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Medtronic plc (MDT) Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 delivered revenue of $8.58B (+8.4% reported, +4.8% organic) and non-GAAP EPS of $1.26 (+2% YoY); Medtronic raised full-year non-GAAP EPS guidance to $5.60–$5.66 and reiterated ~5% organic revenue growth .
  • Results were above Wall Street consensus: Revenue $8.58B vs $8.37B*, EPS $1.26 vs $1.23*; EBITDA also exceeded consensus ($2.40B* vs $2.26B*). Bold beat driven by broad portfolio strength and lower tariff impact. Values retrieved from S&P Global.
  • Cardiac Ablation Solutions nearly +50% with +72% in the U.S. on Pulsed Field Ablation adoption; Diabetes +11.5% reported (+7.9% organic); GAAP operating margin expanded +70 bps, although non-GAAP operating margin compressed -80 bps with mix and early launch investments .
  • Near-term catalysts: CMS proposed NCD for renal denervation (final expected by Oct 8, 2025), governance/board changes following constructive engagement with Elliott, and advancing Hugo robotics and neuro innovations; management flagged Investor Day in mid-2026 to outline a new financial framework .

What Went Well and What Went Wrong

What Went Well

  • Pulsed Field Ablation momentum: “Cardiac Ablation Solutions revenue increased nearly 50%, including 72% in the US” on PFA portfolio strength .
  • Multi-portfolio growth: Cardiovascular +9.3% reported (+7.0% organic), Neuroscience +4.3% reported (+3.1% organic), Medical Surgical +4.4% reported (+2.4% organic), Diabetes +11.5% reported (+7.9% organic) .
  • Guidance upgrade and execution: “As a result of our Q1 EPS outperformance and improved tariff impact assumption, we are raising our full year EPS guidance” (CFO Thierry Piéton) . CEO highlighted “accelerate our revenue growth in the second half” with growth drivers including PFA, transcatheter valves, neuromodulation, diabetes, leadless pacing .

What Went Wrong

  • Margin mix pressure: Non-GAAP operating margin fell to 23.6% (-80 bps YoY) even as GAAP operating margin rose to 16.8% (+70 bps); non-GAAP gross margin was flat 65.1% (-80 bps YoY) .
  • Specialty Therapies decline and pockets of slower growth: Specialty Therapies -1.5% reported (-2.7% organic); U.S Surgical & Endoscopy -1.3% YoY, reflecting competitive and mixed dynamics .
  • China VBP and recall headwinds linger in Neurovascular; management noted recall recovery and VBP impact with acceleration expected as replacement products ramp .

Financial Results

Summary vs prior quarters and estimates

MetricQ3 FY25Q4 FY25Q1 FY26
Revenue ($USD Billions)$8.292 $8.927 $8.578
GAAP Diluted EPS ($)$1.01 $0.82 $0.81
Non-GAAP Diluted EPS ($)$1.39 $1.62 $1.26
GAAP Gross Margin (%)66.5% 64.7% 65.0%
Non-GAAP Gross Margin (%)66.6% 65.1% 65.1%
GAAP Operating Margin (%)19.9% 16.1% 16.8%
Non-GAAP Operating Margin (%)26.2% 27.8% 23.6%

S&P Global consensus vs actual (Q1 FY26)

MetricConsensusActual
Revenue ($USD Billions)$8.373*$8.578
EPS ($)$1.229*$1.26
EBITDA ($USD Billions)$2.263*$2.396*
Values retrieved from S&P Global.

Segment breakdown (Q1 FY26)

SegmentRevenue ($USD Millions)Reported YoY GrowthOrganic YoY Growth
Cardiovascular$3,285 9.3% 7.0%
- Cardiac Rhythm & Heart Failure1,712 11.5% 9.1%
- Structural Heart & Aortic930 8.7% 6.1%
- Coronary & Peripheral Vascular643 4.5% 2.9%
Neuroscience$2,416 4.3% 3.1%
- Cranial & Spinal Technologies1,211 5.5% 4.5%
- Specialty Therapies702 -1.5% -2.7%
- Neuromodulation504 10.2% 8.6%
Medical Surgical$2,083 4.4% 2.4%
- Surgical & Endoscopy1,612 4.4% 2.3%
- Acute Care & Monitoring471 4.3% 2.6%
Diabetes$721 11.5% 7.9%
Total Reportable Segments$8,506 6.8% 4.8%
Other$72 NM —
Total$8,578 8.4% 4.8%

KPIs and cash

KPIQ1 FY26Q1 FY25
Cash from Operations ($USD Millions)$1,088 $986
Free Cash Flow ($USD Millions)$584 $466
GAAP Effective Tax Rate (%)19.6% 17.4%
Non-GAAP Effective Tax Rate (%)17.8% 17.0%
R&D Expense ($USD Millions)$726 $676
SG&A Expense ($USD Millions)$2,806 $2,655
U.S. Revenue ($USD Millions)$4,224 $4,082
International Revenue ($USD Millions)$4,354 $3,832
FX Impact on Revenue ($USD Millions)$162 —

