Strong demand for cardiac devices helped Medtronic (MDT.US)'s Q1 performance exceed expectations and raised annual guidelines to invest US$700 million to increase robotic surgery business

The Zhitong Finance App learned that before the US stock market on Tuesday, medical device manufacturer Medtronic (MDT.US) announced better-than-expected results for the first quarter of fiscal year 2027, while also raising its full-year results guidance, betting on strong demand for cardiac devices used in complex cardiovascular surgeries. As of press release, Medtronic's US stocks rose more than 3% in the premarket on Tuesday.

According to the data, Medtronic's revenue for the first quarter increased 13.8% year over year to US$9.76 billion, better than analysts' general expectations of US$9.55 billion. Adjusted operating profit was $2.32 billion, up 14.9% year over year; adjusted net profit was $1.86 billion, up 14.4% year over year; adjusted earnings per share were $1.45, better than analysts' general expectations of $1.39.

By business, the largest cardiovascular business had revenue of US$3.93 billion, up 19.5% year over year — mainly driven by cardiac ablation solutions (CAS) revenue surged 88% year on year; neuroscience business revenue of US$2.68 billion, up 10.3% year on year; medical surgery business revenue was US$2.28 billion, up 10.0% year on year; and diabetes business revenue was US$840 million, up 16.9% year over year.

Looking ahead, Medtronic expects the organic revenue growth rate for the 2027 fiscal year to be between 7.25% and 7.75%, higher than the previous forecast of 6.75% to 7.25%; adjusted earnings per share for the full year are expected to be $5.94 to $6, higher than the previous forecast of $5.90 to $6, and the median value in the latest forecast range is also higher than the average analysts' expectation of $5.95. The company added that the latest performance guidelines include the diabetes business, and if the diabetes business completes a complete spin-off before the end of the fiscal year (the company announced plans to split the diabetes business into an independent listed company in May last year), it will update this outlook accordingly.

Investors' expectations for medical device manufacturers have remained high in recent quarters, driven by factors such as strong demand for surgery, increased doctors' adoption of medical devices, and technological advancements. Medtronic Chief Financial Officer Thierry Pieton said that strong operating performance and strict financial management contributed to the company's recent quarterly adjusted earnings per share and revenue growth, which strengthened the company's confidence in raising its performance outlook.

Additionally, Medtronic is further increasing its robotic surgery business. The company invested $700 million in Cornerstone Robotics and obtained the right to distribute the company's Centre surgical system in select markets outside the US. The strategic agreement with Cornerstone Robotics is the latest sign that Medtronic is targeting Intuitive Machines (LUNR.US), which currently dominates the field of robotic surgical systems.

Medtronic will distribute the Centre surgical system along with its Hugo robot-assisted surgical system. Medtronic's Hugo robotic-assisted surgery system is generally viewed as a direct competitor to Intuitive's Da Vinci robotic surgery system. “Combined with Medtronic's connected surgery ecosystem, these two complementary platforms will expand the accessibility of robot-assisted surgery and provide surgeons and healthcare systems with more choices and more flexible solutions to meet their diverse needs and benefit more patients around the world,” Medtronic said in a press release on Tuesday.

Medtronic also said it will invest $80 million in Pi-Cardia, a manufacturer of heart valve repair devices, and get the option to buy the company for $210 million.