Executive Summary
Medtronic reported a solid start to QQ1 2026 with revenue of $8.578 billion, up 8.38% year over year and a sequential decline of 3.91% quarter over quarter. The gross margin held at a robust 59.93%, enabling an operating margin of 16.84% and EBIT of $1.445 billion, supported by EBITDA of $2.225 billion (EBITDA margin 25.94%). Net income totaled $1.04 billion with an earnings per share (EPS) of $0.81, essentially flat versus the prior-year period and down modestly on a QoQ basis. Free cash flow reached $584 million, while cash from operating activities was $1.088 billion and capital expenditures were $504 million, underscoring meaningful cash generation even as working capital movements (-$1.147 billion) weighed on cash flow dynamics.
Management continued to emphasize a growth-oriented trajectory anchored in Medtronic’s diversified portfolios (Cardiovascular, Medical Surgical, Neuroscience, and Diabetes Operating Unit), ongoing R&D investment, and digital health initiatives. While no explicit full-year guidance was disclosed in the provided data, the quarter reflects a balance between growth investments and cost discipline, with margins and cash generation remaining resilient amidst ongoing macro and FX headwinds. Investors should monitor the cadence of product launches, reimbursement dynamics, foreign exchange effects, and the trajectory of working capital given the sizable quarterly working capital swing reported.
Key Performance Indicators
Key Insights
Revenue: $8.578B; YoY +8.38%; QoQ -3.91%
Gross Profit: $5.141B; Gross Margin 59.93%; YoY +9.10%; QoQ -11.41%
Operating Income: $1.445B; Margin 16.84%; YoY +13.07%; QoQ +0.63%
Net Income: $1.040B; Net Margin 12.12%; YoY -0.19%; QoQ -1.61%
EPS (Diluted): $0.81; YoY 0%; QoQ -1.22%
EBITDA: $2.225B; EBITDA Margin 25.94%
Cash Flow from Operations: $1.088B
Capital Expenditures: $0.504B
Free Cash Flow: $0.584B
Balance Sheet Highlights: Cash and cash equivalents $1.088B; Total current assets $1.003B; Cur...
Financial Highlights
Revenue: $8.578B; YoY +8.38%; QoQ -3.91%
Gross Profit: $5.141B; Gross Margin 59.93%; YoY +9.10%; QoQ -11.41%
Operating Income: $1.445B; Margin 16.84%; YoY +13.07%; QoQ +0.63%
Net Income: $1.040B; Net Margin 12.12%; YoY -0.19%; QoQ -1.61%
EPS (Diluted): $0.81; YoY 0%; QoQ -1.22%
EBITDA: $2.225B; EBITDA Margin 25.94%
Cash Flow from Operations: $1.088B
Capital Expenditures: $0.504B
Free Cash Flow: $0.584B
Balance Sheet Highlights: Cash and cash equivalents $1.088B; Total current assets $1.003B; Current liabilities $0.402B; Net debt negative $1.088B (net cash position); Current ratio ≈ 2.50x
Liquidity/Profitability Signals: Gross margin ~60%, operating margin ~16.8%, net margin ~12.1%; Positive operating cash flow supports ongoing investment needs and shareholder returns.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
8.58B |
8.38% |
-3.91% |
| Gross Profit |
5.14B |
9.10% |
-11.41% |
| Operating Income |
1.45B |
13.07% |
0.63% |
| Net Income |
1.04B |
-0.19% |
-1.61% |
| EPS |
0.81 |
0.00% |
-1.22% |
Management Commentary
- Growth Drivers: Management views continued momentum across core Medtronic portfolios (Cardiovascular, Diabetes, Surgical) and expansion of remote monitoring/digital health capabilities as key growth enablers. - Margin Discipline: The quarter demonstrates resilience in margins amid ongoing R&D investment and mix shifts toward higher-value devices. - Working Capital Dynamics: A sizable negative working capital movement (-$1.147B) contributed to cash flow volatility despite solid operating cash flow, highlighting the impact of receivables, payables, and inventory timing. - FX and Macro Headwinds: Ongoing currency translation and macro uncertainty are recognized risks that could influence reported results and international segment performance. - Path to Longer-Term Growth: The company remains focused on product launches, international expansion, and portfolio optimization to sustain growth beyond the current quarter.
Forward Guidance
No formal numeric full-year guidance was provided in the available data for QQ1 2026. Given Medtronic’s diversified product mix and ongoing R&D investments, the near-term outlook appears to hinge on volume growth and successful launches across cardiovascular, diabetes, and surgical platforms, alongside continued progress in digital health and remote monitoring initiatives. Key factors investors should monitor include: (1) FX translation and hedging effectiveness, (2) cadence and uptake of new product launches and clinical evidence, (3) reimbursement trends and international market expansion, (4) working capital development (receivables/payables/inventory), and (5) management’s commentary on cost control and potential operating leverage as volumes scale. If management maintains an emphasis on growth investments coupled with margin discipline, Medtronic could advance toward mid-teens operating margins and sustained free cash flow generation over the next several quarters, subject to macro and competitive dynamics.