MDT · Q3 2026 Earnings

Bullish

Medtronic

Reported February 17, 2026

30-second summary

Medtronic beat its Q3 EPS guide ($1.36 vs. $1.32–$1.34) on 6.0% organic growth — above the ~5.5% guide — with Cardiac Ablation Solutions accelerating to +80% YoY (+137% US) and Hugo securing US FDA clearance for urology with first cases already completed. Management reaffirmed FY26 organic at ~5.5% and non-GAAP EPS at $5.62–$5.66 unchanged, and guided Q4 to "similar to Q3" growth of ~6% off a stronger Q4 FY25 comp — a quiet acknowledgment that the H2 acceleration narrative is plateauing rather than compounding into Q4. The FY27 high-single-digit EPS commitment was reaffirmed but management flagged for the first time that street consensus near 8.5% may overshoot once embedded diabetes-separation and M&A dilution are properly modeled.

Headline numbers

EPS

Q3 FY2026

$1.36

Revenue

Q3 FY2026

$9.02B

+6.0% YoY

Gross margin

Q3 FY2026

64.9%

Operating margin

Q3 FY2026

24.1%

Key financials

Q3 FY2026

Metric	Q3 FY2026	YoY	Q2 FY2026	QoQ
Revenue	$9.02B	+6.0%	$8.96B	+0.6%
EPS	$1.36	—	$1.36	+0.0%
Gross margin	64.9%	—	65.9%	-100bps
Operating margin	24.1%	—	24.1%	+0bps

Guidance

Company beat Q3 EPS and organic revenue guidance while reaffirming full-year FY26 targets; Q4 FY26 expected to grow ~6% with maintained FY27 outlook for high single-digit EPS growth.

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
Non-GAAP EPS	Q3 FY2026	$1.32 to $1.34	$1.36	+$0.02 above high end of guide	Beat
Organic Revenue Growth	Q3 FY2026	approximately 5.5%	6.0%	+0.5 percentage points above guide	Beat

New guidance

Metric	Period	Guide	YoY
Revenue Growth	Q4 FY2026	approximately 6%	+3.2-3.4% YoY
Non-GAAP EPS Growth	FY 2027	high single-digit	—

Reaffirmed unchanged this quarter: Organic Revenue Growth (approximately 5.5%), Non-GAAP EPS ($5.62 to $5.66), Tariff Impact (approximately $185 million)

Segment KPIs

Q3 FY2026

Segment	Q3 FY2026	YoY
Cardiovascular Portfolio	$3.457B	+10.6%
Neuroscience Portfolio	$2.558B	+2.5%
Medical Surgical Portfolio	$2.173B	+2.7%
Diabetes Business	$0.796B	+8.3%
Cardiac Rhythm & Heart Failure	$1.856B	+17.0%
Structural Heart & Aortic	$0.929B	+2.6%
Coronary & Peripheral Vascular	$0.672B	+5.9%
Cardiac Ablation Solutions Revenue Growth	80% YoY	—
U.S. Cardiac Ablation Solutions Growth	137% YoY	—
International Diabetes Revenue Growth	Double-digit	—

Other KPIs

Q3 FY2026

Segment	Q3 FY2026
Organic Revenue Growth	6.0% YoY
Non-GAAP Operating Margin	24.1%
Non-GAAP Gross Margin	64.9%
FY26 Organic Revenue Growth Guidance	~5.5%
FY26 Non-GAAP EPS Guidance	$5.62 to $5.66

Management tone

Q4 FY25 diabetes separation announced → Q1 FY26 governance reset + "outsized growth" → Q2 FY26 "acceleration is underway" → Q3 FY26 multiple launch fronts in commercial execution

The narrative completed the transition from forecast to execution metrics — but the Q4 framing reveals a quieter recalibration. Two quarters ago CAS was a future thesis; last quarter Geoff said acceleration was "underway"; this quarter management is reporting first Hugo cases completed, 500+ AltaViva physicians trained, 200+ new RDN accounts opened, and 137% US CAS growth. Yet the Q4 commentary — "we expect revenue growth similar to Q3, so around 6% off a stronger Q4 25 comp" — is the first deceleration signal embedded in the H2 acceleration narrative. Last quarter's "acceleration is indeed underway" has given way to "similar to Q3"; that is a tone of stabilization, not continued lift.

