Medtronic rises 2.3% on earnings beat and $700 million robotics deal

Medtronic's $700 million bet on surgical robotics lands as the device maker posts its strongest quarter in years, revenue up 13.7 percent to $9.76 billion and adjusted earnings of $1.45 a share beating estimates.

"We are off to a strong start in fiscal 2027. What gives us confidence is not simply the strength of the quarter, but importantly, the breadth of performance across our businesses and the increasing contributions from newer growth platforms," Geoff Martha, chairman and chief executive officer at Medtronic, said.

The Galway, Ireland-based company reported adjusted earnings of $1.45 a share for the quarter ended July 31, ahead of the $1.39 consensus, on revenue of $9.756 billion versus the $9.54 billion analysts expected. Organic growth of 13.7 percent ran roughly 200 basis points above the midpoint of guidance, though an extra fiscal week contributed about $570 million. Cardiovascular, the largest portfolio, grew 18.9 percent organically, led by 88 percent growth in cardiac ablation solutions and 15 percent in cardiac rhythm management.

Medtronic raised its fiscal 2027 organic revenue growth forecast by 50 basis points to 7.25 percent to 7.75 percent and lifted adjusted earnings guidance to $5.94 to $6.00 a share. The company also announced a $700 million strategic partnership with Cornerstone Robotics to broaden access to robotic-assisted surgery, a market where Intuitive Surgical's da Vinci systems dominate.

Guidance Rises as Cardiovascular Leads Growth

The beat was broad-based. Neuroscience revenue rose 9.3 percent organically, medical surgical climbed 10.2 percent, and the diabetes business grew 14.9 percent to $843 million. Free cash flow more than doubled to $1.29 billion from $584 million a year earlier. The company also completed acquisitions of Scientia Vascular and SPR Therapeutics, won FDA clearance for its Touch Surgery Aide computing platform, and expanded the CE Mark indication for its Affera mapping and ablation system and Sphere-9 catheter to treat ventricular arrhythmias.

Chief Financial Officer Thierry Piéton credited "strong operating performance and disciplined financial management" for the results that enabled the guidance raise. The forecast assumes a neutral to 1 percent accretive impact from foreign exchange based on recent rates.

A $700 Million Push Into Robotic Surgery

The Cornerstone Robotics partnership extends Medtronic's push into a field long controlled by Intuitive Surgical, whose da Vinci systems anchor a market the company values in the tens of billions of dollars. Medtronic's own Hugo robotic-assisted surgery system competes directly, and the investment adds a partner focused on expanding global access to the technology. The company separately invested in Pi-Cardia, a developer of leaflet modification for complex transcatheter aortic valve replacement, and its diabetes business is being carved out through a planned separation.

Medtronic shares rose 2.3 percent to $92.75 in after-hours trading. The raised guidance gives investors a clearer earnings trajectory into the fiscal year, and the robotics investment, while modest relative to the company's annual revenue, shows where management sees the next growth leg. Intuitive Surgical, whose da Vinci systems anchor the surgical robotics market, remains the benchmark the investment aims to challenge.

This article is for informational purposes only and does not constitute investment advice.