MDT · Q2 2026 Earnings

Q: Asked about second half guidance of 6% growth, breaking down pipeline vs. base business contribution, RDN assumptions, confidence in rebound, and margin leverage in H2.

Management explained strategic investments in mapper structure, cardiac ablation, and direct marketing for Simplicity offset revenue upside. Expects SG&A leverage in H2, operating margin roughly flat YoY ex-tariffs but down ~50bps post-tariffs. Detailed growth drivers: PFA leading in H2, Simplicity ramping post-NCD, AltaViva contributing, Hugo expected approval in H2, base business strong (diabetes, neuromodulation, CST, CRM).

Q: Asked where SG&A and R&D investments are going, cadence of 200bps R&D increase, ability to grow operating margin, and M&A strategy.

Management detailed two investment categories: capitalizing on growth drivers (CAST, Ardian, AltaViva, Hugo) and maintaining technology leadership in core franchises (CRM, CST). Expects SG&A leverage in H2 2026 and 2027. Outlined P&L algorithm: 70-80bps gross margin improvement from pricing and COGS offset by 80bps negative mix and 20bps tariffs. Committed to high single-digit EPS growth in 2027. M&A focused on tuck-ins in higher-growth segments (cardiology, neuroscience), plus 50+ venture companies in portfolio.

Q: Asked about PFA mapper sufficiency to hit $2B target and supply constraints; also asked if TIBIL could become billion-dollar product and cannibalize Botox.

Management confirmed PFA supply not constraining, mapper hiring going well though wished for larger buffer given growth. Emphasized PFA momentum from customer feedback (two systems deployed, three more planned). On TIBIL: acknowledged 46M US patients with OAB, 16M with urge incontinence; TIBIL faster (same-day procedure vs. weeks/months for sacral), easier procedure, but emphasized sacral+TIBIL as incremental to sacral business making pelvic health a growth driver; patients choosing TIBIL when presented all options including Botox.

Q: Asked about Ardian ramp precision, specifically whether U.S. Ardian can achieve $400M by year 3 (fiscal 2028), impact of isolated systolic hypertension exclusion in NCD, and confirmed current run rate.

Management (Jeff) stated would be disappointed if Ardian reached $400M by year 5, expects faster ramp. Affirmed final NCD won't hold back growth and is improvement on proposed NCD. Brought in Dr. Laura Morey (Chief Scientific & Medical Officer, interventional cardiologist) who clarified: ISH population represents <15% of patients over 60, very rare under 60; estimated <10% of total patient population affected by ISH exclusion. NCD provides more practical access with fewer restrictions, less time to treatment, good faith medication attempts reasonable before referral.

Q: Asked about commercial payer discussions, pace relative to NCD, restrictions being placed, and how commercial payers plan to introduce Simplicity within patient pool.

Management stated commercial payers coming online faster than anticipated, with patient push also driving adoption. NCD broader than proposed and better than anticipated. One difference from Medicare: commercial emphasis on patients being on few medications before access. NCD includes physician/patient discretion allowing switch to Ardian/Simplicity if patient cannot tolerate meds. Commercial payers onboarding faster than initially expected.

Bullish

Medtronic

Reported November 18, 2025

30-second summary

Medtronic beat its own Q2 EPS guide ($1.36 vs. $1.30–$1.32) on 5.5% organic growth — above the 4.5–5% guide — and raised FY26 organic revenue guidance by 50bps to ~5.5% while lifting non-GAAP EPS at the low end to $5.62–$5.66. The operational story is now visible: Cardiac Ablation Solutions accelerated to 71% reported / 128% US (from ~50%/~72% last quarter), the Symplicity (Ardian/RDN) NCD landed broader than expected, and the Altaviva pelvic-health launch is gaining real traction — yet management explicitly said back-half guidance contains "not much" Symplicity contribution, leaving upside optionality on the table.

Headline numbers

EPS

Q2 FY2026

$1.36

Revenue

Q2 FY2026

$8.96B

+5.5% YoY

Gross margin

Q2 FY2026

65.9%

Operating margin

Q2 FY2026

24.1%

Key financials

Q2 FY2026

Metric	Q2 FY2026	YoY	Q1 FY2026	QoQ
Revenue	$8.96B	+5.5%	$8.58B	+4.5%
EPS	$1.36	—	$1.26	+7.9%
Gross margin	65.9%	—	65.0%	+90bps
Operating margin	24.1%	—	16.8%	+730bps

