Executive Summary
Medtronic plc reported a solid start to fiscal 2025 (QQ1 2025) with revenue of $7.915B and a resilient margin profile despite currency headwinds. GAAP/net income stood at $1.042B with diluted EPS of $0.80, while adjusted metrics showed gross margin of 65.9% (up 30 bps on a constant-currency basis) and adjusted operating margin of 24.4%. Management highlighted a broad-based strength across high-growth and established franchises, led by Diabetes, Neuromodulation, and Cardiac Ablation Solutions (CAS) driven by Pulse Field Ablation (PFA) and Sphere-9, as well as TAVR/FX Plus in Structural Heart. The company raised its FY25 organic revenue growth guidance to 4.5–5% and signaled ongoing margin expansion aided by pricing, cost-out programs, and efficiency initiatives. A key driver of strategic value continues to be product innovation and capacity investments (PulseSelect PFA, Sphere-9, Evolut FX Plus), alongside a notable partnership with Abbott to bring integrated CGM into its AID/SMART MDI ecosystems. Management also reaffirmed commitment to capital allocation, including opportunistic share repurchases (~$4B over the last two quarters) and tuck-in M&A as a core growth vector. The quarter reinforces Medtronic’s diversified growth framework, with a roughly mid-single-digit top-line trajectory in the near term and a pathway to higher earnings power into the back half of the year as currency headwinds recede and new product cycles gain scale.
Key Performance Indicators
Key Insights
Revenue: $7.915B (YoY +2.77%, QoQ -7.85% per reported metrics). Gross profit: $4.712B (Gross margin 59.53% as reported; adjusted gross margin 65.9% CC). Operating income: $1.278B (Operating margin 16.15% reported; 24.4% adjusted CC). Net income: $1.042B; Net income margin 13.17%. EPS (GAAP): $0.81; EPS (diluted): $0.80. Free cash flow: $466M; Net cash provided by operating activities: $986M. Balance sheet: total assets $89.75B; cash & equivalents $1.31B; short-term investments $6.53B; total ...
Financial Highlights
Revenue: $7.915B (YoY +2.77%, QoQ -7.85% per reported metrics). Gross profit: $4.712B (Gross margin 59.53% as reported; adjusted gross margin 65.9% CC). Operating income: $1.278B (Operating margin 16.15% reported; 24.4% adjusted CC). Net income: $1.042B; Net income margin 13.17%. EPS (GAAP): $0.81; EPS (diluted): $0.80. Free cash flow: $466M; Net cash provided by operating activities: $986M. Balance sheet: total assets $89.75B; cash & equivalents $1.31B; short-term investments $6.53B; total debt $27.87B; net debt $26.56B. Cash conversion and liquidity metrics indicate solid cash generation even as currency headwinds persist. Guidance: FY25 organic revenue growth raised to 4.5–5%; Q2 organic growth around 4.5%; FX headwind to revenue now expected to be $110–$210M (incl. $10–$60M in Q2); Non-GAAP diluted EPS guidance raised to $5.42–$5.50; Q2 EPS guidance $1.24–$1.26.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
7.92B |
2.77% |
-7.85% |
| Gross Profit |
4.71B |
-7.13% |
-9.33% |
| Operating Income |
1.28B |
0.79% |
-16.31% |
| Net Income |
1.04B |
31.73% |
59.33% |
| EPS |
0.81 |
37.29% |
65.31% |
Key Financial Ratios
operatingProfitMargin
16.1%
operatingCashFlowPerShare
$0.76
freeCashFlowPerShare
$0.36
dividendPayoutRatio
86.2%
Management Commentary
Theme: Growth engines and product cycles
- Management communicated that QQ1 performance was driven by multiple growth platforms, including PulseField Ablation (PFA) in CAS and the Sphere-9 focal catheter, with PulseSelect adoption expanding in 20 countries (>10,000 treatments across 550 physicians). Geoff Martha highlighted PulseSelect as a meaningful catalyst for CAS growth with capacity expansion underway.
- Structural Heart momentum: Evolut FX Plus launch progressed from limited US to full market, with SMART data supporting patient benefits in small annulus patients (notably women). FX Plus is expected to broaden coronary access and reinforce data-driven value in TAVR.
- Diabetes leadership and partnership: 780G (AID) patient adoption in the US hitting a one-year milestone; partnering with Abbott to commercialize an integrated CGM within Medtronic’s AID/SMART MDI framework, increasing patient access while maintaining margins.
- Neuromodulation: Strong growth (10% for the quarter) driven by sensing and closed-loop capabilities. Inceptive closed-loop spinal cord stimulator and Percept brain modulation gained traction; FDA approval for asleep DBS surgery represents a potential efficiency tailwind.
- Hugo robotics: Enrollment progress in EXPAND EURO; US filing timeline deferred but commitment reaffirmed; Medtronic emphasized a multi-year growth trajectory through robotics and broader digital capabilities.
Theme: Margin resilience and guidance
- Adjusted gross margin improving CC by about 30 bps despite an 80 bp currency impact; pricing from new innovations and cost-out initiatives offset inflation, contributing to margin stabilization.
- Guidance updated to reflect Q1 outperformance, signaling confidence in mid-single-digit top-line momentum and high-single-digit growth in earnings power exiting the year; FX headwinds are expected to lessen in the back half.
Geoff Martha: 'As you saw in our results, we're exceeding our commitments and increasing our outlook for the rest of the year. This is now our seventh quarter in a row of delivering mid-single-digit revenue growth.'
— Geoff Martha
Que Dallara: 'The strategy hasn't changed. We've just found a way to expand access to a broader installed base.'
— Que Dallara
Forward Guidance
Management raised FY25 organic revenue growth guidance to 4.5–5% (from 4–5%) and expects Q2 to deliver mid-single-digit top-line growth around 4.5% organic. FX is expected to remain a headwind to revenue in the near term, with an estimated negative impact of $110–$210M for the year (including $10–$60M in Q2). The company projects operating margins to expand through the year as cost-out programs and pricing contribute, though currency remains a drag in the near term. FY25 non-GAAP diluted EPS guidance is raised to $5.42–$5.50, with Q2 EPS of $1.24–$1.26. Investors should monitor: (1) cadence of new product launches (PFA PulseSelect and Sphere-9, FX Plus in TAVR), (2) Abbott CGM integration progress and resulting installed base expansion in diabetes, (3) Hugo robotics development cadence and US filing timelines, (4) reimbursement dynamics for renal denervation (Simplicity) as CMS NTAP considerations progress, and (5) the pace of margin expansion and the influence of FX tailwinds in H2.