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An Earnings Report That Exceeded Expectations

But the real highlight is not just “exceeding expectations”

On June 3, Medtronic announced its financial results for the fourth quarter and full year of fiscal 2026.Following the release of its financial report, the company's stock price rose nearly 6% during intraday trading.The market’s positive response was driven not merely by earnings that exceeded expectations, but also by investors’ growing recognition of new growth drivers emerging for this global medical device company.

In the fourth quarter, Medtronic achieved revenue of $9.807 billion (approximately RMBRMB66.467 billion）, a year-on-year increase of 9.9%; organic growth of 6.6%.Adjusted earnings per share (Non-GAAP EPS) amounted to $1.55, exceeding the market expectation of $1.54.

Annual revenue reached $36.364 billion, a year-over-year increase of 8.4%, with organic growth of 5.8%, marking the highest annual revenue growth rate for the company in the past decade.。

This is Medtronic’s “best revenue growth performance in a decade,” said Medtronic CEO Geoff Martha in an interviewThe Viewpoint Expressed by the Renowned Financial Media Barron’s. In His View, This Achievement Was No Accident; It Was the Result of Continuous Strategic Adjustments, Optimized Execution, and Increased Investment in Innovation Over the Past Few Years.

In fact,Since 2023, Medtronic has continuously advanced its business focus strategy, on one hand promoting the independent listing of its diabetes care business, MiniMed, and on the other hand increasing investments in high-growth areas such as electrophysiology, robotic surgery, and neuromodulation. Today, these efforts are finally beginning to reflect in the financial statements.。

However, focusing solely on revenue growth makes it easy to overlook more significant signals behind the financial report: Medtronic’s growth structure is undergoing a transformation.

Historically, the company’s growth was primarily driven by mature businesses such as traditional pacemakers, spinal products, and surgical consumables; however, the fastest-growing segment this quarter wasElectrophysiology, Renal Denervation, Robotic Surgery, and Innovative Neuromodulation PlatformsThis means that the "stable but slow-growing Medtronic" familiar to the market may be undergoing fundamental changes.

The biggest highlight of this quarter undoubtedly comes from the cardiovascular business.

In the fourth quarter, Medtronic’s Cardiovascular segment revenue reached $3.797 billion, representing a 13.8% year-over-year increase and a 10.1% organic growth rate, making it the largest contributor to the company’s growth.

The most prominent among them is the Cardiac Ablation Solutions (CAS) business,Year-over-year growth reached as high as 78%, with the U.S. market growing by 124% and its U.S. market share further increasing by 8 percentage points.。

The core products driving this growth are the Affera Platform and the Sphere-9 Pulsed Field Ablation (PFA) Catheter.

Over the past two years, Pulsed Field Ablation (PFA) has emerged as the most closely watched new technology in the global treatment of atrial fibrillation. Compared with traditional radiofrequency ablation and cryoablation, PFA can more precisely target myocardial tissue while reducing the risk of injury to surrounding structures such as the esophagus and phrenic nerve. Consequently, industry experts widely believe that PFA will reshape the atrial fibrillation treatment market over the next decade.

During the earnings call, Medtronic disclosed thatPFA-related BusinessRevenue increased by 145% year-over-year, and the U.S. installed base of the Affera™ System grew by 40% quarter-over-quarter. Currently, Medtronic is accelerating the advancement ofSphere-360 Catheter, Prism-2 3D Mapping System, and Future ICE CatheterEcosystem Development: Aiming to Build a Comprehensive Electrophysiology Solutions Platform.

Shagun Singh, an analyst at RBC Capital Markets, pointed out that the market continues to undervalue Medtronic’s electrophysiology and renal denervation businesses, particularly against the backdrop of a growing population of patients with atrial fibrillation.The electrophysiology market is expected to maintain double-digit growth in the coming years, with Medtronic gradually becoming one of the most important players in this field.。

Meanwhile,Symplicity Spyral, a renal denervation product, has also begun to enter the phase of commercial scale-up.Management disclosed that the product has achieved approximately $100 million in annualized revenue, with average weekly surgical volumes doubling since the implementation of the national medical insurance coverage policy. For a new market just entering the early stages of commercialization, this growth rate is quite substantial.