Guidance

Medtronic raised FY26 EPS guidance at the low end and organic revenue growth by 50 bps following a Q2 beat on both metrics; reaffirmed tariff impact; introduced Q3-specific guidance highlighting FX tailwind and tariff headwind.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
EPS (non-GAAP)	Q2 FY2026	$1.30 to $1.32	$1.36	+$0.04 to $0.06 above guide	Beat
Revenue (organic growth, YoY %)	Q2 FY2026	4.5% to 5%	5.5%	+0.5 to +1.0 pts above guide	Beat

New guidance

Metric	Period	Guide	YoY
EPS (non-GAAP)	Q3 FY2026	$1.32 to $1.34	—
Revenue organic growth	Q3 FY2026	approximately 5.5%	—
FX tailwind (Q3)	Q3 FY2026	$150 to $200 million	—
Tariff impact (Q3)	Q3 FY2026	$90 to $95 million	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
EPS (non-GAAP)	FY2026	$5.60 to $5.66	$5.62 to $5.66	+$0.02 at the low end	Raised
Revenue organic growth	FY2026	approximately 5.0%	approximately 5.5%	+50 bps	Raised

Reaffirmed unchanged this quarter: Tariff impact on EPS (approximately $185 million), EPS growth excluding tariffs (approximately 4.5%)

Segment KPIs

Q2 FY2026

Segment	Q2 FY2026	YoY
Cardiovascular Portfolio	$3.436B	+9.3%
Cardiac Rhythm & Heart Failure	$1.825B	+14.3%
Structural Heart & Aortic	$0.956B	+6.6%
Coronary & Peripheral Vascular	$0.655B	+0.8%
Neuroscience Portfolio	$2.562B	+3.9%
Cranial & Spinal Technologies	$1.299B	+4.7%
Specialty Therapies	$0.744B	+0.3%
Neuromodulation	$0.52B	+7.3%
Medical Surgical Portfolio	$2.171B	+1.3%
Surgical & Endoscopy	$1.679B	+1.1%
Acute Care & Monitoring	$0.493B	+2.0%
Diabetes	$0.757B	+7.1%
Cardiac Ablation Solutions Revenue Growth	71% reported, 128% in U.S.	—
Cardiovascular Portfolio Growth (Organic)	9.3%	—

Other KPIs

Q2 FY2026

Segment	Q2 FY2026
Non-GAAP Operating Margin	24.1%
GAAP Operating Margin	18.8%
SG&A as % of Revenue (Non-GAAP)	32.7%
R&D as % of Revenue	8.4%
U.S. Revenue Growth (Organic)	4.8%
International Revenue Growth (Organic)	6.2%

Management tone

Q3 FY25 CAS as emerging driver → Q4 FY25 diabetes separation announced → Q1 FY26 governance reset + "acceleration coming" → Q2 FY26 "acceleration is underway"

The framing flipped from forecast to proof. Last quarter Geoff said the company was "on the cusp of an acceleration." This quarter the verbatim language is "that acceleration is indeed underway." On the prior call, CAS US growth at 72% was the headline operational proof; this quarter it stepped up to 128%, with PFA "the highest growth rate of any company in this large and fast-growing space." A management team that for years has chosen measured language is now claiming category leadership — and the print is finally hard enough to support it.

Symplicity went from "long ramp service-line build" (Q4) to "biggest thing" (Q1) to "this isn't a question of if or even how big, it's a question of how fast" (Q2). The NCD landed October 8 with broader coverage than the proposed version, ISH exclusion scoping to <10% of the addressable population per Dr. Morey's Q&A clarification, and commercial payers onboarding faster than management anticipated. Crucially, management said: "we have not incorporated much simplicity revenue into our back half guidance, but we are sprinting after this opportunity." That is a deliberate setup of an upside vector for H2 and FY27.

Capital allocation language hardened from "more aggressive M&A" (Q1) to a stated growth-mindset operating posture. "We took the opportunity to increase OpEx investments to support our revenue growth momentum" — and management quantified 50+ venture companies in the portfolio plus committed to high-single-digit EPS growth in FY27. The shift is from defending margins to deliberately spending into a growth window, which the FY26 guide now embeds.

Diabetes recategorized again — from "separable healthy business" (Q4) to "growth constraint" (Q1) to "innovation cycle with 35,000+ orders and 9,000+ new US prescribers" (Q2). The just-prior-to-separation business is having its strongest commercial inflection in years, which complicates the optics of spinning it but reinforces the proceeds case.

Self-awareness about the credibility gap was explicit. "We're pleased with the progress, but eager to continue proving Medtronic has turned the page and entered a new period of greater revenue and earnings growth." That is a CEO acknowledging the prior years of underperformance and setting the bar for sustained delivery rather than declaring victory.

