Medtronic plc (NYSE: MDT) Stock: Dips Despite Q425 Beat as FY26 Forecast Disappoints

TLDR

Medtronic beat Q4 EPS and revenue estimates but issued a cautious FY26 forecast. Q4 EPS rose 11% to $1.62, beating the $1.58 consensus. Revenue climbed 4% YoY to $8.93 billion, driven by growth in cardiovascular and diabetes units. FY26 guidance underwhelmed investors, with EPS and revenue projections trailing Wall Street expectations. Medtronic plans to spin off its diabetes business into a new publicly traded entity within 18 months.

Medtronic plc (NYSE: MDT) stock was down 0.79% to $85.8 by early Wednesday afternoon despite reporting stronger-than-expected Q4 results.

Medtronic plc (MDT)

The company posted adjusted earnings of $1.62 per share, surpassing the Zacks Consensus Estimate of $1.58 and rising 11% from $1.46 a year earlier. Revenue for the quarter ended April 2025 reached $8.93 billion, exceeding expectations of $8.84 billion and growing 4% year over year.

Medtronic, $MDT, Q4-FY25. Results:
🔴 -0.5% Pre-Market

📊 Adj. EPS: $1.62 🟢
💰 Revenue: $8.93B 🟢
🔎 Strong finish to FY25 with double-digit growth in Cardiac Ablation and Diabetes units; announces separation of Diabetes business into a new standalone company. pic.twitter.com/NPLPeN8ZD3

— EarningsTime (@Earnings_Time) May 21, 2025

Each of its business segments showed gains. The Cardiovascular unit led with 7% growth to $3.336 billion. Neuroscience added $2.62 billion, up 3%, and the Medical Surgical unit grew 1% to $2.212 billion. The Diabetes segment posted standout 10% growth, generating $728 million in revenue and topping the $706.6 million estimate.

FY26 Outlook Weighs on Sentiment

Despite a strong Q4, the company’s cautious FY26 guidance disappointed investors. Medtronic projected adjusted EPS of $5.50–$5.60, well below analysts’ expectations of $5.83. Revenue is expected to grow between 4.8% and 5.1%, just above the 4.5% consensus.

CEO Geoff Martha flagged potential risks from U.S.-China tariffs resuming after a temporary 90-day pause, as well as broader macroeconomic uncertainties. The company’s operating margin improved to 27.8% from 26.9%, highlighting internal efficiency gains despite these external pressures.

Diabetes Unit Spin-Off on the Horizon

In a strategic shift, Medtronic announced it will spin off its diabetes business within 18 months. The division, which has rebounded from regulatory troubles, grew 10.7% in FY25 to nearly $2.8 billion in revenue.

📣 BIG news! Medtronic announced its intent to separate our Diabetes business into a standalone, public company. Our goal remains the same – we strive to give people the freedom to forget about diabetes and live their best life. We wouldn’t be where we are today without our… pic.twitter.com/ADfxUsSTzO

— Medtronic Diabetes (@MDT_Diabetes) May 21, 2025

The new standalone company will be headquartered in Northridge, California, and led by Que Dallara, who has overseen the division since 2022. Medtronic believes this separation will allow the diabetes business to scale faster while enabling the parent company to focus on higher-margin areas like cardiovascular, neuroscience, and surgical devices.

The move follows years of turnaround efforts after the FDA issued a warning letter in 2021 over product safety issues. Since then, the division has launched improved products, including the MiniMed 780G insulin pump and smart pens, and entered a glucose sensor partnership with Abbott in 2024.

Conclusion

While Medtronic’s Q4 performance demonstrated operational strength, investors are taking a cautious view due to weaker-than-expected FY26 guidance. The planned diabetes spin-off underscores the company’s commitment to sharpening its focus on core high-margin areas. As of May 21, 2025, MDT has returned 8.04% YTD but trails the S&P 500 over one and five-year periods.

 

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