Beyond its electrophysiology business, another noteworthy development for Medtronic this quarter is that multiple innovative platforms have simultaneously entered the commercialization harvest phase.

First is the Hugo robotic surgery platform.

In recent years, the robotic surgery market has been nearly monopolized by Intuitive Surgical, with Medtronic considered one of the companies most likely to challenge its dominance.

This quarter, Medtronic announced that it has submitted a 510(k) application to the FDA for the Hugo robotic system in the fields of general surgery and gynecology. Previously, Hugo had already received approval for urological indications in the United States. The company stated that the current global growth rate of surgical procedures is two to three times the market average. IBD believes that,This means that Hugo is gradually transitioning from the validation phase to the large-scale rollout phase.。

Next are Stealth AXiS and Altaviva.

The Stealth AXiS system received FDA approval for use in spinal, cranial, and ENT applications this quarter, along with CE marking in Europe. Meanwhile, Altaviva continued to expand its physician coverage, with the number of active implanting physicians tripling quarter-over-quarter and the patient volume increasing by 2.5 times.Although the current revenue scale of these businesses is still modest, their growth rate far exceeds the company’s average.。

More notably, Medtronic is restarting its M&A engine.

Over the past quarter, the company completed the acquisition of CathWorks and announced the acquisitions of Scientia Vascular and SPR Therapeutics, while also investing in innovative enterprises such as Beluga Medical, CardioACC, and Pulnovo.。These transactions are almost entirely concentrated in high-growth sectors such as electrophysiology, neurointervention, chronic pain, and pulmonary artery denervation.。

Reuters reported that Geoff Martha expects these initiatives to begin contributing revenue in fiscal year 2027, with the true growth impact gradually materializing in subsequent years. Unlike large-scale mergers and acquisitions of the past, these transactions are smaller in scale but more strategically targeted, aligning better with the prevailing trend in the current medical device industry of “small acquisitions plus platform expansion.”

Of course, this financial report is not without its flaws.

Adjusted operating profit in the fourth quarter was $2.5 billion, a year-on-year increase of only 0.6%; the adjusted operating margin was 25.5%, a year-on-year decrease of 230 basis points; adjusted EPS decreased by 4.3% year on year.The primary factors contributing to margin pressure include tariff costs, transaction expenses related to MiniMed, investments in the commercialization of new products, and the expansion of the sales force.

For fiscal year 2027, the company expects Non-GAAP EPS to be $5.90 to $6.00, slightly below the market’s prior expectation of approximately $6.05. Meanwhile, the company estimates the impact of tariffs to be around $250 million.，This is also a key reason why some Wall Street institutions remain cautious.。

However, from another perspective, Medtronic's revenue guidance is highly positive.The Company expects fiscal year 2027Organic revenue growth of 6.75% to 7.25%, maintaining the highest level in recent yearsBarron’s believes that the market has overlooked the relatively conservative EPS guidance because investors are more focused on the quality of revenue growth and the ramp-up speed of innovative businesses.

From a long-term perspective, the most noteworthy aspect of this financial report is neither the $9.8 billion in revenue nor the $1.55 EPS, but rather that Medtronic is forming an entirely new growth portfolio: Affera represents the electrophysiology revolution, Symplicity signifies a new market for hypertension treatment, Hugo embodies the future of robotic surgery, and a series of acquisitions have储备ed new growth drivers for the coming years.

For the past decade, investors have viewed Medtronic as a stable but low-growth medical device giant; now, as multiple innovation platforms simultaneously enter their harvest phase, the market is beginning to reassess the company’s long-term value.If Affera, Symplicity, and Hugo can continue to deliver on their growth promises, the fourth quarter of fiscal year 2026 will likely be regarded as the true beginning of Medtronic’s new growth cycle.

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