Recurring themes management leaned on this quarter:

PFA cardiac ablation acceleration driving strongest cardiovascular growth in over a decadeSimplicity hypertension launch with broad Medicare NCD coverage now removes adoption barriersAltaViva incontinence therapy early momentum from physician training and consumer demandManufacturing scale-up completed with margin headwinds from capacity ramp now behindProactive OpEx investment to capture PFA and RDN market opportunities despite growth reinvestmentDiabetes sensor innovation cycle driving pent-up demand with meaningful order inflection

Risks management surfaced:

Business mix headwinds from rapid CAS capital-to-catheter shift and diabetes early manufacturing rampTariff impact of approximately $185 million COGS headwind for fiscal 26FX volatility requiring $625-725 million tailwind estimate for fiscal 26China volume-based procurement ongoing but manageable in specific businessesSimplicity and AltaViva are new market launches with execution risk despite positive early signals

Q&A highlights

Travis Steed · B of A Global Securities

Asked about second half guidance of 6% growth, breaking down pipeline vs. base business contribution, RDN assumptions, confidence in rebound, and margin leverage in H2.

Management explained strategic investments in mapper structure, cardiac ablation, and direct marketing for Simplicity offset revenue upside. Expects SG&A leverage in H2, operating margin roughly flat YoY ex-tariffs but down ~50bps post-tariffs. Detailed growth drivers: PFA leading in H2, Simplicity ramping post-NCD, AltaViva contributing, Hugo expected approval in H2, base business strong (diabetes, neuromodulation, CST, CRM).

R&D targeting ~10% of revenue over timeGross margin up slightly before tariffs, down ~50bps post-tariffsOperating margin roughly flat YoY x-tariffs, slightly down with tariffs185 million tariff impact with 90% hitting income statement in H2, majority in Q3

Robby Marcus · J.P. Morgan

Asked where SG&A and R&D investments are going, cadence of 200bps R&D increase, ability to grow operating margin, and M&A strategy.

Management detailed two investment categories: capitalizing on growth drivers (CAST, Ardian, AltaViva, Hugo) and maintaining technology leadership in core franchises (CRM, CST). Expects SG&A leverage in H2 2026 and 2027. Outlined P&L algorithm: 70-80bps gross margin improvement from pricing and COGS offset by 80bps negative mix and 20bps tariffs. Committed to high single-digit EPS growth in 2027. M&A focused on tuck-ins in higher-growth segments (cardiology, neuroscience), plus 50+ venture companies in portfolio.

70-80bps gross margin improvement from pricing + COGS continuing40bps pricing, 30-40bps cost out this quarter, recurring pattern80bps negative mix and 20bps tariffs this quarterCommits to high single-digit EPS growth in 2027

Vijay Kumar · Evercore ISI

Asked about PFA mapper sufficiency to hit $2B target and supply constraints; also asked if TIBIL could become billion-dollar product and cannibalize Botox.

Management confirmed PFA supply not constraining, mapper hiring going well though wished for larger buffer given growth. Emphasized PFA momentum from customer feedback (two systems deployed, three more planned). On TIBIL: acknowledged 46M US patients with OAB, 16M with urge incontinence; TIBIL faster (same-day procedure vs. weeks/months for sacral), easier procedure, but emphasized sacral+TIBIL as incremental to sacral business making pelvic health a growth driver; patients choosing TIBIL when presented all options including Botox.

Supply not constraining PFA growth to $2B targetMapper hiring staying ahead of demand despite rapid growth46 million US patients with overactive bladder, 16M with urge incontinenceTIBIL procedure completed in single day vs. weeks/months for sacral

Larry Beagleson · Wells Fargo Securities

Asked about Ardian ramp precision, specifically whether U.S. Ardian can achieve $400M by year 3 (fiscal 2028), impact of isolated systolic hypertension exclusion in NCD, and confirmed current run rate.

Management (Jeff) stated would be disappointed if Ardian reached $400M by year 5, expects faster ramp. Affirmed final NCD won't hold back growth and is improvement on proposed NCD. Brought in Dr. Laura Morey (Chief Scientific & Medical Officer, interventional cardiologist) who clarified: ISH population represents <15% of patients over 60, very rare under 60; estimated <10% of total patient population affected by ISH exclusion. NCD provides more practical access with fewer restrictions, less time to treatment, good faith medication attempts reasonable before referral.

Jeff expects $400M U.S. Ardian by year 3 (fiscal 2028), faster than Watchman trajectoryCurrent U.S. run rate approximately $50 millionISH represents <15% of hypertension patients over 60ISH very rare in patients under 60 (half of trial population)

Patrick Wood · Morgan Stanley

Asked about commercial payer discussions, pace relative to NCD, restrictions being placed, and how commercial payers plan to introduce Simplicity within patient pool.

