Medtronic Reports Strongest Revenue Growth in Decade Amid Rising Costs

What happened

Medtronic reported fiscal fourth quarter revenue of $9.8 billion, representing year-over-year growth of nearly 10% and exceeding analyst expectations. For the full fiscal year 2026, revenue reached $36.36 billion, up 8.4% annually-the company's strongest top-line growth in a decade. The cardiovascular unit led performance with $3.8 billion in quarterly revenue, up 13.8%, driven primarily by cardiac ablation solutions which grew 78% globally and 124% in the U.S. Within this segment, pulsed field ablation technology expanded 145% globally. CEO Geoff Martha highlighted that the company gained U.S. market share in ablation amid fierce competition from Boston Scientific, Johnson & Johnson, and Abbott. Adjusted earnings of $1.55 per share beat consensus estimates by 0.58%. For fiscal 2027, management guided to organic revenue growth of 6.75% to 7.25% and non-GAAP earnings per share of $5.90 to $6.00, while flagging approximately $250 million in tariff-related costs for the year, including $75 million in the first quarter.

Why it matters

The results demonstrate that Medtronic's multi-year portfolio transformation is gaining commercial traction, particularly in high-growth markets like cardiac ablation where it is capturing meaningful share. The 78% growth in cardiac ablation solutions and 145% expansion in pulsed field ablation position the company competitively in the rapidly expanding electrophysiology market. However, the fiscal 2027 earnings guidance came in slightly below analyst expectations, reflecting $250 million in tariff headwinds, margin pressures, and integration costs from recent acquisitions. The company also faces near-term uncertainty around its structural heart business (TAVR), where U.S. performance has softened, though management indicated weekly procedure volumes have recently stabilized. Medtronic's valuation at 13 times forward earnings represents a discount to the peer group average of roughly 16.6 times, making it attractive to value-focused investors. The company announced its 49th consecutive annual dividend increase, maintaining its path toward Dividend King status, with a current yield of approximately 3.5% supported by only 50% of projected earnings.

Bigger picture

Medtronic's performance reflects broader trends in the medical technology sector, where companies are balancing innovation-driven growth against cost inflation, tariff pressures, and margin compression. The cardiac ablation market, particularly pulsed field ablation, has become a major competitive battleground among large-cap medtech players including Boston Scientific, Johnson & Johnson, and Abbott. Medtronic's ability to gain U.S. market share in this space signals execution strength but also highlights the intensity of competition. The company's fiscal 2027 guidance incorporates multiple macroeconomic headwinds: $250 million in tariff costs, roughly 2% dilution from M&A activity, higher interest and tax expenses, and about 1 percentage point of headwind from fuel and transportation costs tied to Middle East conflict. Management is actively reshaping the portfolio through tuck-in acquisitions such as CathWorks, Scientia Vascular, and SPR Therapeutics, while preparing to spin off its diabetes business (MiniMed) to sharpen strategic focus. The planned separation, expected later this fiscal year, will enable existing shareholders to exchange shares and is intended to improve net margins while allowing both entities to execute independently.

What to watch

Investors should monitor whether Medtronic can sustain momentum in cardiac ablation as the growth rate moderates from earlier triple-digit expansion. Stabilization in U.S. TAVR procedure volumes will be critical, as management has embedded current run-rates into fiscal 2027 guidance. The company expects first-quarter organic revenue growth of 11.5% to 12%, with 500 to 600 basis points from an extra selling week, providing an early test of underlying demand trends. Gross margin trajectory will be key, particularly in the second half of fiscal 2027 when management expects improvement from lapping tariff effects and better product mix in cardiac ablation. Progress on newer platforms such as the Hugo robotic system, Altaviva urinary incontinence implant, and Symplicity hypertension treatment will indicate whether Medtronic's growth base is broadening beyond ablation. Finally, the completion of the MiniMed spin-off and its impact on share count and margin structure will shape the company's financial profile heading into calendar 2026.