Hugo moved from FDA-clearance milestone to live commercial contributor in a single quarter. Three quarters ago Hugo was framed as a future H2 catalyst; last quarter as "expected approval"; this quarter the verbatim language is "we've already completed our first installations and initial cases." The transition from regulatory milestone to operating metric inside one quarter is unusually fast for a medtech robotics platform and supports the "tangible execution" reframe.

Simplicity Spiral's commercial flywheel is now quantified rather than narrated. Last quarter Geoff used the phrase "we are sprinting after this opportunity" with explicitly minimal back-half contribution baked in. This quarter management cited "a 50 times increase in website visits versus the prior quarter" and Simplicity Spiral DTC visits jumping from 50,000 in Q2 to 2.5 million in Q3 with 200+ new accounts opened. The market development funnel has measurable shape, but management still declined to give Simplicity Spiral revenue figures despite the prior watch-list ask — a deliberate withholding that suggests revenue is real but not yet at a scale management wants to anchor.

FY27 EPS framing got a quiet downward nudge. Last quarter the framing was clean "high single-digit." This quarter, in response to Robbie Marcus, management volunteered that street consensus of 8.5% may not fully reflect temporary diabetes and M&A dilution. They simultaneously disclosed tariff headwind rising to ~$300M in FY27 from $185M in FY26 (~$75M/quarter), diabetes separation creating 1-2 cents/month dilution before accretion, and 4-5 cents of M&A dilution embedded. Reading this combination as a tone shift: management is steering analysts toward the lower half of the high-single-digit band without formally cutting.

Neuroscience pivoted from "below expectations" to "pipeline activating in Q4." Three quarters ago neuroscience was framed as a recovery story; this quarter management acknowledged growth "a little below our expectations" while immediately redirecting to the just-cleared Stealth AXiS platform expected to contribute "as soon as the fourth quarter." This is the same deferral pattern as Specialty Therapies last quarter, which then printed flat growth — a credibility risk if Q4 again disappoints.

Recurring themes management leaned on this quarter:

Multi-billion dollar growth opportunities materializing (PFA, Simplicity, AltaViva, Hugo)Cardiovascular strength with 11% YoY growth and strongest decade performancePlatform consolidation and ecosystem approach (TouchSurgery, Stealth Access, ABLE ecosystem)Early-stage market building transitioning to scaling phasePipeline activation creating step-change growth across segmentsMargin expansion trajectory despite near-term mix headwinds from new product ramps

Risks management surfaced:

China volume-based procurement (VBP) ongoing but characterized as manageableStructural heart competitive pressure in U.S. partially offsetting international gainsCAS and diabetes mix dynamics creating negative 100 basis point margin impact near-termTariff headwinds of $185 million forecasted for fiscal 26Neuroscience segment growth lagging expectations in Q3

Q&A highlights

Travis Steed · Bank of America

How will Medtronic accelerate revenue growth next year and achieve high single-digit EPS growth commitment given tough CAS comps and surgical growth of only 1%, particularly with Hugo ramp?

Management outlined multiple growth drivers: CAS will continue growing and become larger part of company; Simplicity for hypertension and AltaViva for overactive bladder beginning to kick in Q4; CST with Stealth Access (new platform, not just extension of Mazor) will drive growth; neurovascular accelerating with new products (Onyx indication for MMAE, carotid stenting, NeuroGuard). EPS growth supported by accelerated revenue growth, improving gross margins (CAS mix effect and diabetes separation), functional area leverage from separation, continued R&D and M&A investment. Full year tariff headwind of ~$300M (vs $185M in FY26), 53 weeks provides help, diabetes separation causes 1-2 cents/month dilution initially, M&A embedded 4-5 cents dilution.