Management stated commercial payers coming online faster than anticipated, with patient push also driving adoption. NCD broader than proposed and better than anticipated. One difference from Medicare: commercial emphasis on patients being on few medications before access. NCD includes physician/patient discretion allowing switch to Ardian/Simplicity if patient cannot tolerate meds. Commercial payers onboarding faster than initially expected.

Commercial payers coming online faster than anticipatedNCD is broader and better than proposed NCDCommercial payers emphasize medication duration requirement (few medications for a while)NCD includes physician and patient discretion pathway for Ardian/Simplicity

Answers to last quarter's watch list

Ardian/RDN CMS NCD decision on October 8. Final NCD landed broader than proposed — better coverage scope, ISH exclusion limited to <10% of addressable population per Dr. Morey's clinical detail, and commercial payers onboarding faster than expected. Geoff implied US Ardian targets ~$400M by FY2028 (year 3, faster than Watchman trajectory); current run-rate ~$50M. The binary catalyst resolved cleanly favorable. Status: Resolved positively.

Underlying ex-tariff EPS growth in Q2 and back-half acceleration. Q2 EPS at $1.36 beat the $1.30–$1.32 guide by $0.04–$0.06 with organic at 5.5% above the 4.5–5% guide — operational, not just FX. FY26 ex-tariff EPS growth reaffirmed at ~4.5%, organic raised 50bps to ~5.5%. The H2 acceleration story is now being delivered in real-time rather than promised. Status: Resolved positively.

CAS US growth sustainment above 60% and Affera trajectory. US CAS at 128% — well above the 60% bar, with reported growth stepping up from ~50% to 71%. Affera mapping installed base doubled in the quarter. Management called it "the highest growth rate of any company in this large and fast-growing space." Status: Resolved positively.

Diabetes separation structure disclosure. Management reiterated separation "complete by end of calendar year 26" and confirmed the preferred path remains a two-step IPO and split. Diabetes also posted +7.1% with 35,000+ SimpleraSync orders and 9,000+ new US prescribers — making the spin commercially well-timed. Status: Resolved positively.

Hugo H2 US launch confirmation. Management referenced Hugo as expected to receive FDA approval in H2 with a urology indication and contribute to the back-half growth algorithm, but no definitive FDA action date was disclosed. Status: Continue monitoring.

Elliott engagement next steps. No specific portfolio action announcement this quarter beyond the operating-mindset commentary. Management cited 50+ venture companies in the portfolio and tuck-in M&A focus in cardiology/neuroscience but did not announce a specific divestiture or large transaction. Status: Continue monitoring.

What to watch into next quarter

Q3 EPS vs. $1.32–$1.34 guide and the FX/tariff bridge. The Q3 guide is set against a $150–200M FX revenue tailwind and a $90–95M tariff drag on COGS. Watch whether actual organic EPS (ex-FX, ex-tariff) sustains the Q2 beat cadence or whether the FY26 EPS midpoint creep ($0.02 at low end) was as much as management felt operationally entitled to take.

Symplicity revenue disclosure as Medicare patients start flowing. Management explicitly said "not much" Symplicity is in back-half guidance — so any meaningful disclosure of Q3 revenue or patient volume sets the FY27 baseline. Watch for a hard run-rate figure on the Q3 call.

CAS US growth deceleration risk from 128% comp base. Q2 reported 71% / US 128% sets a brutal comp. Watch whether US growth holds above 80% in Q3 — anything below would suggest the doubling-to-$2B target slips closer to FY28.

Specialty Therapies acceleration from +0.3%. Management explicitly committed to acceleration in neurovascular and pelvic health (Altaviva) next quarter. Watch the segment print — failure to inflect above 3% would undermine the H2 growth algorithm.

Diabetes separation execution milestones. Management confirmed preferred path is two-step IPO and split, complete by end of calendar 2026 — roughly 13 months out. Watch for IPO filing timeline and any updates on minority stake sizing.

Hugo FDA action. Stated H2 expectation with urology indication; watch for a definitive approval date and initial commercial cadence as the first US robotics catalyst.

Sources

Medtronic FY26 Q2 Earnings Release (SEC 8-K Exhibit 99.1), filed 2025-11-18 — https://www.sec.gov/Archives/edgar/data/1613103/000162828025052771/exhibit991-fy26q2earningsr.htm
Medtronic FY26 Q2 management commentary and Q&A excerpts accompanying the press release

Get the next brief, free.

We publish analyst-grade earnings briefs the same day or morning after every call — headline numbers, segment KPIs, Q&A highlights, and tone analysis. Free during beta.

This is not investment advice.