Executive Summary
Medtronic reported QQ2 2025 revenue of $8.403 billion, up 5% year over year on an organic basis, and posted an adjusted EPS of $1.26, surpassing the midpoint of guidance. Management highlighted eight consecutive quarters of mid-single-digit organic revenue growth and an 8% EPS increase on a constant currency basis, signaling durable earnings power as several high-growth initiatives move through the pipeline. The quarterly results were driven by strength in Diabetes, Neuromodulation, and Cardiac Rhythm Management, with robust contributions from established market leaders and synergies from synergistic businesses. Management raised full-year 2025 organic revenue growth to 4.75%-5% and the non-GAAP diluted EPS guidance to $5.44-$5.50, underscoring confidence in margin expansion despite FX headwinds and ongoing investments in new products and platforms.
Key drivers include the continued momentum of the TAVR franchise (FX+ launch in the U.S. and CE Mark in Europe), Pulse Field Ablation (PFA) via PulseSelect, Affera mapping/ablation system with Sphere-9 catheter, and early stage ramps in Hugo robotic surgery, Simplera, and Ardian. Diabetes delivered double-digit growth, with CGM volumes up >20% and the 780G system expanding patient access. Hypertension (Symplicity) remains a long-term growth catalyst, aided by CMS outpatient pass-through (TPT) and ongoing payer coverage discussions. The balance sheet remains healthy with a net debt of $26.9B, solid cash flow generation, and disciplined capital allocation including dividend and opportunistic buybacks. The quarterly margin dynamics reflect FX pressure and early product-launch mix, but management anticipates margin improvement in Q3 and Q4, supported by productivity gains and pricing discipline.
For investors, the key takeaway is MDT's strategic resilience: a diversified, innovation-led portfolio, ongoing margin discipline, and a clear path to mid-single-digit topline growth and EPS leverage through H2 FY25 and beyond, albeit with FX and execution risks tied to new product introductions and reimbursement evolution.
Key Performance Indicators
Key Insights
Revenue: $8.403B in Q2 2025, up 5% YoY; organic growth 5% (FX and reported basis). Gross Profit: $5.457B; Gross Margin: 64.94% (0.649) with adjusted gross margin at 65.2% (FX headwinds noted). Operating Income: $1.595B; Operating Margin: 19.0% (0.190). Net Income: $1.27B; Net Margin: 15.11% (0.151). EPS (GAAP): $0.99; EPS (Diluted): $0.99. Weighted average shares out: 1.282B (non-GAAP adjustments noted elsewhere). Free Cash Flow: $554M; Net cash provided by operating activities: $958M; Cash at e...
Financial Highlights
Revenue: $8.403B in Q2 2025, up 5% YoY; organic growth 5% (FX and reported basis). Gross Profit: $5.457B; Gross Margin: 64.94% (0.649) with adjusted gross margin at 65.2% (FX headwinds noted). Operating Income: $1.595B; Operating Margin: 19.0% (0.190). Net Income: $1.27B; Net Margin: 15.11% (0.151). EPS (GAAP): $0.99; EPS (Diluted): $0.99. Weighted average shares out: 1.282B (non-GAAP adjustments noted elsewhere). Free Cash Flow: $554M; Net cash provided by operating activities: $958M; Cash at end of period: $1.394B; NetChangeInCash: +$83M. Capital Expenditures: $404M; Dividends paid: $897M; Share repurchases: -$288M; Net Debt: $26.93B; Total Debt: $28.326B; Debt/Equity: 0.584; Interest Coverage: 7.63x. Current ratio: 1.84; Quick ratio: 1.39; Cash Ratio: 0.11. Guidance: 2025 organic revenue growth 4.75%-5%, Q3 organic growth ~4.75%, FX headwind $225-325M for the year (incl. $100-150M in Q3); 2025 non-GAAP diluted EPS: $5.44-$5.50; Q3 EPS: $1.35-$1.37. Margin trajectory: Q3 gross margins and Q4 margins expected to improve sequentially; full-year operating margin target ~25.7% (guidance).
