Medtronic's QQ2 2025 results show a revenue pullback on a YoY basis, offset by meaningful margin expansion and robust free cash flow generation. The quarter delivered revenue of $8.403 billion, down 2.17% year over year but up 6.17% quarter over quarter, reflecting continued demand resilience amid a gradually improving macro environment and ongoing product mix benefits. Gross margin stood at 64.94%, supporting an operating margin of 18.98% and an EBITDA margin of 29.07%, underscoring the company’s ability to convert revenue into strong profitability even as top-line growth modestly softened.
Net income rose sharply, up 94.19% YoY to $1.27 billion, aided by higher operating leverage and a favorable tax line, with diluted EPS at $0.99, up 102.04% YoY. Free cash flow generation remained positive and meaningful at $554 million for the quarter, contributing to resilient cash flow from operations of $958 million. However, the balance sheet remains debt-dense, with total debt of $28.33 billion and net debt of $26.93 billion, implying a leverage burden that investors should monitor alongside interest coverage of approximately 7.6x.
On the investment side, Medtronic continues to return capital to shareholders via dividends, with a payout ratio around 70.6% and a dividend yield near 0.77%. The company’s valuation metrics show a price-to-earnings of ~22.9x and a price-to-free-cash-flow multiple in the high hundreds range, signaling market expectations for continued cash generation and growth in diagnostic/therapeutic device categories. Looking ahead, the absence of formal forward guidance in the provided data requires a cautious stance, though the firm’s profitability and cash flow profile support a constructive long-term view given ongoing market opportunities in cardiovascular devices, diabetes management, and minimally invasive surgery.