Financial Trends -- 6.5/10
Medtronic is delivering a genuine revenue re-acceleration after years of stagnation, with FQ26Q3
hitting 6% organic growth -- the highest in 10 quarters. Cardiovascular (CAS/PFA) is the star,
growing ~80% YoY, and Diabetes is strong before its planned separation. However, total organic
growth only just crossed the 5% target in the most recent quarters, MedSurg remains weak, gross
margins are under pressure from tariffs and mix, and Non-GAAP EPS growth has been anemic over a
multi-year horizon (only $5.49 in FY2025 vs. $5.55 in FY2022). This is a turnaround-in-progress,
not a proven inflection.
Weight: 25%
FQ26Q3 Organic Growth
6.0%
Highest in 10 quarters | Up from 4.1% trough
FY2025 Non-GAAP EPS
$5.49
+5.6% YoY | Still below FY2022 $5.55
CV Organic Growth (FQ26Q3)
11%
CAS/PFA ~80% YoY | Engine of acceleration
Non-GAAP Gross Margin
64.9%
Down 120bps from FY2024 | Tariff + mix headwinds
Annual Financial Summary (USD M, Fiscal Year-End April)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Total Revenue | 30,117M | 31,686M | 31,227M | 32,364M | 33,489M |
| Revenue YoY | — | +5.2% | -1.4% | +3.6% | +3.5% |
| Non-GAAP EPS ($) | $4.44 | $5.55 | $5.29 | $5.20 | $5.49 |
| Non-GAAP EPS YoY | — | +25.0% | -4.7% | -1.7% | +5.6% |
| GAAP EPS ($) | $2.66 | $3.73 | $2.82 | $2.76 | $3.61 |
Note: MDT fiscal year ends late April. FY2025 = May 2024 - Apr 2025.
All figures in millions of USD except per-share data. Reported growth underperforms organic
growth due to FX and divestitures.
Multi-year EPS stagnation is the critical concern.
Non-GAAP EPS in FY2025 ($5.49) is still below FY2022 ($5.55). Over a 3-year span, adjusted
EPS actually declined despite revenue growth. FY2026 guidance of $5.62-$5.66 would finally
exceed FY2022 levels. Revenue has grown from $31.7B to $33.5B (+5.7%) over FY2022-FY2025,
but margins and below-the-line items have absorbed the gains. The company has been running
in place on earnings while claiming a turnaround.
Segment Revenue (USD M, Annual)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Cardiovascular | 10,772M | 11,423M | 11,573M | 11,831M | 12,481M |
| Neuroscience | 8,195M | 8,784M | 8,959M | 9,406M | 9,846M |
| MedSurg | 8,737M | 9,141M | 8,433M | 8,417M | — |
| Diabetes | 2,413M | 2,338M | 2,262M | 2,488M | 2,755M |
MedSurg FY2025 geographic total not returned in data; segment revenue reported separately.
5-year CAGRs: CV +3.7%, Neuroscience +4.7%, Diabetes +3.4%.
Segment Organic Growth (%)
| Segment | FY2023 | FY2024 | FY2025 | FQ26Q1 | FQ26Q2 | FQ26Q3 |
|---|---|---|---|---|---|---|
| Cardiovascular | 4.0% | 5.0% | 6.3% | 7.0% | 9.3% | 11% |
| Neuroscience | 4.1% | 5.2% | 5.2% | 3.1% | 3.9% | 3% |
| MedSurg | -2.4% | 4.7% | 0.8% | 2.4% | 1.3% | 3% |
| Diabetes | 2.4% | 8.6% | 11.5% | 7.9% | 7.1% | 8%+ |
| Total Company | — | — | 4.9% | 4.8% | 5.5% | 6.0% |
Cardiovascular is the engine -- CAS/PFA growing ~80% YoY, PFA ~200% worldwide.
CV organic growth accelerated from 5.0% (FY2024) to 11% (FQ26Q3), an outstanding trajectory.
The 5%+ total organic growth target is now being achieved and exceeded. However, the acceleration
is heavily concentrated: Neuroscience is decelerating from 6.5% to 3%, MedSurg remains the weakest
link at sub-3% growth (bariatric and robotic headwinds), and Diabetes -- while strong at 8%+ --
is being separated (target completion by end CY2026).
