Q2 2025 Earnings Summary
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +5% | Strong broad-based growth across key segments (e.g., Cardiovascular and Neuroscience) and geographies drove a +5% YoY increase, building on the +6% growth from the prior year. New product launches (e.g., Evolut™ FX) and improved procedure volumes also contributed to this rise. |
Cardiovascular | +6% | Growth continued from the prior year’s +6% due to strong adoption of TAVR (including Evolut™ FX/FX+), pulsed field ablation systems, and continued traction in Micra™ leadless pacemakers. These innovations, along with manufacturing scale-up, supported steady momentum. |
Neuroscience | +7% | Building on +5% growth in the previous year, Neuroscience benefited from the continued adoption of the AiBLE™ spinal ecosystem and new launches in Neuromodulation (e.g., Percept™ RC). Double-digit gains in robotic systems (e.g., Mazor™) and high-single-digit gains in StealthStation™ Navigation also helped. |
Diabetes | +12% | After a strong rebound in the prior year (high teens growth internationally), Medtronic’s MiniMed™ 780G system continued to drive adoption worldwide, boosted by high continuous glucose monitor (CGM) attachment rates. Expanded prescriber base and the Simplera™ Sync sensor release further enhanced revenue. |
Rest of World | +8% | Following solid performance across Non-U.S. Developed and Emerging Markets in the prior year, international revenue accelerated on strong product uptake (e.g., Cardiovascular and Diabetes). This included mid-teens growth in emerging markets, partly offsetting currency headwinds. |
Operating Income (EBIT) | +19% | Higher EBIT reflects revenue growth, cost-controls, and stable gross margins (which improved 30 bps on a constant currency basis). This builds on the prior year’s margin expansions, aided by disciplined spending and pricing from new product introductions. |
Net Income | +40% | The jump in net income stems from operating profit leverage, share repurchases, and above-market growth in high-margin product lines like TAVR and Diabetes AID systems. Despite currency headwinds, cost-management initiatives and strong segment mix continued to lift net income from the prior period. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Organic Revenue Growth | Q3 2025 | no prior guidance | 4.75% | no prior guidance |
EPS | Q3 2025 | no prior guidance | $1.35 to $1.37 | no prior guidance |
Operating Margins | Q3 2025 | no prior guidance | 25.6% | no prior guidance |
Gross Margins | Q3 2025 | no prior guidance | Expected to improve sequentially | no prior guidance |
FX Impact on Revenue | Q3 2025 | no prior guidance | -$100M to -$150M | no prior guidance |
FX Impact on EPS | Q3 2025 | no prior guidance | Unfavorable 1% | no prior guidance |
Organic Revenue Growth | FY 2025 | 4.5% to 5% | 4.75% to 5% | raised |
Non-GAAP Diluted EPS | FY 2025 | $5.42 to $5.50 | $5.44 to $5.50 | raised |
Operating Margins | FY 2025 | expected to expand | 25.7% | no prior guidance |
FX Impact on Revenue | FY 2025 | -$110M to -$210M | -$225M to -$325M | lowered |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Organic Revenue Growth | Q2 2025 | 4.5% | 5.25% year-over-year growth (from 7,984 in Q2 2024To 8,403 in Q2 2025) | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Raised Revenue & EPS Guidance | Consistently raised in Q1 2025 (4.5%-5%, $5.42-$5.50), Q4 2024, and Q3 2024 (gradual increases each quarter). | Raised organic revenue growth to 4.75%-5% and EPS to $5.44-$5.50. Cited strong top-line and operational performance. | Recurring topic; remains bullish each period (steady guidance uplifts). |
Spine business (AiBLE ecosystem) | Showed 7%+ global/U.S. growth in Q1 2025, with AiBLE cited as a key growth driver in Q4 and Q3 2024 as well. | Grew 6%, driven by AiBLE’s enabling technologies and large installed base. Company sees sustainable high single-digit growth. | Consistent topic; sentiment remains positive, highlighting continued market-share gains. |
Diabetes segment expansions | In Q1 2025, 13% segment growth led by 780G; prior quarters emphasize strong CGM uptake and pipeline (Simplera, Smart MDI). | Type 2 label trial completed enrollment; 780G still showing double-digit growth (11%). Company sees significant Type 2 opportunity. | Ongoing topic; optimism increasing as Type 2 pursuit nears FDA submission. |
Renal denervation therapy (Simplicity) | Q1 2025: Progress on CMS inpatient payment and private payer discussions. Q4 2024: Efforts for national coverage with evidence. | Transitional Pass-Through Payment (TPT) starts in January for half of Medicare fee-for-service patients. Engaging with CMS and private payers for broader coverage. | Continued focus on reimbursement; sentiment positive but hinges on coverage expansion. |
Supply chain disruptions in Cardiac Ablation | No mention in previous periods. | Third-party supplier interruption slowed Q2 CAS growth; issue resolved, capacity expanded, expecting strong double-digit rebound. | New concern in Q2 2025; resolved quickly, so sentiment turned positive after a temporary setback. |
Surgical robotics (Hugo system) | Q1 2025: Midterm growth driver; Q4/Q3 2024: Ongoing pivotal trials, scaling manufacturing. | Preparing U.S. filing for urology in early 2025; fast enrollment in hernia/gyn trials. Adding ICG imaging and LigaSure tech. | Continuing topic; upbeat about pipeline progress but still phased rollout. |
Cardiac ablation technologies | Q1 2025: Early PFA success, offsetting cryo declines. Q4/Q3 2024: Strong PulseSelect launch and Sphere-9 data. | Emphasized PFA (PulseSelect single-shot, new Sphere-9 focal); cryo volumes down but offset by PFA uptake. Revenue per case higher with Affera. | Consistent theme; shifting from cryo to PFA is bullish for Medtronic share. |
New product launches | Q1 2025: Inceptive’s first U.S. quarter, Evolut FX+ limited launch, Micra next-gen pacing success also noted in Q4/Q3 2024. | • Inceptive closed-loop SCS: boosted 10% pain growth. • Evolut FX+ in TAVR: high single-digit TAVR growth. • Micra AV2/VR2 leadless pacing: high-teens growth. | Ongoing set of launches driving sales; sentiment consistently positive, fueling above-market growth. |
