On September 1, Medtronic (NYSE:MDT) reported fiscal 2027 first-quarter results that blew past its own guidance, with revenue of $9.8 billion and organic growth of 13.7%. An extra selling week included in the quarter, which ended July 31, added roughly $570 million to that figure. Still, even stripping that out, management called it the strongest quarter in nearly eight years. The company used the beat to raise its full-year outlook.
A Heart Business On Fire
Cardiovascular revenue jumped 18.9% organically to $3.9 billion, and the standout inside it was Cardiac Ablation Solutions, which grew 88% worldwide. That business crossed $2 billion in trailing twelve-month revenue this quarter, a milestone Medtronic said it hit ahead of schedule, while its Sphere-9 catheter added nine points of US market share in the pulsed field ablation market. Cardiac Rhythm Management, one of the company’s oldest and largest franchises at more than $5.5 billion a year, still grew 15% globally, powered by double-digit growth in the decade-old Micra pacemaker line.
Cranial & Spinal Technologies grew 13%, helped by the AiBLE surgical ecosystem and the newly launched Stealth AXiS navigation platform. Diabetes revenue rose 14.9% to $843 million, and Pelvic Health grew 15% as procedures for the Altaviva system doubled sequentially. Robotics is scaling too: the US installed base for the Affera mapping system grew 35% sequentially, and Medtronic expects its Hugo surgical robot to pass 50,000 completed procedures by the end of the fiscal year, with procedure growth running at more than twice the market rate.
Management backed all of this with a raise to fiscal 2027 organic revenue guidance, now 7.25% to 7.75%, and adjusted earnings per share guidance of $5.94 to $6.00, while adjusted operating margin expanded to 23.7%.
Where The Growth Story Cools
Not every part of the portfolio is firing. Neuromodulation grew just 3% globally, weighed down by ongoing softness in the spinal cord stimulation market and replacement headwinds in deep brain stimulation, a pocket of the business that has lagged for a while. Structural Heart, part of the interventional cardiology unit, grew only in the low single digits, a much slower pace than the rest of cardiovascular. Management also flagged a $50 million to $150 million foreign exchange headwind for the full fiscal year based on recent currency rates.
Some of the current strength comes at a cost. SG&A expense rose 14% year over year to 32.4% of revenue as Medtronic integrates recent acquisitions and commercializes newer platforms, and gross margin absorbed a 50 basis point hit from unfavorable mix, largely tied to diabetes and the capital-heavy ablation business. Executives also said Cardiac Ablation Solutions growth, while still expected to outpace the market by more than three times next quarter, will moderate over the rest of the year as comparisons get tougher, and acute care and monitoring growth is expected to normalize as fiscal 2027 progresses.
What The Market Is Pricing In
Hedge fund ownership of Medtronic climbed from 60 funds in the prior quarter to 67 in the most recent one, pointing to building institutional conviction. Short interest sits at just 1.12% of the float, suggesting little organized skepticism toward the stock. Shares trade at a forward price-to-earnings ratio of 15.46 as of September 9, a modest multiple given the growth rates coming out of ablation and robotics.
The Real Question For Investors
Medtronic’s quarter makes clear that its newest growth engines, cardiac ablation, robotic surgery and pelvic health, are scaling fast enough to offset the drag from slower units like neuromodulation and structural heart. The extra selling week flattered the headline number, but management’s own math suggests underlying demand was still unusually strong. For the growth story to keep holding, Cardiac Ablation Solutions and Hugo need to keep expanding even as comparisons get harder and currency swings work against the company.
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