Medtronic 2025 Q4 Earnings Strong Performance as Net Income Surges 61%

Medtronic (MDT), ranked 123rd by market capitalization, reported its fiscal 2025 Q4 earnings on May 21st, 2025. The company's performance exceeded expectations with revenue and earnings surpassing forecasts. Medtronic reported a total revenue increase of 3.9% to $8.93 billion, beating consensus estimates of $8.82 billion. The company's adjusted EPS came in at $1.62, also above the forecasted $1.58. Medtronic provided guidance for fiscal 2026, expecting organic revenue growth of approximately 5%, with adjusted EPS projected between $5.50 and $5.60, slightly below the consensus of $5.83. The strategic separation of its Diabetes business is anticipated to streamline operations and enhance focus on high-margin growth markets.

Revenue

Medtronic reported a total revenue increase of 3.9% to $8.93 billion in 2025 Q4, up from $8.59 billion in 2024 Q4. The Cardiovascular segment led the growth, contributing $3.34 billion, while the Neuroscience division added $2.62 billion. The Medical Surgical segment generated $2.21 billion, and the Diabetes business saw revenues of $728 million. Other segments brought in $31 million, culminating in the total revenue of $8.93 billion for the quarter.

Earnings/Net Income

Medtronic's EPS rose 67.3% to $0.82 in 2025 Q4 from $0.49 in 2024 Q4, marking continued earnings growth. Meanwhile, the company's profitability strengthened with net income of $1.06 billion in 2025 Q4, marking a 61.0% growth from $659 million in 2024 Q4. This substantial increase in EPS reflects strong operational performance and strategic initiatives.

Post-Earnings Price Action Review

The strategy of buying Medtronic (MDT) shares after its revenue increase quarter-over-quarter on the financial report release date and holding for 30 days resulted in poor performance. The backtest revealed a return of -12.10%, considerably underperforming the benchmark return of 44.88%. Additionally, the strategy's Sharpe ratio stood at -0.19, indicating a lack of risk-adjusted returns, while experiencing a maximum drawdown of -30.98%, underscoring its high risk. With a compound annual growth rate (CAGR) of -4.25% and volatility at 22.06%, the strategy faced significant challenges, rendering it less favorable for MDT investments over the past three years. These findings suggest that such an investment approach is not optimal for Medtronic shares, necessitating a reevaluation of investment strategies.

CEO Commentary

Geoff Martha, Chairman and CEO of Medtronic, emphasized a strong finish to the fiscal year with a revenue growth of 5.4%, driven by durable growth across key segments. He highlighted the acceleration in Cardiovascular growth, achieving an 8% increase, with notable contributions from Cardiac Ablation Solutions. Martha noted the decision to separate the Diabetes business as a strategic move that allows Medtronic to focus on high-margin growth markets, enhancing overall operational efficiency and profitability. He expressed optimism about the company’s future, stating, “the underlying fundamentals are strong, and they are getting stronger,” reinforcing confidence in mid-single-digit revenue growth moving forward.

Guidance

Medtronic expects organic revenue growth of approximately 5% in fiscal year 2026, with a range of 4.5% to 5% growth in Q1. The company anticipates adjusted EPS in the range of $5.50 to $5.60, reflecting a 4% growth, excluding the impact of tariffs. The guidance includes expectations for continued investment in growth drivers, particularly in R&D and sales, while maintaining strong operational leverage, with projected EPS in Q1 ranging from $1.22 to $1.24.

Additional News

Medtronic announced its intent to separate its Diabetes business into a standalone public company, aiming to enhance focus on high-margin growth areas. The new entity will be led by Que Dallara, current EVP of Medtronic Diabetes. Additionally, the company revealed leadership transitions, with Skip Kiil taking over as EVP and President of the Cardiovascular Portfolio, succeeding Sean Salmon. Medtronic also declared a dividend increase of 1.4% to $0.71 per share for the first quarter of fiscal year 2026, marking the 48th consecutive annual dividend increase. These strategic moves aim to bolster Medtronic’s position in the healthcare technology sector, driving growth and improving shareholder value.