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Revenue GrowthFY26~5% ~5% Maintained
Reported Revenue Growth (incl. FX & Other)FY264.8%–5.1% 6.5%–6.8% (assuming recent FX) Raised
Diluted non-GAAP EPS ($)FY26$5.50–$5.60 (incl. tariffs) $5.60–$5.66 (incl. ~$185M tariffs) Raised and narrowed; tariff impact reduced
Underlying EPS Growth (ex-tariffs)FY26~4% ~4.5% Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY25)Previous Mentions (Q4 FY25)Current Period (Q1 FY26)Trend
Pulsed Field Ablation (CAS)Low-20s growth; supply approval in Galway to boost Affera; expecting acceleration in back half Near-30s CAS growth; FY25 CAS ~$1B; Sphere-9 launch Nearly +50% CAS revenue; +72% U.S.; broad PFA adoption Accelerating adoption; multi-catheter portfolio scaling
Renal Denervation (RDN) reimbursementCMS NCA initiated; TPT effective Jan 1; pursuing coverage pathways Guidance framed with tariff scenarios; broader portfolio momentum Record-positive CMS comments; final NCD expected by Oct 8; management: “could be biggest thing we ever do” Material potential growth driver into 2H and beyond
Diabetes platform & separationDouble-digit CGM; Simplera Sync int’l; Smart MDI rollout; reiterated FY25 guide Intent to separate Diabetes; FY25 Diabetes +10.7% U.S. timing dynamic awaiting new CGMs; production doubling; Instinct (Abbott) ACE approved in July; separation tracking ~15 months Innovation super-cycle; structural portfolio simplification progressing
Hugo surgical roboticsUrology submission planned; expanding indications and digital ecosystem Filed with FDA for urology; preparing hernia/GYN; strong dataset presentations 30+ countries, tens of thousands procedures; FDA progress; U.S. launch prep; ecosystem partnerships emphasized Building installed base internationally; U.S. indications approaching
Neurovascular/China VBP & recallEx-China strength; flow diversion solid Noted VBP impact, recall on Pipeline Vantage; Shield remains available Management expects acceleration as replacement product ramps; portfolio adds via Contigo partnership Headwinds easing; product refresh set to improve trajectory
Tariffs/FX & marginsFX -5% EPS headwind; hedging program; margins to improve sequentially FY26 EPS scenario framed by tariffs; margins up in Q4 FY26 EPS raised; tariff impact trimmed to ~$185M; non-GAAP margin down from mix/early launches EPS trajectory improving; near-term mix headwinds manageable

Management Commentary

  • CEO: “We’re confident and well positioned to accelerate our revenue growth in the second half... several innovative product categories, including Pulsed Field Ablation, Transcatheter Valves, Neuromodulation, Diabetes, and Leadless Pacing” .
  • CFO: “As a result of our Q1 EPS outperformance and improved tariff impact assumption, we are raising our full year EPS guidance” .
  • CEO on RDN: “All the dominoes are falling... this is going to be a massive market... could be the biggest thing that we ever do” .
  • CFO on framework: Investor Day “sometime in mid-26” to outline the next step in financial profile and framework .
  • Robotics: “We’re now in over 30 countries... significant double digit growth in current accounts... preparing to submit hernia and GYN” .

Q&A Highlights

  • Growth algorithm: Management emphasized incremental growth drivers (CAS, RDN, Tibial neuromodulation, Hugo) and reinvestment “without detriment to EPS,” with a new framework expected at Investor Day .
  • RDN NCD scope: Record positive CMS comment volume; final NCD expected by Oct 8, strong physician society support; massive uncontrolled hypertension population targeted .
  • Diabetes ramp: U.S. demand awaiting new CGMs; production to “double” sequentially; Instinct (Abbott-based sensor) ACE approved in July with launch “in the coming months”; separation timeline ~15 months .
  • Portfolio balancing: Slower-growing areas (neurovascular, pelvic health, PV) have organic accelerators (product refresh, partnerships) to lift overall profile; CRM innovations (leadless, EVICD, conduction pacing) sustaining growth .
  • Hugo metrics and U.S. pathway: Tens of thousands of procedures; modular form factor favored; urology submission underway, hernia/GYN next; expanding digital ecosystem .

Estimates Context

  • Q1 FY26 results beat consensus on revenue ($8.58B vs $8.37B*) and EPS ($1.26 vs $1.23*); EBITDA exceeded ($2.40B* vs $2.26B*). This supports the raised FY26 EPS range and suggests upward estimate revisions on EPS while revenue estimates remain anchored around ~5% organic growth. Values retrieved from S&P Global.
  • Forward quarters: Q2 FY26 consensus EPS $1.31*; revenue $8.86B*; Q3 FY26 consensus EPS $1.34*; revenue $8.89B*. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Broad-based growth with a bold beat on revenue and EPS versus consensus, alongside a raised EPS guide and reduced tariff headwind—supportive for near-term estimate revisions and sentiment . Values retrieved from S&P Global.
  • CAS/PFA is scaling fast (nearly +50% revenue; +72% U.S.), positioning Medtronic to gain share and drive higher revenue per case as Sphere-9 ramps .
  • RDN NCD is a major catalyst; management views it as potentially its largest opportunity—watch for final CMS coverage by Oct 8, 2025 .
  • Margin dynamics: GAAP margins improved; non-GAAP margins compressed on mix/launch investments—expect leverage to improve as new products scale and cost programs progress .
  • Diabetes “innovation super-cycle” and separation plan: CGM launches (Simplera, Instinct), capacity expansion, and IPO/split-off in ~15 months can unlock portfolio value and margin accretion to MDT core .
  • Robotics (Hugo) and AI-enabled ecosystems (spine AiBLE, Touch Surgery) broaden the moat and drive durable growth as U.S. indications approach .
  • Governance catalysts: Board additions and new Growth/Operating committees after Elliott engagement signal elevated urgency on portfolio optimization, margins, and capital allocation .

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