[10-Q] Medtronic plc Quarterly Earnings Report
Filing Impact
Filing Sentiment
Form Type
10-Q
Rhea-AI Filing Summary
Medtronic plc reported higher results for the quarter ended October 24, 2025. Net sales rose to $8,961 million from $8,403 million a year earlier, driven by growth across Cardiovascular, Neuroscience, Medical Surgical, and Diabetes, with segment sales reaching $8,926 million. Net income attributable to Medtronic increased to $1,374 million from $1,270 million, and diluted earnings per share improved to $1.07 from $0.99.
For the first six months of fiscal 2026, net sales were $17,539 million versus $16,318 million, and net income attributable to Medtronic was $2,414 million compared with $2,312 million. Operating cash flow was $2,013 million, while the company continued returning cash via dividends of $1,820 million and share repurchases of $495 million. Medtronic reduced its Italian payback accrual by $39 million, recorded as a sales benefit, and recognized a $90 million fair value loss on its Mozarc Medical investment.
On the balance sheet, cash and cash equivalents stood at $1,282 million with $7,045 million in investments. Total assets were $91,346 million, total liabilities $42,489 million, and total equity $48,857 million. Long-term debt increased to $27,680 million, including new 2.950% notes due 2031 and 4.200% notes due 2046, and the company had $1.4 billion of commercial paper outstanding.
Positive
- None.
Negative
- None.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
| For the quarterly period ended | ||||||||
| Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from __________ to __________ | ||||||||
Commission File Number 001-36820
®| (Exact name of registrant as specified in its charter) | |||||
| (State of incorporation) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices)
+353 1 438-1700
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | Emerging growth company | ||||||||||||||
| Non-accelerated filer | ☐ | Smaller Reporting Company | |||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 1(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of November 19, 2025, 1,282,014,208 ordinary shares, par value $0.0001, of the registrant were outstanding.
TABLE OF CONTENTS
| Item | Description | Page | ||||||||||||
PART I | ||||||||||||||
| 1. | Financial Statements (unaudited) | 1 | ||||||||||||
| 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 32 | ||||||||||||
| 3. | Quantitative and Qualitative Disclosures About Market Risk | 53 | ||||||||||||
| 4. | Controls and Procedures | 54 | ||||||||||||
PART II | ||||||||||||||
| 1. | Legal Proceedings | 54 | ||||||||||||
| 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 54 | ||||||||||||
| 5. | Other Information | 54 | ||||||||||||
| 6. | Exhibits | 55 | ||||||||||||
Signature | 56 | |||||||||||||
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Medtronic plc
Consolidated Statements of Income
(Unaudited)
| Three months ended | Six months ended | ||||||||||||||||||||||
| (in millions, except per share data) | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | |||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of products sold, excluding amortization of intangible assets | |||||||||||||||||||||||
| Research and development expense | |||||||||||||||||||||||
| Selling, general, and administrative expense | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Restructuring charges, net | |||||||||||||||||||||||
| Certain litigation charges, net | |||||||||||||||||||||||
| Other operating expense (income), net | ( | ( | |||||||||||||||||||||
| Operating profit | |||||||||||||||||||||||
| Other non-operating income, net | ( | ( | ( | ( | |||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Income tax provision | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Net income attributable to noncontrolling interests | ( | ( | ( | ( | |||||||||||||||||||
| Net income attributable to Medtronic | $ | $ | $ | $ | |||||||||||||||||||
| Basic earnings per share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted earnings per share | $ | $ | $ | $ | |||||||||||||||||||
| Basic weighted average shares outstanding | |||||||||||||||||||||||
| Diluted weighted average shares outstanding | |||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
1
Medtronic plc
Consolidated Statements of Comprehensive Income
(Unaudited)
| Three months ended | Six months ended | ||||||||||||||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | |||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
| Unrealized gain on investment securities | |||||||||||||||||||||||
| Translation adjustment | ( | ||||||||||||||||||||||
| Net investment hedges | ( | ( | |||||||||||||||||||||
| Net change in retirement obligations | |||||||||||||||||||||||
| Unrealized gain (loss) on cash flow hedges | ( | ( | |||||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||
| Comprehensive income including noncontrolling interests | |||||||||||||||||||||||
| Comprehensive income attributable to noncontrolling interests | ( | ( | ( | ( | |||||||||||||||||||
| Comprehensive income attributable to Medtronic | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
2
Medtronic plc
Consolidated Balance Sheets
(Unaudited)
| (in millions) | October 24, 2025 | April 25, 2025 | |||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Investments | |||||||||||
Accounts receivable, less allowances and credit losses of $ | |||||||||||
