Medtronic
(NYSE: MDT)
expects Trump administration tariffs and reciprocal tariffs from other countries to cost it $200–350 million in its new fiscal year.
The world’s largest medtech company, with operational headquarters in Fridley, Minnesota, also announced today that its Diabetes business will become a separate company, preferably through an IPO. Que Dallara, current EVP and president of Medtronic Diabetes, will lead the new, to-be-named diabetes tech company as CEO. Company officials expect the move to boost margins and EPS, at the same time that tariffs are having the opposite effect.
“Medtronic commercial manufacturing and technology platform synergies are less applicable to the Diabetes business, given their distinct customer, go-to market, and supply chain infrastructure. … This separation shifts and simplifies our portfolio to have even more intense focus on our highest margin growth drivers. These growth drivers are already building momentum, and this increased focus will ensure that they reach their full revenue growth potential,” CEO Geoff Martha said during the company’s earnings call with analysts this morning.
[Read more about the Diabetes business spinoff on our sibling site Drug Delivery Business News.]
Dallara isn’t the only change Medtronic will see in its leadership: Sean Salmon, EVP and president of the company’s Cardiovascular Portfolio, is leaving, with Cranial and Spinal Technologies SVP and President Skip Kiil promoted into the role effective immediately. Michael Carter, VP and GM, will succeed Kiil as SVP and president of CST.
MDT shares were up more than 1% to $87.69 apiece after the start of trading today. The S&P 500 was down slightly.
BTIG analysts kept their Neutral rating on MDT shares, describing the Diabetes business spinoff plans as the right move because it was about “getting smaller to get bigger.”
Medtronic is ‘now at an inflection point’
Medtronic earned $1.061 billion, or 82¢ per share, off of $8.927 billion for the quarter ended April 25, 2025. The bottom line was up 61%, and the top line was up nearly 4% compared with the same quarter a year ago.
Adjusted to exclude one-time items, Medtronic’s EPS was $1.62. The result was 4¢ ahead of the expectations of Wall Street analysts, who expected EPS of $1.58 and revenue of $8.83 billion.
“We had a strong close to our fiscal year, and I’m excited to see the progress we are making as our growth drivers continue to build momentum. Operationally, we translated our accelerating revenue growth into earnings leverage, as we delivered at the upper end of the commitments that we laid out a year ago,” Martha said in the earnings news release.
Said Martha: “We are now at an inflection point as we accelerate our speed of travel to higher, more profitable growth.”
Other fourth-quarter highlights included:
- Pulsed-field ablation products revenue grew 30%, enabling the Cardiovascular portfolio to grow 5.5%;
- Neuroscience was up 4.7%, and Diabetes was up 10.7%, while Medical Surgical was down slightly;
- Medtronic submitted its Hugo surgical robot platform to the FDA for a urologic indication.;
- It kicked off its largest brain-computer interface launch following U.S. FDA approval of its BrainSense adaptive deep brain stimulation (aDBS).
Medtronic expects revenue in the new fiscal year to grow roughly 5% organically and 4.8–5.1% on a reported basis, slightly ahead of what analysts were expecting on average. The tariff impact — with the range dependent on whether U.S.-China tariffs return to pre-pause levels — has the company guiding at $5.50–5.60 adjusted EPS; the analyst consensus had been $5.83. (The analyst consensus numbers are from Yahoo! Finance.)
When it comes to tariffs, Martha said: “You can see from the significant amount that we’ve already been able to offset, that we are extremely focused on mitigating actions. You also see from our guidance that the underlying fundamentals of the business are strong, and they’re getting stronger.”