Quarterly Trends (Revenue and EPS)
| Metric | FQ25Q1 | FQ25Q2 | FQ25Q3 | FQ25Q4 | FQ26Q1 | FQ26Q2 | FQ26Q3 |
|---|---|---|---|---|---|---|---|
| Total Revenue | 7,967M | 8,366M | 8,260M | 8,896M | 8,506M | 8,926M | 8,985M |
| Organic Growth | 5.3% | 5.0% | 4.1% | 5.4% | 4.8% | 5.5% | 6.0% |
| Non-GAAP EPS ($) | $1.23 | $1.26 | $1.39 | $1.62 | $1.26 | $1.36 | $1.36 |
Clear organic growth acceleration: 4.1% trough to 6.0% in FQ26Q3.
Quarterly revenue has trended upward, with FQ26Q3 ($8,985M) approaching $9B. The organic growth
trajectory from 4.1% (FQ25Q3) to 5.4% to 4.8% to 5.5% to 6.0% shows a genuine re-acceleration.
FY2026 is guided to ~5.5% organic and tracking above that. However, quarterly Non-GAAP EPS has
been relatively flat at $1.26-$1.36 in FQ26, with FY2026 guided to $5.62-$5.66 (only ~2-3% growth).
Quarterly Segment Revenue (USD M)
| Metric | FQ25Q3 | FQ25Q4 | FQ26Q1 | FQ26Q2 | FQ26Q3 |
|---|---|---|---|---|---|
| Cardiovascular | 3,037M | 3,336M | 3,285M | 3,436M | 3,457M |
| Neuroscience | 2,458M | 2,620M | 2,416M | 2,562M | 2,558M |
| Diabetes | 694M | 728M | 721M | 757M | 796M |
Segment EBITDA (USD M, Annual)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Cardiovascular | 3,850M | 4,512M | 4,435M | 4,474M | 4,801M |
| Neuroscience | 3,162M | 3,765M | 3,617M | 3,940M | 4,183M |
| MedSurg | 3,021M | 3,572M | 2,856M | 3,170M | 3,042M |
| Diabetes | 598M | 583M | 378M | 394M | 491M |
| Total Segment EBITDA | 10,632M | 12,432M | 11,286M | 11,979M | 12,518M |
Total segment EBITDA in FY2025 ($12,518M) is barely above FY2022 ($12,432M).
MedSurg segment EBITDA has declined from $3,572M (FY2022) to $3,042M (FY2025), a -15% decline.
Diabetes EBITDA is recovering but still well below FY2021 levels. CV and Neuroscience are the
only segments showing consistent EBITDA growth. The overall picture is one of stagnation --
revenue grows but profitability does not meaningfully improve.
Non-GAAP Gross Margin (%)
| Metric | FY2024 | FY2025 | FQ26Q1 | FQ26Q2 | FQ26Q3 |
|---|---|---|---|---|---|
| Non-GAAP Gross Margin | 66.1% | 65.7% | 65.1% | 65.9% | 64.9% |
Gross margin under pressure: down 120bps from FY2024 to FQ26Q3.
Drivers include tariffs (~110bps headwind in Q3), negative mix from CAS capital equipment
(lower margin) and Diabetes Simplera ramp, partially offset by pricing (+30bps). Company guides
gross margin "down ~30bps" for FY2026 including tariffs. The $185M tariff impact to COGS in
FY2026 is expected to carry over at ~$75M/quarter into FY2027 (~$300M full year).
Acceleration / Deceleration Analysis
| Signal | Detail | Direction |
|---|---|---|
| Total Organic Growth | 4.1% trough to 5.5% to 6.0% -- clear positive trajectory, now above 5% target | Accelerating |
| CV / CAS / PFA | CV organic 5.0% to 6.3% to 11%; CAS ~80% YoY, PFA ~200% worldwide | Strong Positive |
| Diabetes | Sustained 7-12% organic range on 780G / Simplera; strong but being separated | Strong (separating) |
| Neuroscience | 6.5% in FQ24Q4 down to 3% in FQ26Q3 -- worrying downtrend in second-largest segment | Decelerating |
| MedSurg | 4.5% to 0.8% to 2.4% to 1.3% to 3% -- structurally challenged, bariatric + robotic headwinds | Weak |
| Gross Margin | 66.1% to 65.7% to 64.9% -- tariff + CAS mix headwinds compressing margins | Declining |
| Multi-Year EPS | Non-GAAP EPS flat from FY2022 ($5.55) to FY2025 ($5.49); 3 years of no progress | Stagnant |
Transcript Context (FY2026 Q1-Q3 Earnings Calls)
New Product Launches (Growth Drivers):
(1) CAS/PFA (Affera + Sphere-9): Growing 80% YoY, PFA ~200%. Sphere-360 next-gen catheter received
CE Mark, U.S. pivotal trial initiated. Targeting $2B trailing CAS revenue by H1 FY2027.
