Release Date: September 01, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Medtronic PLC MDT delivered a strong fiscal Q1 2027 with revenue of $9.8 billion and adjusted EPS of $1.45, both well ahead of expectations, driven by 13.7% organic revenue growth.
- The company's Cardiac Ablation Solutions (CAS) business continues to outperform, delivering 88% worldwide growth and surpassing the $2 billion trailing 12-month revenue mark ahead of schedule, with a 9-point increase in US share.
- Medtronic PLC (MDT) is seeing broad-based strength across its largest businesses, with Cardiac Rhythm Management (CRM) growing 15%, Cranial and Spinal Technologies (CST) up 13%, and Surgical up 9%, demonstrating the durability of its growth.
- The company is making significant progress in its next cycle of growth platforms, including Symplicity (renal denervation), Altaviva (pelvic health), and Hugo (robotic surgery), all showing strong momentum and early adoption.
- Medtronic PLC (MDT) raised its full-year fiscal 2027 organic revenue growth guidance to 7.25%-7.75%, a 50 basis point increase, reflecting confidence in continued strong performance and execution.
- The company is strategically deploying capital to enhance its portfolio, including a $700 million investment in Cornerstone Robotics and an investment in Pi-Cardia, expanding its reach in high-growth markets like soft tissue robotics and structural heart.
Negative Points
- Medtronic PLC (MDT)'s Q1 results were significantly boosted by an extra selling week, contributing approximately $570 million or 670 basis points to organic growth, which may not be repeatable in subsequent quarters.
- The company faces ongoing gross margin headwinds from unfavorable business mix, particularly from the fast-growing Diabetes and CAS businesses, which are lower margin and continue to pressure overall profitability.
- Medtronic PLC (MDT) expects foreign exchange to be a headwind for the full year, with a projected $50 million to $150 million negative impact on revenue, potentially dampening reported growth.
- The Neuromodulation business saw only 3% growth globally, impacted by softness in the SCS market and replacement headwinds in DBS, indicating challenges in certain legacy product lines.
- The company's guidance for Q2 implies a significant slowdown to roughly 6% organic revenue growth, suggesting that the exceptional Q1 performance may not be sustained in the near term.
- Medtronic PLC (MDT) is making significant investments in acquisitions and commercial expansion, which are expected to create near-term pressure on operating margins and EPS, as evidenced by the slight reduction in full-year operating margin expansion guidance.
Q & A Highlights
Q: Can you provide more color on the utilization trends and market share shifts in centers after they adopt the Affera system, and where do you see share stabilizing over time?
A: Geoff Martha (CEO) noted that 75% of the US installed base is at high-volume centers (300+ ablations per year), which still leaves significant room to grow in lower-volume centers. Once Affera is installed, utilization is high, and many large accounts are adding additional systems. The 35% sequential growth in the US Affera installed base in Q1, following 40% in Q4, demonstrates the strong pull-through and early-stage opportunity. Thierry Pieton (CFO) added that the mechanical impact of this installed base growth is very encouraging for future catheter sales.
Q: Some investors may view the Cornerstone Robotics investment as a signal of a lack of confidence in Hugo. Can you address this and provide more details on the deal's financial implications, target markets, and potential for full acquisition?
A: Geoff Martha (CEO) strongly refuted this, stating the investment is "just the opposite" and reflects confidence in Hugo, which is expected to surpass 50,000 procedures by fiscal year-end. The Cornerstone deal is a global play to expand access and provide customer choice in underpenetrated markets, complementing Hugo's US focus. Mike Marinaro (President, Medical Surgical Portfolio) emphasized this builds a full portfolio of robotics offerings. Thierry Pieton (CFO) noted minimal financial impact in FY27 besides foregone interest, with contributions to growth starting in FY28, and confirmed the investment provides strategic optionality for a potential future acquisition.
Q: Given the strong performance of the base business ex-CAS, can you elaborate on the other growth drivers and the structure of the Cornerstone deal? Also, why was the operating margin guidance ticked down?