| Inventories | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant, and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets, net | |||||||||||
| Tax assets | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Current debt obligations | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Accrued compensation | |||||||||||
| Accrued income taxes | |||||||||||
| Other accrued expenses | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Accrued compensation and retirement benefits | |||||||||||
| Accrued income taxes | |||||||||||
| Deferred tax liabilities | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (Note 16) | |||||||||||
| Shareholders’ equity: | |||||||||||
Ordinary shares— par value $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total shareholders’ equity | |||||||||||
| Noncontrolling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
Medtronic plc
Consolidated Statements of Equity
(Unaudited)
| Ordinary Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Shareholders’ Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Number | Par Value | ||||||||||||||||||||||||||||||||||||||||||||||||
| April 25, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) income | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Dividends to shareholders ($ | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares under stock purchase and award plans | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of ordinary shares | ( | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| July 25, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Dividends to shareholders ($ | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares under stock purchase and award plans | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of ordinary shares | ( | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Changes to noncontrolling ownership interests | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| October 24, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Ordinary Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Shareholders’ Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Number | Par Value | ||||||||||||||||||||||||||||||||||||||||||||||||
| April 26, 2024 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Dividends to shareholders ($ | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares under stock purchase and award plans | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of ordinary shares | ( | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| July 26, 2024 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Dividends to shareholders ($ | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares under stock purchase and award plans | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of ordinary shares | ( | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| October 25, 2024 | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
Medtronic plc
Consolidated Statements of Cash Flows
(Unaudited)
| Six months ended | |||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | |||||||||
| Operating Activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Provision for credit losses | |||||||||||
| Deferred income taxes | |||||||||||
| Stock-based compensation | |||||||||||
| Other, net | ( | ||||||||||
| Change in operating assets and liabilities, net of acquisitions and divestitures: | |||||||||||
| Accounts receivable, net | ( | ||||||||||
| Inventories | ( | ( | |||||||||
| Accounts payable and accrued liabilities | ( | ( | |||||||||
| Other operating assets and liabilities | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Investing Activities: | |||||||||||
| Additions to property, plant, and equipment | ( | ( | |||||||||
| Purchases of investments | ( | ( | |||||||||
| Sales and maturities of investments | |||||||||||
| Other investing activities, net | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Financing Activities: | |||||||||||
| Change in current debt obligations, net | ( | ||||||||||
| Issuance of long-term debt | |||||||||||
| Payments on long-term debt | ( | ||||||||||
| Dividends to shareholders | ( | ( | |||||||||
| Issuance of ordinary shares | |||||||||||
| Repurchase of ordinary shares | ( | ( | |||||||||
| Other financing activities, net | ( | ||||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | |||||||||||
| Net change in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental Cash Flow Information | |||||||||||
| Cash paid for: | |||||||||||
| Income taxes | $ | $ | |||||||||
| Interest | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements of Medtronic plc and its subsidiaries (Medtronic plc, Medtronic, or the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S.) (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, the consolidated financial statements include all the adjustments necessary for a fair statement in conformity with U.S. GAAP. Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year.
The accompanying unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements of the Company and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 25, 2025. The Company’s fiscal years 2026, 2025, and 2024 will end or ended on April 24, 2026, April 25, 2025, and April 26, 2024, respectively.
There have been no material changes to our significant accounting policies, as disclosed in Note 1 included in the Company's Annual Report on Form 10-K for the fiscal year ended April 25, 2025.