(2) Symplicity RDN for hypertension: 200+ new accounts, 150 physicians on Physician Finder, 100M
covered lives. DTC marketing driving 2.5M website visits (50x increase). Revenue more meaningful in FY2027.
(3) Hugo robot: FDA cleared for urologic procedures, first U.S. cases at Cleveland Clinic Feb 2026.
(4) Stealth AXiS: FDA cleared for spinal procedures, AI-powered planning + robotics platform.
(5) Altaviva tibial neurostim: 500+ physicians trained, expected to contribute FQ26Q4 onward.
Turnaround / Corporate Actions:
Elliott Management activist involvement announced with Q1 FY2026, new Board members and
Growth/Operating committees. Investor Day planned for mid-CY2026 with new long-term financial targets.
CEO frames this as "new chapter" with more aggressive M&A and portfolio optimization.
Diabetes separation (MiniMed) on track for completion by end CY2026, IPO + split path,
expected to add ~50bps gross margin and ~100bps operating margin to remaining Medtronic.
Tariff Impact:
$185M tariff impact to COGS in FY2026 (~110bps gross margin headwind in Q3).
Expected to carry over at ~$75M/quarter into FY2027 (~$300M full year).
Company actively mitigating through supply chain actions.
Capital Return:
FY2025: Returned $6.3B to shareholders via dividends and buybacks.
Dividend increased for 48th consecutive year (current yield: 3.28%).
Diabetes separation IPO + split planned to retire shares, expected to be EPS accretive.
Penalty / Modifier Assessment
| Factor | Impact | Detail |
|---|---|---|
| Multi-year EPS stagnation | -1.0 | Non-GAAP EPS flat from FY2022-FY2025 despite revenue growth. |
| Gross margin erosion | -0.5 | Tariffs + mix dragging margins down 120bps+. |
| MedSurg structural weakness | -0.5 | Largest underperforming segment, bariatric + robotic headwinds. |
| Neuroscience deceleration | -0.5 | Second-largest segment decelerating from 6.5% to 3%. |
| Clear organic growth acceleration | +1.0 | 4.1% to 6.0%, crossing above 5% target. |
| CAS/PFA breakout | +1.0 | 80% growth in $13B+ market with strong competitive position. |
| Multiple new growth drivers | +0.5 | RDN, Altaviva, Hugo, Stealth AXiS all in early launch. |
| Diabetes separation (positive) | +0.5 | Removes margin drag, enables share retirement. |
Net modifier: +0.5 points (positives slightly outweigh negatives but EPS stagnation is a heavy drag)
Score Derivation
| Component | Assessment | Contribution |
|---|---|---|
| Base | Mid-single-digit organic grower with flat earnings over multi-year period | 5.0 |
| Organic growth acceleration | 4.1% to 6.0%, now above 5% target | +1.0 |
| CAS/PFA breakout growth | 80% YoY, gaining share in $13B+ market | +1.0 |
| Multiple new growth drivers | RDN, Hugo, Stealth AXiS, Altaviva all in early launch with visible catalysts | +0.5 |
| Multi-year Non-GAAP EPS stagnation | FY2022-FY2025: $5.55 to $5.49, three years of no earnings growth | -0.5 |
| Gross margin compression + segment weakness | Tariffs, Neuro deceleration, MedSurg structural challenges offsetting CAS strength | -0.5 |
| Total | 6.5 |
Final Score: 6.5 / 10. Medtronic has clearly improving revenue
momentum and exciting new product drivers, but has yet to translate that revenue growth into sustained
earnings power. The turnaround is real but incomplete -- revenue is accelerating, but margins are
compressed, the earnings trajectory has been flat for 3 years, and the organic growth acceleration is
heavily concentrated in one business (CAS). If FY2027 delivers on the "high single digit" EPS growth
promise and organic growth sustains at 5.5%+, a re-rating to 7+ would be warranted.
Key Risks to Score
Upside: CAS/PFA sustains 50%+ growth and reaches $2B
trailing revenue target; Neuroscience re-accelerates on Stealth AXiS launch; Diabetes separation
boosts remaining Medtronic margins by 50-100bps; FY2027 delivers high-single-digit EPS growth
as guided; tariff headwinds abate. Score moves to 7.5+.
Downside: CAS/PFA growth decelerates as competitors
(J&J, Boston Sci) launch rival platforms; MedSurg continues to drag; tariff costs escalate beyond
$300M/yr; Diabetes separation delayed or value-destructive; EPS remains flat for a 4th consecutive
year. Score drops to 5.5.