CAS growth sustaining and expected to continueTariff headwind increasing to ~$300M/year in FY27 from $185M in FY26 (~$75M/quarter)Diabetes IPO/split creates 1-2 cents per month dilution before accretion occurs4-5 cents of M&A dilution embedded in guidance

Larry Beagleson · Wells Fargo

CAS growth of 80% worldwide implies EP market grew ~20% in Q4; how does management view EP market growth in CY26 and can CAS sustain 80% growth to hit $2B trailing 12-month goal?

Management agreed with 20% market growth assessment in fiscal Q3/Q4, expects market to grow at least high teens in FY27, then strong double-digit thereafter. For CAS business growth, expects sustaining in Q4 but hasn't provided guidance beyond. Positioned well with catheter portfolio and mapping; believes catheter still carries the day. Sphere 9 proven versatile across persistent/paroxysmal, new/redos, simple/complex cases. Sphere 360 single-shot catheter got CE mark, U.S. trial started. Regular mapping upgrades planned. Competitive positioning strong vs. mapping-focused and catheter-focused competitors.

EP market grew ~20% in fiscal Q3/Q4Market expected to grow at least high teens in FY27Market expected strong double-digit growth thereafterSphere 9 proven versatile across multiple use cases

Vijay Kumar · Evercore

How should analyst monitor progress on RDN and AltaViva launches as growth accelerators for FY26? What are concrete goalposts for tracking launch curves?

Management acknowledged question on concrete goalposts and committed to laying out more specifics as products mature. For AltaViva: trained 500+ physicians, showing strong demand commitment. For renal denervation: opened 200+ new accounts this quarter, physician finder at 150 physicians (high bar requiring 5 cases + opt-in), tracking covered lives at 100 million (one-third of U.S. population). Will continue tracking as launches mature.

AltaViva: 500+ physicians trainedRDN: 200+ new accounts opened this quarterRDN: Physician finder at 150 physicians (high bar, requires 5 cases + opt-in)RDN: 100 million covered lives (approximately one-third of U.S. population)

Robbie Marcus · J.P. Morgan

With Hugo, RDN, and continued CAS investment, how does Medtronic achieve high single-digit EPS growth in FY27? Is street consensus of 8.5% EPS growth a good midpoint given traditional 6.5-9.4% range for high single-digit guidance?

Management outlined high-level EPS drivers: (1) Accelerated growth providing leverage; (2) Gross margin improvement from operational improvements and CAS mix shift toward catheters (improvement expected in H2 FY27, CAS driving margin improvement as early as FY27), and diabetes separation (lower margin business exiting); (3) R&D and S&M investment in franchises (RDN, CAS hiring mappers, direct-to-consumer on Simplicity/AltaViva) offset by SG&A leverage, particularly GNA line; (4) Below-line: interest headwind from refinancing ~0% debt to 3.5-4%, tax line stabilizing. Street's 8.5% embedded assumptions: temporary diabetes dilution (1-2 cents) and M&A dilution not fully captured; as visibility improves, will clarify impacts.

Gross margin improvement expected from CAS mix shift in H2 FY27CAS expected to drive year-over-year gross margin improvement as early as FY27Diabetes separation creates natural gross margin lift (lower margin business exiting)Continued investment in R&D and S&M despite SG&A leverage from GNA line

Danielle Antofi · UBS

How should investors think about renal denervation market development? What is involved in building referral networks? Can management provide directional numbers on RDN activity to date?