2. New Accounting Pronouncements
Recently Adopted Accounting Standards
During the six months ended October 24, 2025, there have been no newly adopted accounting pronouncements that materially impact our consolidated financial statements. Refer to the Company's Annual Report on Form 10-K for the fiscal year ended April 25, 2025 for pronouncements recently adopted.
Not Yet Adopted Accounting Standards
Income Taxes
In December 2023, the FASB issued Accounting Standards Update (ASU) 2023-09, Improvements to Income Tax Disclosures (Topic 740), which requires incremental annual disclosures on income taxes, including rate reconciliations, income taxes paid, and other disclosures. The Company will adopt this guidance beginning in the fourth quarter of fiscal year 2026 for our annual report. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40), which requires tabular disclosures disaggregating certain costs and expenses within relevant income statement captions. The Company will adopt this guidance beginning in the fourth quarter of fiscal year 2028 for our annual report and for interim periods starting in fiscal year 2029. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.
Internal-Use Software
In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software (Subtopic 350-40), to increase the operability of the recognition guidance by removing all references to "project stages" and clarifying when an entity is required to start capitalizing software costs. This accounting guidance is effective for the Company beginning in the first quarter of fiscal year 2029, with early adoption permitted. We are currently evaluating the potential effect that the updated standard will have on our financial statements.
6
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
3. Revenue
The Company's revenues are principally derived from device-based medical therapies and services related to cardiac rhythm disorders, cardiovascular disease, hypertension, neurological surgery technologies, neurological disorders and diseases, spinal conditions and musculoskeletal trauma, chronic pain, ear, nose, and throat conditions, urological and digestive disorders, advanced and general surgical care products, respiratory and monitoring solutions, and diabetes conditions. The Company's primary customers include healthcare systems, clinics, third-party healthcare providers, distributors, and other institutions, including governmental healthcare programs and group purchasing organizations.
The table below illustrates net sales by segment and division and by market geography for the three and six months ended October 24, 2025 and October 25, 2024. The U.S. revenue includes United States and U.S. territories, and the international revenue includes all other non-U.S. countries.
| Worldwide | |||||||||||||||||||||||
Three months ended | Six months ended | ||||||||||||||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | |||||||||||||||||||
| Cardiac Rhythm & Heart Failure | $ | $ | $ | $ | |||||||||||||||||||
| Structural Heart & Aortic | |||||||||||||||||||||||
| Coronary & Peripheral Vascular | |||||||||||||||||||||||
| Cardiovascular | |||||||||||||||||||||||
| Cranial & Spinal Technologies | |||||||||||||||||||||||
| Specialty Therapies | |||||||||||||||||||||||
| Neuromodulation | |||||||||||||||||||||||
| Neuroscience | |||||||||||||||||||||||
| Surgical & Endoscopy | |||||||||||||||||||||||
| Acute Care & Monitoring | |||||||||||||||||||||||
| Medical Surgical | |||||||||||||||||||||||
| Diabetes | |||||||||||||||||||||||
| Reportable segment net sales | |||||||||||||||||||||||
Other operating segment(1) | |||||||||||||||||||||||
Other adjustments(2) | ( | ||||||||||||||||||||||
| Total net sales | $ | $ | $ | $ | |||||||||||||||||||
U.S. | International | U.S. | International | ||||||||||||||||||||||||||||||||||||||||||||
| Three months ended | Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | |||||||||||||||||||||||||||||||||||||||
| Cardiovascular | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Neuroscience | |||||||||||||||||||||||||||||||||||||||||||||||
| Medical Surgical | |||||||||||||||||||||||||||||||||||||||||||||||
| Diabetes | |||||||||||||||||||||||||||||||||||||||||||||||
| Reportable segment net sales | |||||||||||||||||||||||||||||||||||||||||||||||
Other operating segment(1) | |||||||||||||||||||||||||||||||||||||||||||||||
Other adjustments(2) | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Total net sales | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
(1)Includes operations and ongoing transition agreements from businesses the Company has exited or divested.
(2)Reflects adjustments to the Company's Italian payback accruals as further described below.