Operating margin | Q1 2025: 24.4%, down 40 bps y/y but up on constant currency. Q4/Q3 2024 also cited FX as main drag. | Improved by 100 bps on a constant currency basis in Q2; FX fully drove a 90 bps reported decline. Full-year operating margin expected at 25.7%. | Repeated margin headwinds from FX; underlying operational improvements positive. |
Uncertainty around sustaining CRM | Q1 2025: CRM rose 8%, but leadership expressed uncertainty about maintaining that growth rate. | No mention in Q2 2025. | Less discussed now; prior caution about repeating strong CRM growth. |
Afra catheter launch concerns | Q1 2025: Demand high but awaiting U.S. approval. Q4/Q3 2024: Affirmed strong interest; scaling production. | Affera (Sphere-9) FDA-approved; ramping up in top centers. Revenue per case higher than cryo but not 3x. | Continuing topic; sentiment moving positive as approvals and expansions advance. |
Global macro headwinds | Q1 2025 & prior: FX, inflation, and tax named as consistent headwinds. | 5% FX EPS headwind, plus small tax rate hikes. Company leveraging hedging. | Persistent macro challenges but mitigated by hedges and cost-control. |
Potential spin-off or refocus of PM | Q3 2024: Decided to retain Patient Monitoring (PM), exit ventilators, combine PMRI into ACM. | No mention in Q2 2025. | No longer referenced; previously a pivot to refocus the business. |
Ventilator business exit | Q4/Q3 2024: Officially exited unprofitable ventilator line; reallocated resources. | Not discussed in Q2 2025. | No longer a topic; exit was completed, so no new updates. |
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Earnings Guidance and Margins
Q: Can you grow earnings despite FX headwinds and investments?
A: Yes, we are committed to growing earnings and have raised our EPS guidance to $5.44 to $5.50, even while absorbing a 5-point FX headwind. We expect operating margins of 25.7% for the full year, up 10 basis points year-over-year, achieved through cost management and disciplined investment in high-priority launches. -
Impact of FX and Tariffs
Q: How are you handling FX and tariff headwinds?
A: Our hedging program is offsetting FX headwinds, keeping them in line with our expectations. While FX presents a 5-point headwind on EPS, we're maintaining earnings growth through revenue increases and cost controls. Regarding tariffs, we're monitoring potential impacts, but our exposure to imports from China is less than 1% of revenue, minimizing any significant effect. -
Renal Denervation Opportunities
Q: What's the outlook for renal denervation and reimbursement?
A: The renal denervation market is promising, with an addressable patient population of around 16 million Medicare patients with uncontrolled hypertension. With the Transitional Pass-Through (TPT) payment in place, we can now access roughly half of the Medicare fee-for-service patients, accelerating therapy adoption. Broader coverage is needed, and we're pursuing coverage with evidence development to reach more patients. -
Ablation Growth and Supply Issues
Q: What's happening with your cardiac ablation growth?
A: Supply issues from a third-party component supplier affected our cardiac ablation solutions, but this has been resolved. We now expect strong double-digit growth in the third quarter as we ramp up PulseSelect supply and activate new accounts. Revenue per case for Affera increases—not quite 3x, but certainly higher—enhancing our margins. -
Diabetes Type 2 Market Expansion
Q: How is your expansion into Type 2 diabetes progressing?
A: We've completed enrollment and expect to submit to the FDA for an expanded Type 2 indication in the first half of next year. Although our installed base is largely Type 1, we see Type 2 as a large opportunity with extremely good clinical data, and we're quite optimistic about its potential. -
Spine Business Growth
Q: How sustainable is your spine business growth?
A: Our spine business continues to grow above the market, benefiting from consolidation and our scale and technology. We believe this high single-digit growth is sustainable as we attract top talent and physicians, leveraging our advanced technologies to drive further market share gains. -
TAVR Market Outlook
Q: What's your view on the TAVR market growth?
A: The TAVR market is healthy, growing in the high single-digit range. We're seeing expansion through asymptomatic patients and potential future indications like moderate aortic stenosis. Our recent product improvements, such as the FX valve, strengthen our position and address previous concerns like coronary access. -
Portfolio Management and M&A
Q: What's your strategy for M&A and portfolio adjustments?
A: We're focusing on tuck-in acquisitions that align with our high-growth markets and segments. Portfolio management is an ongoing process to ensure we play to our strengths. This approach aims to deliver durable, mid-single-digit growth that translates to earnings leverage and cash flow, ultimately providing double-digit shareholder returns. -
Mitral and Tricuspid Valve Programs
Q: Can you update us on your valve replacement and repair programs?
A: Our Intrepid valve, used in both mitral and tricuspid positions, continues its trials for U.S. and European approval and is performing well. In the tricuspid area, we're using the existing Intrepid valve in early feasibility studies and making modifications to optimize it. We also have investments in repair technologies to address these conditions comprehensively. -
Tariffs and China Exposure
Q: How are you affected by tariffs and imports from China?
A: While it's early to speculate on specific policy changes, we closely monitor potential tariff impacts. Our exposure to imports from China is minimal, comprising less than 1% of our revenue, so we do not anticipate significant effects from tariff adjustments.
Research analysts covering Medtronic.