Management emphasized strong market development momentum and provided specific metrics: Simplicity direct-to-consumer website visits jumped from 50,000 in Q2 to 2.5 million in Q3, showing spike in consumer demand. Opened 200+ accounts this quarter. Hiring many market development roles: building referral pathways from GPs/hypertension specialists to hospitals; health economics, coding, and billing support to hospitals. All foundational elements turned green: FDA breakthrough approval (broad), CMS reimbursement (good number, broad

Answers to last quarter's watch list

Q3 EPS vs. $1.32–$1.34 guide and the FX/tariff bridge. Q3 non-GAAP EPS of $1.36 beat the midpoint of the guide by $0.03, with organic revenue at 6.0% vs. ~5.5% guide. Yet FY26 EPS guide was reaffirmed unchanged at $5.62–$5.66 rather than raised — management took the operational beat to absorb other line items rather than flow it through. Status: Resolved positively on the beat; Continue monitoring on FY26 EPS taking the beat to the print.

Simplicity Spiral revenue disclosure as Medicare patients start flowing. Management provided activity metrics (2.5M website visits, 200+ accounts, 150 physicians on finder, 100M covered lives) but explicitly declined to provide revenue or patient-volume figures despite multiple analyst attempts. The deferral of "concrete goalposts… as products mature" is essentially a no-answer for FY27 baseline-setting purposes. Status: Not resolved.

CAS US growth deceleration risk. US CAS grew +137% in Q3, well above the 80% threshold set in last quarter's watch list. Reported CAS +80% with PFA accounting for 80% of that revenue. Status: Resolved positively.

Specialty Therapies acceleration from flat growth. Neuroscience as a whole grew +2.5%, and Specialty Therapies printed flat (-0.2% organic) and was characterized by management as "a little below our expectations." The acceleration management committed to last quarter did not arrive; instead the acceleration was deferred again to Q4 via Stealth AXiS. Status: Resolved negatively.

Diabetes separation execution milestones. Management did not disclose IPO filing timeline or minority stake sizing on this print. Diabetes posted +8.3% growth (international double-digit), keeping the commercial story intact, but specific structural milestones were not advanced. Status: Continue monitoring.

Hugo FDA action. Hugo received US FDA clearance for urologic surgical procedures during the quarter, with first installations and initial cases already completed. Status: Resolved positively.

What to watch into next quarter

Q4 organic growth vs. the ~6% "similar to Q3" guide. Management explicitly characterized the Q4 FY25 comp as stronger. Watch whether reported growth holds and whether management explicitly characterizes the ~6% organic as a deceleration or a comp artifact.

Simplicity Spiral revenue disclosure on the Q4 call. Two consecutive quarters of activity-only metrics is the maximum tolerable before analysts begin discounting the RDN thesis. Watch whether management provides a Q4 run-rate or any FY27 baseline figure.

Stealth AXiS Q4 contribution to CST and neuroscience print. Management has now deferred neuroscience acceleration twice. A Q4 neuroscience print below +3.5% with no quantified Stealth AXiS contribution would erode the pipeline-activation narrative materially.

FY27 EPS guidance band. Management used Q&A to walk down street consensus from 8.5% without formal guidance. Watch the May FY26 Q4 call for the formal FY27 frame and whether it lands in the lower half of the 6.5–9.4% "high single-digit" range.

Gross margin trajectory. Q3 non-GAAP gross margin of 64.9% absorbed -100bps of CAS/diabetes mix and -110bps of tariffs. Watch whether management still expects FY26 gross margin to increase slightly ex-tariffs — the original guide — and whether the CAS catheter/capital mix inflection arrives on schedule in H2 FY27.

Diabetes separation IPO filing timeline. With ~10 months remaining to the calendar-year-2026 separation target, the absence of a formal IPO filing on the Q4 print would push execution risk visibly higher.

Sources

Medtronic FY26 Q3 Earnings Release (SEC 8-K Exhibit 99.1), filed 2026-02-17 — https://www.sec.gov/Archives/edgar/data/1613103/000162828026008300/exhibit991-fy26q3earningsr.htm
Medtronic FY26 Q3 management commentary and Q&A excerpts accompanying the press release

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