Medtronic plc Q1 FY26 Earnings Analysis

- Renal denervation (RDN) shows strong consumer demand with visits jumping from 50,000 in Q2 to 2.5 million in Q3; over 200 new accounts opened and 150 physicians trained. - CAS (Catheter Ablation System) revenue is expected to double, reaching $2 billion trailing by first half FY ’27 with continued high teens to strong double-digit market growth. - New product launches like Sphere-9 in Japan and Sphere-360 in Europe (with US trial ongoing) fuel growth in CAS. - Altaviva (tibial neurostimulation) and Symplicity (hypertension treatment) are early-stage but growing rapidly with direct-to-consumer marketing amplifying traction. - Hugo robotic surgical system just launched in the US with initial successful installations; expected to expand indications and drive growth. - Other segments like Neurovascular, CST, and CRM are accelerating, contributing to overall revenue growth. - Fiscal ’27 guidance anticipates accelerating revenue growth with high single-digit EPS growth, supported by these innovation drivers.

- Fiscal ’26 organic revenue growth guidance reiterated at approximately 5.5%, with Q4 expected at around 6% growth. - Adjusted operating profit expected to grow approximately 5% or 7% excluding tariffs in fiscal ’26, with operating margin roughly flat excluding tariffs. - Gross margin anticipated to increase slightly ex tariffs in fiscal ’26, despite tariff impacts of ~$185 million. - Fiscal ’27 EPS growth guidance is high single digits, driven by accelerated growth, improved gross margins (mix shift toward more catheters, separation of Diabetes business), and leverage in G&A. - Continued investments in R&D, sales, marketing, and M&A expected but net leverage from SG&A and functional areas will support margin expansion. - Some temporary EPS dilution (around $0.01-$0.02) from Diabetes separation and M&A dilution ($0.04-$0.05) expected in fiscal ’27, but offset over time. - Strong growth drivers include CAS, renal denervation (RDN), Altaviva, Hugo robot, Stealth AXiS, and Neurovascular pipeline.

- Medtronic is increasing R&D investment, particularly in high-growth areas like renal denervation (RDN), CAS, and robotics (Stealth AXiS and Hugo). - Direct-to-consumer marketing investments are being made to build referral pathways and brand awareness, e.g., for Symplicity in hypertension management. - The company is hiring extensively, including mappers and roles focused on market development, health economics, coding, and billing. - Medtronic is shifting to a more offensive capital allocation stance, combining organic investments with strategic M&A. - M&A focus remains on tuck-in deals and venture investments in close adjacency to existing business areas, with several opportunities prioritized. - Investments in robotics (Stealth AXiS) and other innovative technologies are viewed as key generational growth drivers. - Continuous investments fuel growth initiatives and support acceleration in revenue and earnings for FY ’27 and beyond.

No information is provided regarding the same in the latest conference call.

- Hugo Surgical System: Orders and installations are ramping up, with initial U.S. cases completed at Cleveland Clinic and more scheduled, indicating a growing order book. - Renal Denervation (Symplicity): Over 200 new account openings this quarter, reflecting strong market development and growing procedure volumes; physician participation increasing with 150+ physicians in the referral network. - CAS (Cardiac Ablation Systems): Trailing 12-month revenue goal target of $2 billion expected by FY '27 first half, supported by catheter portfolio strength and new product launches (Sphere-9 and Sphere-360) with ongoing trial and market expansion; strong installed base growth. - Stealth AXiS Robotics: Early-stage adoption with positive clinical and surgeon feedback; expected to increase orders as it integrates into existing workflows, enhancing competitive position. - CathWorks & Anteris: Focused on tuck-in M&A supporting product pipeline expansion and potential orders in adjacencies, implying strategic capital deployment toward growing order backlog.