Exchange: XETRA | Sector: Healthcare | Industry: Medical Devices
Q1 2026
Published: Aug 19, 2025
Earnings Highlights
Revenue of $8.58B up 2.1% year-over-year
EPS of $0.81 increased by 0% from previous year
Gross margin of 59.9%
Net income of 1.04B
"N/A" - N/A
Medtronic plc (2M6.DE) QQ1 2026 Earnings Analysis – USD 8.58B Revenue, Margin Resilience, and Net Cash Position
Executive Summary
Medtronic reported a solid start to QQ1 2026 with revenue of $8.578 billion, up 2.1% year over year. The gross profit was $5.141 billion resulting in a gross margin of 59.93%, while operating income of $1.445 billion produced an operating margin of 16.85%. Net income stood at $1.04 billion and earnings per diluted share were $0.81. The results reflect a diversified portfolio mix and ongoing R&D investment, underpinning a platform for mid-single-digit topline growth and margin discipline in a competitive med-tech landscape.
On a quarter-over-quarter basis, revenue declined by 3.91% driven by seasonality and lapping a strong prior-year quarter, while operating income rose modestly by 0.63% QoQ. Net income declined 1.61% QoQ and earnings per share decreased by 1.22% QoQ. Cash flow remained competitive, with net cash provided by operating activities of $1.088 billion and free cash flow of $0.584 billion, supporting a net cash position of approximately $1.088 billion at period end. Capital allocation included modest share repurchases and a dividend payout, while capital expenditures totaled $0.504 billion for the quarter. Management commentary is not included in the provided data; investors should monitor portfolio momentum (Cardiovascular, Diabetes, Medical/Surgical, Neuroscience), FX effects, reimbursement dynamics, and ongoing investments in high-growth adjacencies such as remote monitoring and AI-enabled solutions for potential upside.
Overall, Medtronic remains a leading diversified med-tech franchise with durable profitability and a healthy balance sheet, offering a constructive setup for downside protection and selective upside as key product launches and adoption cycles unfold over the coming quarters.
Net Income: $1.04 billion; Net Margin 12.12%; YoY margin change -18.11%; QoQ margin change -1.61%
EPS (diluted): $0.81; QoQ change -1.22%; YoY data not available
Financial Highlights
Overview of Key Metrics (QQ1 2026 vs prior period and year)
- Revenue: $8.578 billion; YoY growth +2.08%; QoQ change -3.91%
- Gross Profit: $5.141 billion; Gross Margin 59.93%; YoY margin change -5.79%; QoQ margin change -11.41%
- Operating Income: $1.445 billion; Operating Margin 16.85%; YoY margin change -9.40%; QoQ margin change +0.63%
- Net Income: $1.04 billion; Net Margin 12.12%; YoY margin change -18.11%; QoQ margin change -1.61%
- EPS (diluted): $0.81; QoQ change -1.22%; YoY data not available
- EBITDA: $2.225 billion; EBITDA Margin ~25.94%
- R&D Expenses: $726 million; SG&A (selling/general/administrative): $2.806 billion
- Interest Expense: $176 million; Depreciation & Amortization: $0.748 billion
- Cash Flow: Operating cash flow $1.089 billion; CAPEX $0.504 billion; Free Cash Flow $0.584 billion
- Balance Sheet Highlights: Cash and cash equivalents / cash and short-term investments $1.088 billion; Total current assets $1.003 billion; Total current liabilities $0.402 billion; Net debt position: negative $1.088 billion (net cash); Beginning cash $2.218 billion; Net change in cash -$2.218 billion due to FX and other financing activities in the quarter (data caveat: some balance sheet line items appear inconsistent in the provided data).
- Weighted average shares outstanding (basic): 1.2816 billion; Diluted: 1.2871 billion
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
8.58B
2.08%
-3.91%
Gross Profit
5.14B
-5.79%
-11.41%
Operating Income
1.45B
-9.40%
0.63%
Net Income
1.04B
-18.11%
-1.61%
EPS
0.81
N/A
-1.22%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript highlights not available in the provided data. No management quotes or thematic summaries from an earnings call could be extracted.
N/A
— N/A
N/A
— N/A
Forward Guidance
No explicit forward guidance was provided in the dataset for QQ1 2026. Given the subdued QoQ growth and modest YoY expansion, the prudent baseline assumes continued execution of the core Cardiovascular, Diabetes, and Medical/Surgical platforms with ongoing R&D investment and cash returns. Investors should monitor:
- Revenue trajectory by portfolio, particularly any acceleration in Cardiovascular and Diabetes device adoption.
- Operating leverage through mix improvements and cost control in R&D and SG&A.
- FX headwinds and reimbursement dynamics in key markets, which can materially impact margins.
- Capital allocation policy, including cadence of dividends and any share repurchases, against a backdrop of capex and potential bolt-on acquisitions.
