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    MDT
    Earnings call· Oct 2025(Q2 FY26)

    Medtronic plc MDT

    Nov 18, 2025 Source

    Executive summary

    Medtronic plc Q2 FY26 — Growth Acceleration Underway, Guidance Raised

    Medtronic reported a strong second quarter, with both revenue and EPS exceeding expectations, signaling an acceleration in financial results driven by robust procedure volumes and innovative technology launches. The company raised its full-year revenue and EPS guidance, fueled by significant momentum in its PFA franchise and the anticipated ramp-up of Symplicity and Altaviva. Management is strategically increasing OpEx investments to capitalize on market opportunities while maintaining a focus on portfolio management and tuck-in M&A.

    Highlights

    5

    • Q2 FY26 organic revenue grew 5.5%, exceeding the midpoint of guidance by 75 basis points.

    • Adjusted EPS of $1.36 increased 8% year-over-year, beating guidance midpoint by $0.05.

    • Cardiac Ablation (CAS) revenue grew 71%, with PFA franchise growing over 300% in the U.S. and international markets.

    • Full-year FY26 organic revenue growth guidance raised to approximately 5.5% from prior guidance.

    • Full-year FY26 adjusted EPS guidance raised to $5.62-$5.66 from $5.60-$5.66.

    Concerns

    5

    • Cryoablation revenue declined 40% year-over-year.

    • Business mix (Cardiac Ablation and Diabetes) resulted in an 80 basis point headwind to adjusted gross margin.

    • Tariffs were a 20 basis point headwind to Q2 adjusted gross margin and are expected to impact FY26 COGS by ~$185 million.

    • Q3 FY26 margins are expected to be down a couple of hundred basis points due to tariffs, business mix, and lower COGS efficiency savings.

    • Surgical business growth was impacted by timing of tenders in emerging markets and the ongoing shift to robotics.

    Guidance & targets

    20
    CategoryTargetConfidence
    Full-year FY26 Organic Revenue Growth
    ~5.5%
    high materiality
    High
    Q3 FY26 Organic Revenue Growth
    ~5.5%
    medium materiality
    High
    Full-year FY26 FX Tailwind to Revenue
    $625M-$725M
    medium materiality
    High
    Full-year FY26 Adjusted Gross Margin (ex-tariffs)
    Slightly up
    medium materiality
    High
    Full-year FY26 Adjusted Gross Margin (incl. tariffs)
    Decrease of roughly 40 basis points
    medium materiality
    High
    Full-year FY26 Tariff Impact to COGS
    ~$185 million
    medium materiality
    High
    Full-year FY26 Adjusted Operating Profit Growth
    ~5%
    medium materiality
    High
    Full-year FY26 Operating Margin (ex-tariffs)
    Roughly flat
    medium materiality
    High
    Full-year FY26 Adjusted EPS
    $5.62-$5.66
    high materiality
    High
    Q3 FY26 Adjusted EPS
    $1.32-$1.34
    medium materiality
    High
    Full-year FY27 Adjusted EPS Growth
    High single-digit
    high materiality
    High
    Diabetes Business Separation
    Complete by end of calendar year '26
    high materiality
    High
    R&D as % of Revenue
    ~10%
    medium materiality
    Medium
    Hugo FDA Approval
    Urology indication
    medium materiality
    High
    Symplicity Revenue Contribution
    Pick up in back half FY26 and ramp
    high materiality
    High
    Altaviva Revenue Contribution
    Start to contribute in back half FY26
    medium materiality
    High
    Simplera Sync US Rollout
    More broadly to U.S. consumers later this fiscal year
    medium materiality
    High
    Instinct Sensor Shipping
    Begin shipping in late November
    medium materiality
    High
    MiniMed Flex US FDA Submission
    On track to submit
    medium materiality
    High
    MiniMed Fit US FDA Submission
    Intend to submit by the fall of next year
    medium materiality
    High