A: Geoff Martha (CEO) highlighted the breadth of growth across the "big three" businesses (CRM, CST, Surgical) and other drivers like Altaviva, Ardian, and Hugo. He detailed upcoming catalysts in Neuroscience, including Stealth AXiS, Scientia, and new products in Neurovascular. Thierry Pieton (CFO) explained the margin guidance reflects reinvestment of a portion of the revenue upside into commercial acceleration, the foregone interest from the $700 million Cornerstone investment, and tax timing benefits expected to reverse. He confirmed the company is raising FY27 revenue guidance by 50 basis points.
Q: How are you thinking about the trajectory of the renal denervation (Ardian) business, the market opportunity, and what is needed to accelerate the franchise?
A: Geoff Martha (CEO) reaffirmed strong conviction in Ardian as one of the biggest opportunities in med tech, driven by three factors: improving clinical evidence (with real-world outcomes showing 2x-4x better results than trials and strong durability), expanding reimbursement coverage (including new commercial payers like Highmark), and market development. He noted the conversation with hospitals is shifting from awareness to access, with more institutions approaching Medtronic to establish programs, and the transradial catheter launch in H2 is expected to further integrate the therapy into existing workflows.
Q: With the diabetes separation approaching, how will capital allocation change post-separation? Will the cadence of tuck-in deals accelerate, and is a buyback being considered?
A: Geoff Martha (CEO) stated the strategy has already shifted, focusing capital on high-growth, large patient pool areas where Medtronic has a "right to win." This has resulted in a doubling of investment in innovation, from $2.8B in R&D and $0.5B in acquisitions to nearly $3B in R&D and $2B in acquisitions over the last 12 months. Thierry Pieton (CFO) added that deconsolidating diabetes will improve gross margin by ~50 basis points and operating margin by ~100 basis points, providing more flexibility. He noted no specific buyback plans but strong free cash flow and a solid balance sheet provide ample firepower for continued investments.
Q: Can you clarify the margin performance in Q1 and how you're balancing reinvestment of top-line upside versus driving margin expansion for the rest of the year? Also, what was the tariff rebate number?
A: Thierry Pieton (CFO) explained that tariff refunds in Q1 almost fully offset tariffs paid, resulting in a slight net negative impact. For the rest of the year, the guidance does not embed future refunds, creating potential upside. On margins, the company is in "growth mode," reinvesting only a portion of the revenue upside while still expecting FY27 operating margin to expand ~50 basis points and operating profit to grow ~10%. He highlighted ongoing efficiency programs across COGS, manufacturing, logistics, and overhead that are starting to pay off.
Q: Why is the Investor Day being held in Charlotte, North Carolina, and has the company's growth formula shifted from mid-single-digit revenue growth?
A: Geoff Martha (CEO) explained the IRCAD facility in Charlotte is an impressive training site where investors can see the technology in action, including AiBLE, Stealth AXiS, and soft tissue robotics. The event will feature physicians and business unit leaders providing deeper dives into the pipeline and new growth investments. On growth, he stated the company has "aspirations for higher growth" than historical mid-single digits, and the recent inflection in growth over the last two quarters reflects the focus on execution and increased investment. Thierry Pieton (CFO) added the company is at an inflection point and will discuss driving income statement leverage at the event.
Q: What is driving the confidence in the CAS business growing at 2.5 times the market rate, and is there any hesitation on the diabetes split-off timing?
A: Geoff Martha (CEO) cited several factors for CAS confidence: the early stage of the Sphere-9 launch (evidenced by 35% sequential installed base growth), its unique dual-energy point-to-point positioning, new clinical indications (CE Mark for VT), geographic expansion (Japan launch), and the building ecosystem around mapping and ICE technology. Thierry Pieton (CFO) confirmed the expectation to grow north of 3x the market in Q2. On diabetes, he stated there is "no hesitation" and no change in schedule, with the separation occurring when economics are optimal for shareholders, noting the business is performing well with launches ahead of schedule.
Q: How should we think about the impact of the recent acquisitions (SPR Therapeutics, Scientia,
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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