Executive Summary
Medtronic delivered a solid QQ3 2025 performance with a revenue base of $8.292 billion, up 4.76% year-over-year and down 1.32% sequentially. The quarter featured margin resilience, with gross margin of approximately 66.5% and operating margin near 19.85%, translating into an operating income of $1.646 billion and net income of $1.294 billion ($1.01 per share). EBITDA reached $2.401 billion, supporting a robust cash profile despite a high absolute debt level. Free cash flow was $2.096 billion, underpinning continued capital return and strategic flexibility.
From a balance sheet perspective, Medtronic remains highly levered, with total debt of $26.607 billion and net debt of about $25.367 billion, against cash and short-term investments of $7.922 billion. The company generated $2.57 billion of operating cash flow and invested approximately $0.476 billion in capital expenditures, yielding strong free cash flow generation and substantial room for R&D investment and acquisitions if desired. The payout ratio stood at 69.3%, with a dividend yield of roughly 0.78%.
Looking ahead, Medtronic continues to navigate a macro environment characterized by hospital capital expenditure cyclicality and currency headwinds, while pursuing growth through portfolio diversification (Cardiovascular, Medical-Surgical, Neuroscience, and Diabetes Operating Unit), productivity initiatives, and digital/remote-monitoring initiatives. Key risks include reimbursement dynamics, competitive intensity in high-growth device categories, and potential volatility in FX. The QQ3 results reinforce a valuation case supported by consistent cash generation, albeit with leverage necessitating a disciplined approach to capital allocation.
Key Performance Indicators
Key Insights
Revenue: $8.292B; YoY +4.76%; QoQ -1.32%
Gross Profit: $5.513B; YoY +6.97%; QoQ +1.03%
Gross Margin: 66.49%
Operating Income: $1.646B; YoY +28.79%; QoQ +3.20%
Operating Margin: 19.85%
Net Income: $1.294B; YoY +24.18%; QoQ +1.89%
Net Margin: 15.60%
EPS: $1.01; YoY +24.69%; QoQ +2.02%
EBITDA: $2.401B; EBITDARatio: 28.96%
Free Cash Flow: $2.096B; Operating Cash Flow: $2.572B; Capex: $0.476B
Cash & Investments (end of period): $7.922B (Cash $1.24B; Short-term investments $6.682B)
Total Debt: $26...
Financial Highlights
Revenue: $8.292B; YoY +4.76%; QoQ -1.32%
Gross Profit: $5.513B; YoY +6.97%; QoQ +1.03%
Gross Margin: 66.49%
Operating Income: $1.646B; YoY +28.79%; QoQ +3.20%
Operating Margin: 19.85%
Net Income: $1.294B; YoY +24.18%; QoQ +1.89%
Net Margin: 15.60%
EPS: $1.01; YoY +24.69%; QoQ +2.02%
EBITDA: $2.401B; EBITDARatio: 28.96%
Free Cash Flow: $2.096B; Operating Cash Flow: $2.572B; Capex: $0.476B
Cash & Investments (end of period): $7.922B (Cash $1.24B; Short-term investments $6.682B)
Total Debt: $26.607B; Net Debt: $25.367B; Long-term Debt: $23.985B; Short-term Debt: $2.622B
Liquidity & Ratios: Current 1.901x; Quick 1.428x; Cash ratio 0.105x; Interest Coverage 9.20x
Efficiency & Leverage: Debt to Capital 0.350; Debt to Equity 0.539; ROE 2.62%; ROA 1.44%; ROCE 2.11%
Cash Flow & Returns: Cash Flow to Debt 0.097; Free Cash Flow per Share $1.634; Operating Cash Flow per Share $2.01; P/FCF 55.18; P/E 22.35; P/B 2.34; P/S 13.95
Dividend & Shareholder Return: Dividend Payout Ratio 69.3%; Dividend Yield ~0.78%
Working Capital Dynamics: DSO 66.4 days; DIO 181.7 days; DPO 74.0 days; Cash Conversion Cycle ~174 days
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
8.29B |
4.76% |
-1.32% |
| Gross Profit |
5.51B |
6.97% |
1.03% |
| Operating Income |
1.65B |
28.79% |
3.20% |
| Net Income |
1.29B |
24.18% |
1.89% |
| EPS |
1.01 |
24.69% |
2.02% |
Key Financial Ratios
operatingProfitMargin
19.9%
operatingCashFlowPerShare
$2.01
freeCashFlowPerShare
$1.63
dividendPayoutRatio
69.3%
Management Commentary
Transcript data for QQ3 2025 earnings call not provided in the input. As a result, no verbatim management quotes or call-by-theme quotes can be included. When transcript data is available, synthesize themes by: strategy (portfolio optimization, pipeline progress, and capital allocation), operations (cost discipline, manufacturing, and supply chain resilience), and market conditions (FX impact, reimbursement trends, and competitive dynamics).
Transcript data not available for QQ3 2025. No quotes to extract at this time.
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Transcript data not available for QQ3 2025. No quotes to extract at this time.
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Forward Guidance
No explicit management forward guidance is contained in the provided data for QQ3 2025. Based on the quarterly performance and industry backdrop, the near-term framing suggests: (i) continued margin resilience through mix benefits and cost discipline, (ii) modest revenue progression as new product cycles (e.g., advanced CV therapies, diabetes devices, and digital/remote monitoring) scale, and (iii) potential headwinds from FX and hospital capex cycles. Key targets to monitor include: stabilization or acceleration of growth in high-value devices (structural heart, transcatheter therapies, and diabetes care), trajectory of free cash flow generation aiding deleveraging or selective capital deployment, and progress on AI-enabled and remote patient monitoring initiatives. Investors should watch FX translation effects, reimbursement dynamics, regulatory developments, and the pace of adoption in emerging markets.