    Segment performance

    14
    SegmentRevenueYoYQoQMargin
    Cardiovascular
    Strongest growth in over a decade, excluding pandemic comparisons, driven by CAS momentum.
    		—9%——
    Cardiac Ablation Solutions (CAS)
    Strong acceleration from last quarter's nearly 50% growth, highest growth rate in the market. PFA franchise grew over 300% in U.S. and international markets.
    PFA revenue as % of CAS: 75%
    		—71%——
    Cryoablation
    Significant declines, largely offset by PFA growth.
    Remaining cryo revenue outside U.S.: 90%
    		—-40%——
    Cardiac Rhythm Management (CRM)
    Strong performance, particularly in Micra and AURORA EV-ICDs.
    Micra leadless pacemakers growth: 18%AURORA EV-ICDs growth: ~80%
    		—5%——
    Structural Heart
    Growth driven by the Evolut TAVR platform.
    		—7%——
    Peripheral Vascular
    Growth expected to improve with launches of Neuroguard IEP carotid stent and Liberant mechanical thrombectomy system.
    		—low single digits——
    Neuroscience
    Growth returned to mid-single digits as expected.
    		—4%——
    Cranial & Spinal Technologies (CST)
    Strong adoption of spine AiBLE ecosystem driving share gains and pull-through of Core Spine hardware.
    Core Spine growth (global and U.S.): 8%Neurosurgery capital equipment growth: 5%
    		—5%——
    Specialty Therapies
    Expected improvement from last quarter, driven by ENT and Neurovascular. Clear line of sight to continued improvement next quarter.
    		—flat——
    Neuromodulation
    Continued rollout of Inceptiv SCS and BrainSense aDBS systems.
    Pain Stim growth: high single digitsBrain Modulation growth: high single digits
    		—7%——
    MedSurg
    Growth as expected, with slight rebound anticipated in the back half.
    		—1%——
    Surgical
    Impacted by timing of tenders in emerging markets and shift to robotics. Growth expected to improve over time with Hugo.
    		—1%——
    Endoscopy
    Driven by double-digit growth in esophageal products and GI Genius.
    		—8%——
    Diabetes
    Strong international performance. U.S. was lower due to anticipated new sensor launches, but pent-up demand is materializing.
    International growth: 11%
    		—high single digits——

    Operational metrics

    17
    Organic Revenue Growth
    5.5%
    Q2 FY26

    Reported revenue grew 6.6%.

    Adjusted Gross Margin
    65.9%up 70 bps YoY
    Q2 FY26

    Operational improvement of 70 bps offset by business mix and tariffs, with FX tailwind.

    Adjusted R&D as % of Revenue
    8.4%increased 8.9%
    Q2 FY26

    Increased R&D investments in core franchises to accelerate top-line growth.

    SG&A as % of Revenue
    32.7%up 20 bps YoY
    Q2 FY26

    Proactively increased spending to accelerate PFA and RDN launches, while managing G&A.

    Adjusted Operating Profit
    $2.2Bincrease of 6%
    Q2 FY26

    Resulted in an adjusted operating margin of 24.1%.

    Adjusted Operating Margin
    24.1%down 20 bps YoY, up 50 bps sequentially
    Q2 FY26

    Sequential improvement despite YoY decline.

    Adjusted Tax Rate
    16.4%
    Q2 FY26

    Lower than expected due to timing, expected to offset in Q4.

    Adjusted EPS
    $1.36increase of 8%
    Q2 FY26

    Beat guidance midpoint, with a portion due to tax timing.

    PFA Installed Base
    doubledduring the quarter
    Q2 FY26

    Strong leading indicator of future revenue growth and margin expansion.

    EP Ablation Market Size
    >$12Bgrowing mid-20s
    Current

    Medtronic has low double-digit share in this large and fast-growing market.

    Symplicity Addressable Market
    18M
    Current

    People in the U.S. with uncontrolled hypertension.

    Symplicity Commercial Payer Coverage
    30M
    Q2 FY26

    Significant momentum in commercial payer wins.

    Symplicity ON MED Trial Systolic BP Drop
    18.5 pointaverage drop
    3-year data

    Sustained and improving blood pressure reductions over the long term.

    Altaviva Addressable Market
    16M
    Current

    People in the U.S. affected by urinary urges and involuntary leaks.

    Diabetes New Sensor Orders
    >35,000
    Q2 FY26

    Strong demand for new sensors, expected to accelerate U.S. growth.

    New HCP Prescribers for Diabetes Sensors
    >9,000
    Q2 FY26

    New Medtronic prescribers, indicating strong adoption.

    Ventures Arm Portfolio
    >50
    Current

    Investments in early-stage companies to feed future M&A pipeline.

    Industry KPIs

    12
    MetricValueDetails
    Tariff impact-20 bpsbps
    System utilization—
    Pricing realized price+30 bpsbps
    New product launch ramp—
    Procedure volume growth—
    FCF conversion leverage guidance—
    Installed base system placementsdoubled
    Segment franchise organic growth5.5%%
    Consumables recurring revenue mix—
    Sales force commercial capacity build—
    Indicated addressable patient population—
    Pivotal trial clinical evidence milestones—

    Product announcements

    2
    ProductTypeDetails
    Simplera Synclaunch
    Instinct sensorlaunch

    Risks & headwinds

    6
    Cryoablation revenue declineQ2 FY26

    40% decline

    Mitigation: Offset by strong growth in PFA franchise.

    Business mix impact on gross marginQ2 FY26

    -80 basis points

    Mitigation: Expected to improve over time as CAS scales and Diabetes separates.

    Tariff impact on COGS and gross marginQ2 FY26, FY26

    -20 basis points to Q2 gross margin; ~$185 million to FY26 COGS

    Mitigation: Partially offset by pricing and COGS efficiency programs; expected to be a carryover into FY27.