Overall, a constructive but data-limited outlook suggests watching for tangible catalysts in product launches, remote monitoring solutions, and international expansion that could lift growth and margins in subsequent quarters.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
2M6.DE Focus
59.93%
N/A
N/A
N/A
3V64.DE
78.80%
65.60%
13.40%
31.08%
NOVC.DE
83.50%
49.70%
21.00%
17.96%
JNJ.DE
66.40%
28.80%
14.10%
9.08%
CIS.DE
65.90%
17.00%
5.99%
0.00%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Medtronic QQ1 2026 presents a tale of margin resilience and steady FCF generation within a diversified, large-scale medical device franchise. The reported revenue of $8.578B represents modest YoY growth (2.1%) with a QoQ decline (-3.91%), suggesting a cautious near-term top-line trajectory, likely influenced by seasonality and prior-year comparables. The gross margin of 59.93% and operating margin of 16.85% indicate disciplined cost control and favorable mix, albeit with ongoing R&D and SG&A investment that compress near-term profitability relative to peak periods. The company’s net cash position (~$1.088B) and free cash flow of $584M provide a robust capital base to sustain dividends, buybacks, and ongoing product development, even as capex (~$504M) and investing activities shape quarterly cash dynamics.
From a competitive standpoint, Medtronic remains well-positioned given its diversified exposure across Cardiovascular, Diabetes, Medical/Surgical, and Neuroscience portfolios. However, the quarter’s modest top-line growth and the absence of explicit forward guidance in the provided data underscore the need for additional visibility on portfolio execution, new product cycles, and reimbursement tailwinds. Investors should monitor key catalysts such as next-generation insulin pump systems, remote patient monitoring solutions, and AI-enabled procedural platforms, which could unlock revenue acceleration and margin expansion if coupled with efficient cost management.
In terms of risk, currency movements and reimbursement changes represent salient overhangs for international sales, potentially offsetting volume gains from new product launches. Relative to industry benchmarks, Medtronic’s margin profile appears consistent with peer medtechs that maintain high R&D expenditure to sustain innovative offerings while delivering solid cash returns. The forward path will hinge on sustaining top-line momentum across core franchises, improving mix toward higher-margin devices, and maintaining disciplined capital allocation. Investors should stay attentive to quarterly progression in portfolio-level growth, operating leverage, and any material changes to the company’s guidance or capital-return strategy.
Key Investment Factors
Growth Potential
Moderate growth potential driven by high-margin franchises ( Cardiovascular, Diabetes) and expansion of remote monitoring, AI-enabled surgery, and minimally invasive devices. The ~2% YoY revenue growth hints at stabilizing demand; meaningful upside could come from new product cycles, pricing power, and geographic expansion, supported by healthy FCF to fund R&D and launches.
Profitability Risk
Key risks include continued pricing and reimbursement pressure, competitive intensity from peers (e.g., Abbott, Boston Scientific, Stryker), currency volatility, and potential supply chain disruptions. The quarter shows limited top-line acceleration and ongoing investments in R&D which may pressure near-term margins. Data integrity in balance sheet figures suggests a need for cautious interpretation of reported assets and liabilities in the current dataset.
Financial Position
Net cash position (net debt negative) of approximately $1.088B suggests solid liquidity and capacity to fund continued R&D and shareholder returns. Operating cash flow of $1.088B and free cash flow of $0.584B indicate sound cash generation relative to the scale of the business, even as capex (~$0.504B) and investment activities influence cash dynamics. The balance sheet data provided shows a healthy liquidity buffer but some line items appear inconsistent, warranting confirmation from the official filings.
SWOT Analysis
Strengths
Diversified, multi-portfolio medical device leader with a broad addressable market
Gross margin near 60% supports pricing power and operating leverage
Robust free cash flow generation (FCF $0.584B) and net cash position (~$1.088B) provide flexibility for R&D and capital returns
Strong cash generation underpins ongoing investments in high-growth adjacencies (remote monitoring, AI-enabled solutions) and potential strategic acquisitions
Weaknesses
QoQ revenue decline (-3.91%) signals seasonality or base effects that could weigh near-term momentum
YoY revenue only modestly higher (+2.08%), implying limited top-line acceleration
Some balance sheet data appears inconsistent in the provided dataset, requiring corroboration from 10-Q/quarterly filings
R&D intensity remains high (726M) which may suppress near-term profitability if top-line growth stalls
Opportunities
Growth opportunities in Diabetes care/appliance ecosystem (insulin pumps, CGM) and cardiovascular devices with remote monitoring and data analytics
Expansion of minimally invasive and robotic-assisted surgical platforms
Pricing power and geographic expansion to diversify revenue streams
Increased adoption of AI-enabled disease management and patient monitoring solutions
Threats
Intense competition from established medtech peers (Abbott, BSX, SYK) and potential new entrants
Regulatory and reimbursement headwinds across major markets
Macro headwinds including FX volatility impacting international sales and procurement costs
Supply chain vulnerabilities and cyclicality in hospital capital expenditure