Medtronic plc

Revenue was $9.8 billion, up 13.7% reported and organically. Adjusted EPS was $1.45, which Thierry said was $0.06 above the midpoint of guidance and Street expectations. Adjusted gross margin was 65.2%, up 10 basis points year over year, and adjusted operating margin was 23.7%, up 10 basis points year over year; adjusted operating profit was $2.3 billion, up 15% year over year. Geography was nearly 16% growth in the U.S. and 12% internationally. Management raised FY27 organic revenue growth guidance to 7.25%–7.75% from prior guidance and raised FY27 adjusted EPS guidance to $5.94–$6.00. For Q2, the company expects about 6% organic revenue growth and EPS of $1.32–$1.34. FX is expected to be a roughly $50 million to $150 million headwind for the full year and about $25 million to $75 million in Q2. Management also said full-year FY27 operating profit should grow approximately 10% with operating margin expanding about 50 basis points. The extra week contributed approximately $570 million, or 670 basis points, to total organic enterprise revenue growth.

Geoff Martha characterized Q1 as a strong start and a proof point that Medtronic’s strategy is translating into results. He highlighted broad-based strength across CRM, CST, Surgical and newer growth platforms such as CAS, Symplicity, Altaviva and Hugo, and he said the company is ‘doubling down’ on high-growth areas through innovation, ecosystem building and targeted investments. His tone was confident and constructive, while also stressing discipline and continued execution rather than declaring victory.

Thierry Pieton focused on margin discipline and the drivers behind the quarter’s upside. He said gross margin was 65.2%, helped by 30 basis points from pricing and 50 basis points from cost-out, partially offset by 50 basis points of unfavorable mix, mainly from diabetes and CAS, while tariffs were a slight headwind and FX was roughly neutral. He also said adjusted SG&A was 32.4% of revenue, R&D was 7.9%, adjusted operating profit was $2.3 billion, and free cash flow conversion in Q1 was 70%, with a path to 80%. On capital allocation, he said the company has increased investment in innovation and M&A, and that the Cornerstone deal adds about $700 million of investment with some foregone interest this year and distribution benefits starting in FY28.

Analysts focused on how much of the upside came from CAS versus the rest of the portfolio, the rationale for the Cornerstone robotics agreement, diabetes separation timing, margin reinvestment, tariffs, and what the Charlotte investor meeting will cover. Management said the quarter’s breadth was broad-based, with several businesses beyond CAS contributing, and reiterated that CAS should grow more than 2.5x the market for the full year and more than 3x in Q2. On Cornerstone, management said it is a distribution/partnership deal that expands Medtronic’s global robotics portfolio rather than a sign of weakness in Hugo, and said it provides strategic optionality but no immediate acquisition plan. On diabetes, management said there is no change in separation timing; they will proceed when economics are optimal. They also said tariffs were nearly offset by refunds in Q1 but future refunds were not assumed in guidance.