    Surgical business market pressuresQ2 FY26

    1% growth

    Mitigation: Impacted by timing of tenders in emerging markets and ongoing shift to robotics. Expected to improve with Hugo launches.

    Diabetes U.S. new order declineQ2 FY26

    Lower this quarter

    Mitigation: Due to customers anticipating new sensor launches; pent-up demand is now materializing.

    Q3 margin compressionQ3 FY26

    Down a couple of hundred basis points

    Mitigation: Due to tariffs, business mix (CAS and Diabetes), and lower COGS efficiency savings during holidays. Q4 margins expected to increase YoY and sequentially.

    What to watch in Q3 FY26

    5

    Symplicity revenue ramp

    Next few quarters
    CurrentStarting to tick up in back half FY26
    TargetAccelerated ramp in Q3/Q4 FY26

    Why it matters

    Symplicity represents a massive multibillion-dollar opportunity, and its adoption speed is key to Medtronic's growth trajectory.

    As a result, we expect our revenue to pick up in the back half of the fiscal year and ramp over the next few quarters and meaningfully contribute to Medtronic for years to come.

    Q&A highlights

    6

    How do commercial payer discussions for Symplicity reflect the Medicare NCD, specifically regarding restrictions and patient access?

    Commercial payers are coming online faster than anticipated, driven by patient demand. The Medicare NCD is broad and better than expected, incorporating physician/patient discretion. Commercial payers may place more emphasis on patients being on multiple medications for a while, which is the main difference noted.

    “The commercial payers, like I mentioned in the commentary, they are coming online faster than I believe we anticipated. They're getting a lot of push from patients as well.”

    asked by Patrick Wood · answered by Geoffrey Martha

    2 min read6 chapters

    Detailed Narrative

    01

    Growth Acceleration and Enterprise Drivers

    Medtronic is experiencing a significant acceleration in its financial results, driven by robust procedure volumes and strategic focus on innovative technologies. Key enterprise growth drivers include the PFA franchise for Afib, Symplicity for hypertension, Hugo in soft tissue robotics, and Altaviva for incontinence. These products are expected to power the company's trajectory, with PFA already showing strong momentum and Symplicity and Altaviva poised for ramp-up.

    02

    Cardiac Ablation (CAS) Momentum

    The Cardiac Ablation business grew 71% in Q2 FY26, with the PFA franchise contributing significantly, growing over 300% in both the U.S. and international markets. This growth is attributed to the Affera mapping system and Sphere-9 catheter, which offer shorter procedure times and durability. Medtronic has doubled its installed base of Affera mapping systems and expects continued revenue acceleration, aiming to double the business's revenue to an incremental $1 billion from its $1 billion FY25 base.

    03

    Symplicity and Altaviva Launch Progress

    Medtronic received the final Medicare NCD for Symplicity, enabling broad access and removing certain patient pathway barriers. Commercial payer momentum is also accelerating, with wins covering 30 million lives. The company continues to build clinical data, including 3-year ON MED trial data showing an 18.5 point average drop in systolic blood pressure. Altaviva, for incontinence, is seeing positive early signs in its U.S. launch, with oversubscribed physician training and strong consumer interest, positioning it as a future growth driver for Pelvic Health.

    04

    Diabetes Business Innovation and Separation

    The Diabetes business is in a strong innovation cycle, with new sensors Simplera Sync and Instinct driving significant demand. The company has accumulated over 35,000 U.S. customer orders for these sensors, with 25% from new pump users or non-CGM users. Recent regulatory approvals for the 780G system (CE Mark for expanded indications, FDA approval for type 2 diabetes) and progress on next-generation AID systems (Flex and Fit) are bolstering the pipeline. The planned separation of the MiniMed business via a 2-step IPO and split remains on track for completion by the end of calendar year 2026.

    05

    Financial Performance and Strategic Investments

    Q2 FY26 revenue grew 5.5% organically, and adjusted EPS increased 8%. Adjusted gross margin was 65.9%, up 70 basis points year-over-year, driven by pricing and COGS efficiency, despite headwinds from business mix and tariffs. Medtronic strategically increased OpEx investments in R&D and SG&A to accelerate PFA and RDN launches, aiming to capitalize on market demand. The company expects to achieve SG&A leverage in the second half of the year and is committed to driving both revenue and earnings growth.

    06

    Portfolio Management and M&A Focus

    Medtronic is actively engaged in portfolio management beyond the Diabetes separation, ensuring the overall portfolio aligns with strategic goals and supports generational growth drivers. The company is prioritizing tuck-in M&A in higher-growth segments, particularly in Cardiology and Neuroscience, focusing on early-stage or close-to-market opportunities. An active ventures arm with stakes in over 50 companies also feeds the pipeline for future M&A, aiming to augment R&D and maintain a technology lead.

    AI-generated summary of the company’s earnings call. Not investment advice.