgical robot received FDA clearance for urologic procedures with first US installations and cases completed at Cleveland Clinic, demonstrating strong physician feedback on flexibility, portability, and instrumentation.
Hugo is paired with Touch Surgery digital ecosystem, an AI-powered data, connectivity, and analytics technology unique to Medtronic, with installations surpassing 1,000 systems globally and 20% sequential growth.
Hugo expansion into additional indications including hernia and general surgery is planned, with the company positioned as the only provider spanning open, laparoscopic, and robotic-assisted surgeries.
Stealth AXiS represents a transformative platform unifying AI-powered planning, robotics, and navigation into one seamless system, designed around navigation workflow paramount to surgeons.
Stealth AXiS is expected to contribute to Neurosurgery and Cranial & Spinal Technologies as soon as Q4 with future cranial and ENT indication pursuits planned.
Medtronic is advancing a broad innovation pipeline across high-need, high-growth categories including minimally invasive mitral valve replacement, carotid stenting, thrombectomy, coronary drug-coated balloons, cardiac rhythm management, and spine surgery.
MiniMed Diabetes business continues strong innovation cycle with Instinct and Simplera Sync launches in December, multiple FDA clearances expanding 780 indications, and 780G system now available through pharmacy covering majority of commercially-insured lives.
MiniMed Flex patch pump remains on track for US FDA submission by fall, and Vivera third-generation fully closed-loop algorithm US pivotal study began.
Financial Guidance and Outlook
Medtronic is reiterating fiscal 2026 organic revenue growth guidance of approximately 5.5%, with Q4 expected to deliver revenue growth similar to Q3 at around 6% off a stronger Q4 2025 comparison.
Fiscal 2026 gross margin is expected to increase slightly excluding tariffs, with pricing, foreign exchange, and cost of goods sold efficiency programs expected to offset negative business mix impacts.
Fiscal 2026 adjusted operating profit is expected to grow approximately 5%, or 7% excluding tariffs, with operating margin expected to be roughly flat excluding tariffs and down about 50 basis points including tariff impact.
Gross margin and operating margin leverage is expected in the second half of fiscal 2026 excluding tariffs, as previously stated.
Fiscal 2026 EPS guidance range is maintained at $5.62 to $5.66, with the company expecting CRM and ACM to normalize and tax pressure to carry into Q4.
Medtronic maintains expectation for high-single digit EPS growth in fiscal 2027, with growth acceleration expected from multiple business segments.
Fiscal 2027 EPS guidance includes several puts and takes: approximately $300 million tariff headwind for the full year, benefit from 53 weeks versus 52 weeks, $0.01 to $0.02 per month dilution between Diabetes IPO and split, and $0.04 to $0.05 dilution from M&A activity.
MiniMed separation is perfectly on track with preferred path of two-step IPO and split, expected to be complete by end of calendar year 2026.
Medtronic expects Symplicity and Altaviva to begin meaningful revenue contribution in fiscal 2027, with these launches currently in early stages focused on disciplined execution.
Cranial & Spinal Technologies and Neurovascular are expected to accelerate growth in fiscal 2027 from Stealth AXiS and new products including Neuroguard carotid stent and Onyx expanded indication for minimally invasive mitral valve replacement.
Hugo is expected to step up in Q4 with meaningful installations and growth, though may not immediately move the needle on the larger Surgical business.
