Medtronic Sees AI, Ablation and Targeted M&A Fueling Growth

Key Points

• Medtronic’s growth momentum is accelerating: Excluding an extra week in the quarter, growth increased from 4.5% to 7%, driven by cardiac ablation, renal denervation, Hugo robotic surgery and Altaviva pelvic-health products.
• AI is enhancing product value and workflow efficiency. Applications such as GI Genius and AI-enabled spine tools are designed to improve detection, planning, navigation and patient outcomes while strengthening customer retention and pricing.
• The company is expanding through targeted investments and acquisitions. Medtronic spent about $2.7 billion across 16 investments over the past year, focusing mainly on tuck-in deals in robotics, structural heart, neuroscience and other growth areas.

Medtronic NYSE: MDT Chief Financial Officer Thierry Piéton said the medical-device maker’s focus on acute procedures, expanding innovation pipeline and increased use of targeted acquisitions are supporting its recent growth momentum.

Speaking with Peter Harrison of Morgan Stanley Investment Banking Group, Piéton said Medtronic’s portfolio is comparatively insulated from concerns about Affordable Care Act subsidies and potential pressure on elective procedures. He said the company’s products are primarily used in acute settings, including stroke, arrhythmia and valve-replacement procedures.

“Procedure strength has been good,” Piéton said, citing first-quarter performance in Cardiac Rhythm Management, surgical and spine franchises. He said approximately two-thirds of Medtronic revenue comes from Medicare, about one-quarter from private payers, roughly 10% from Medicaid and less than 1% from ACA-related coverage. The company also saw strong first-quarter free cash flow performance, helped by accounts-receivable collections in the U.S. and internationally, he said.

AI Seen Improving Workflows and Product Value

Piéton described artificial intelligence as an opportunity both to enhance Medtronic’s products and improve internal efficiency. In products, he said AI can improve procedure workflows, physician decision-making, hospital service and patient outcomes.

He pointed to GI Genius, an AI-enabled endoscopy platform that he said detects 50% more polyps during a typical endoscopy procedure than a trained physician using the naked eye. In spine care, AI can assist with preoperative planning, procedure navigation and post-procedure feedback, according to Piéton.

Those capabilities can also support pricing and customer retention, he said. Medtronic’s StealthAXiS spine solution combines preoperative, intraoperative and postoperative tools, including navigation, imaging and robotics. Piéton said the broader platform makes implants “stickier” with customers and helps protect pricing.

Innovation Pipeline Supports Growth Outlook

Piéton said Medtronic’s growth rate has increased from 4.5% to 7%, excluding the impact of an extra week in the first quarter. He attributed the improvement to innovation across established franchises as well as four “generational” growth drivers: cardiac ablation, renal denervation for hypertension, Hugo robotic surgery and Altaviva for pelvic health.

Cardiac Rhythm Management grew 15% in the first quarter, Piéton said, driven by products including OmniaSecure, the 3830 lead, EV-ICDs and Micra leadless pacemakers. He added that Medtronic’s vitality index, which measures the share of revenue from products launched within the past three years, has risen from the teens to the low-to-mid-20% range.

Among the company’s newer growth platforms, Piéton said cardiac ablation surpassed $2 billion in trailing-12-month revenue during the first quarter, ahead of Medtronic’s expectations. The Symplicity renal denervation hypertension procedure exceeded $100 million in revenue during the prior year’s fourth quarter, he said. Piéton characterized the procedure as still being in its early stages, citing a potential patient pool of 15 million and a procedure value of roughly $16,000.

He also said Altaviva, a small implant used to treat overactive bladder, addresses another large patient population. Pelvic health revenue rose 15% in the first quarter, supported by Altaviva, according to Piéton.

• Cardiac ablation grew 88% in the first quarter, while the market grew 14% to 15%, Piéton said.
• Medtronic’s mapping-system installed base increased 40% in the fourth quarter and 35% sequentially in the first quarter.
• The company is expanding cardiac ablation in Japan, ventricular tachycardia, intracardiac echocardiography catheters and future catheter offerings.

Robotics, Structural Heart and Neuroscience Investments

Piéton said Medtronic’s investment in Cornerstone, a China-based soft-tissue robotics company, is intended to broaden the company’s surgical robotics offering beyond its Hugo system. Hugo received U.S. Food and Drug Administration approval at the end of last year and has been ramping in the U.S., while also gaining traction outside the country, he said.

Hospitals increasingly want different robotic configurations and visualization options, Piéton said. He said Cornerstone has approvals in China, CE-marked markets and Singapore, allowing commercialization in 50 countries. The investment provides Medtronic with future optionality, he said.

In structural heart, Piéton said Medtronic is investing to improve growth over the next several years. He cited investments in Anteris, which develops a balloon-expandable valve, and Pi-Cardia, which focuses on leaflet modification for TAVR-related procedures. The company is also investing internally in mitral and tricuspid programs.

Neuroscience growth was 3% in the first quarter, but Piéton said he expects acceleration in the second half as product introductions and recent acquisitions contribute. He cited neurovascular products including Artisse, Onyx and Neuroguard, as well as the Scientia acquisition. He also referenced investments in peripheral nerve stimulation, basivertebral nerve ablation and pelvic health.

Portfolio Management and Capital Allocation

Piéton said Medtronic separated MiniMed because the diabetes business differs from the company’s largely business-to-business model and has lower margins, lower return on investment and R&D spending as a share of revenue roughly double that of the remaining portfolio. He said the separation allows Medtronic to focus investment on cardiovascular, MedSurg and neuroscience businesses while allowing MiniMed to pursue its own capital allocation strategy.

While Medtronic likes its portfolio “at a macro level,” Piéton said management continues to review operations in detail. The company retired 25,000 SKUs in 2026 and another 9,000 in the first quarter, he said.

Medtronic has also resumed a more active acquisition strategy after focusing for years on internal operational improvements. Piéton said the company made 16 investments and spent approximately $2.7 billion over the last 12 months. It is targeting tuck-in deals generally valued between $500 million and $1.5 billion rather than acquisitions in the $4 billion to $5 billion range.

Piéton said Medtronic remains committed to its dividend and is seeking to pair growth with earnings-per-share leverage. The company plans to provide additional detail on the durability of its growth outlook at an Investor Day scheduled for Dec. 10 and 11.

About Medtronic (NYSE:MDT)

Medtronic plc is a global medical technology company that develops, manufactures and sells devices and therapies used to diagnose and treat a broad range of medical conditions. Its products are designed for hospitals, physicians and patients across areas including cardiac care, diabetes, neurological disorders, spinal conditions and surgical procedures.

The company's portfolio includes pacemakers, implantable cardioverter-defibrillators, cardiac ablation systems, heart valves, neurostimulation systems, implantable pumps, spinal implants and surgical technologies.

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