Medtronic reported a solid finish to its fiscal year 2024, with Q4 revenue of $8.589 billion and a mid-single-digit top-line trajectory across major segments. The quarter featured notable momentum in Cranial & Spinal Technologies (CST) with 9% growth and robust performance from Cardiac Rhythm Management (CRM), Surgical, and Neuromodulation portfolios. Management framed FY25 as the inflection point for restoring earnings power, guided to organic revenue growth of 4-5% and non-GAAP diluted EPS of $5.40-$5.50, supported by cost-out initiatives, pricing discipline, and operating leverage. The company emphasizes a broad product cycle slate, AI-enabled ecosystem enhancements (AiBLE and Touch Surgery), and expanding high-growth platforms (Pulse Field Ablation, Evolut FX+, Inceptiv closed-loop SCS, 780G Diabetes, and Simplicity hypertension) as the core drivers of durable growth.
Management highlighted a deliberate strategy to improve earnings power through a combination of gross-margin stabilization, operating-expenditure discipline, and strategic portfolio decisions (e.g., divestitures and mix shifts). Free cash flow was strong, with $5.2 billion in FY24 and a free-cash-flow conversion rate well in excess of 100% in the back half of the year, enabling meaningful shareholder returns via dividends and buybacks. The guidance implies a path to mid-single-digit top-line growth and high-single-digit EPS growth as FX headwinds abate and product launches scale through the year. The leadership also underscored a renewed emphasis on a performance-driven culture, leveraging capital allocation to fund priority growth engines and sustain a long-term dividend increase trajectory (47th consecutive year).
Risks remain around currency headwinds, China/VBP tailwinds, product-launch execution, and reimbursement dynamics (notably for Simplicity hypertension). While near-term margin expansion relies on continued cost-out and pricing power, the company expects gross margins to be flat at constant currency in FY25, with operating margins expanding to roughly 26% on a reported basis as the year progresses. Overall, MDT is navigating a multi-year path to restore earnings power while investing aggressively in their AI-enabled portfolio and high-growth franchises.