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
8.40B |
5.25% |
6.17% |
| Gross Profit |
5.46B |
4.48% |
15.81% |
| Operating Income |
1.60B |
19.03% |
24.80% |
| Net Income |
1.27B |
39.71% |
21.88% |
| EPS |
0.99 |
45.59% |
22.22% |
Key Financial Ratios
operatingProfitMargin
19%
operatingCashFlowPerShare
$0.75
freeCashFlowPerShare
$0.43
dividendPayoutRatio
70.6%
Management Commentary
Theme: Growth momentum and guidance. Geoff Martha emphasized durable mid-single-digit organic revenue growth for eight consecutive quarters and an expectation of high single-digit EPS growth on a reported basis in the back half of FY25, supported by a diversified growth engine across TAVR, PFA, leadless pacemakers, diabetes, spine, and neuromodulation. Quote: Our momentum is building as we keep executing on our commitments, delivering yet another quarter of strong results that came in ahead of expectations and another guidance raise. Significance: Underpins management confidence in continued earnings power and capital-allocation efficiency.
Theme: Portfolio progress and pipeline. Geoff highlighted FX+ launch for TAVR, Sphere-9, and Affera mapping/ablation, as well as expansion of PulseSelect PFA and diabetes initiatives (780G, Simplera, InPen app). Significance: Demonstrates a multi-year growth pipeline across core and new platforms, with potential to sustain above-market growth in CAS and Neuromod and to support higher-margin contributions later in the year.
Theme: Margin discipline and investment in growth. Gary Corona outlined a path to higher margins via productivity gains, pricing discipline, and ongoing investment in new products (Affera, Simplera, Hugo), with FX headwinds expected to moderate in Q3/Q4. Quote: There's no change to our margin expectations. In Q3, we expect margins of 25.6%, up 30 basis points year-over-year. Significance: Indicates MDT’s commitment to margin expansion even as new launches are ramped, implying earnings upside even under higher investment levels.
Theme: Hypertension reimbursement progress. Sean Salmon discussed CMS TPT coverage for outpatient devices and the broader efforts for private payer coverage, emphasizing evidence development pathways. Significance: The Hypertension Symplicity opportunity has a clear reimbursement pathway in the U.S., which could unlock large addressable patient populations over time.
Theme: TAVR market dynamics. Sean noted a healthy TAVR market with high-single-digit growth potential, and highlighted FX+ advantages (including coronary access) and SMART data supporting expansion in small annulus patients (women-led cohort). Significance: Supports MDT’s leadership position in TAVR and longer-term upside from broader indications and global adoption.
Our momentum is building as we keep executing on our commitments, delivering yet another quarter of strong results that came in ahead of expectations and another guidance raise.
— Geoffrey (Geoff) Martha
We’re raising our full year revenue and EPS guidance to 2025 organic revenue growth of 4.75% to 5% and non-GAAP diluted EPS of $5.44 to $5.50; Q3 EPS guidance is $1.35 to $1.37.
— Gary Corona
Forward Guidance
Management maintains a constructive full-year outlook: 2025 organic revenue growth raised to 4.75%-5% and non-GAAP diluted EPS guidance of $5.44-$5.50, with Q3 EPS guidance of $1.35-$1.37. FX headwinds are expected to be roughly 5% of the annual revenue impact, or about $225M-$325M for the year, including $100M-$150M in Q3. Gross margins are expected to improve sequentially in Q3 and Q4 as currency effects dampen, while operating margins are anticipated to expand modestly, supported by productivity gains and cost discipline. Risks to the outlook include: (i) execution risk around new product introductions (Affera, Hugo, Sphere-9, Ardian), (ii) continued FX volatility despite hedging, (iii) reimbursement dynamics for hypertension (CMS coverage and private payers), and (iv) potential supply-chain disruptions given third-party supplier dependencies. Key indicators to watch: (a) pace of PulseSelect and Sphere-9 adoption in CAS, (b) trajectory of diabetic devices (780G, Simplera, InPen app) including regulatory approvals, (c) CMS coverage decisions and payer coverage progress for Ardian/Renal Denervation, and (d) progression of Hugo and other digital surgical platforms into U.S. and Europe.