The amount of revenue recognized is reduced by sales rebates, distributor chargebacks, and returns. Adjustments to rebates, distributor chargebacks, and returns reserves are recorded as increases or decreases to revenue. At October 24, 2025, $1.0 billion of rebates were classified as other accrued expenses, and $689 million of distributor chargebacks were classified as a reduction of accounts receivable in the
7
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
consolidated balance sheet. At April 25, 2025, $983 million of rebates were classified as other accrued expenses, and $680 million of distributor chargebacks were classified as a reduction of accounts receivable in the consolidated balance sheet. During the six months ended October 25, 2024, the Company recognized $90 million of incremental Italian payback accruals resulting from the July 22, 2024 rulings by the Constitutional Court of Italy relating to certain prior years since 2015. During the six months ended October 24, 2025, the Company decreased its accrual for the Italian payback by $39 million resulting from the June 30, 2025 legislative decree published by the Italian government and formalized into law in August 2025 confirming a reduction of the amounts due for years 2015 to 2018. The changes in estimates related to the Italian payback accruals were recognized as adjustments to net sales in the consolidated statements of income. Refer to Note 16 for additional information. Other adjustments to variable consideration during the three and six months ended October 24, 2025 and October 25, 2024 were not material.
Deferred Revenue and Remaining Performance Obligations
Deferred revenue at October 24, 2025 and April 25, 2025 was $451 million and $446 million, respectively. At October 24, 2025 and April 25, 2025, $356 million and $354 million was included in other accrued expenses, respectively, and $95 million and $92 million was included in other liabilities, respectively. During the six months ended October 24, 2025, the Company recognized $229 million of revenue that was included in deferred revenue as of April 25, 2025. During the six months ended October 25, 2024, the Company recognized $196 million of revenue that was included in deferred revenue as of April 26, 2024.
Remaining performance obligations include goods and services that have not yet been delivered or provided under existing, noncancellable contracts with minimum purchase commitments. At October 24, 2025, the estimated revenue expected to be recognized in future periods related to unsatisfied performance obligations for executed contracts with an original duration of one year or more was approximately $0.3 billion. The Company expects to recognize revenue on the majority of these remaining performance obligations over the next three years .
4. Acquisitions, Dispositions, and Funded Research and Development Arrangements
Acquisition Activity
During the three and six months ended October 24, 2025, the Company had no acquisitions that were accounted for as business combinations. During the fiscal year ended April 25, 2025, the Company had acquisitions that were accounted for as business combinations. For the three and six months ended October 24, 2025 and the fiscal year ended April 25, 2025, purchase price allocation adjustments were not significant.
Fiscal Year 2025
The acquisition date fair value of net assets acquired during fiscal year 2025 was $128 million, consisting of $159 million of assets acquired and $31 million of liabilities assumed. Assets acquired were primarily comprised of $108 million of goodwill and $50 million of IPR&D. The goodwill is not deductible for tax purposes. The Company recognized $20 million of non-cash contingent consideration liabilities in connection with these business combinations during fiscal year 2025, which were comprised of other milestone-based payments.
Funded Research and Development Arrangements
The Company has entered into various arrangements with affiliates of Blackstone Life Sciences Advisors L.L.C. (collectively, "Blackstone") to receive funding related to the development of certain products within the Cardiovascular Portfolio and Diabetes Operating Unit. As there is substantive and genuine transfer of risk to Blackstone, the development funding is recognized by Medtronic as an obligation to perform contractual services. The Company recognizes the funding as income within other operating expense (income), net as the research and development costs are incurred and funding payments become due. Under these arrangements, the Company recognized income of $37 million and $73 million during the three and six months ended October 24, 2025, respectively, and income of $46 million and $84 million during the three and six months ended October 25, 2024, respectively. As of October 24, 2025, the Company is eligible to receive additional funding of $318 million under these arrangements.
Following potential U.S. regulatory approval and commercial launch of each product covered by the Blackstone agreements, Blackstone will earn a combination of fixed regulatory and commercial milestone payments up to $1.2 billion and royalties based on percent of sales of such products. Under certain termination provisions, the Company's payment obligation will survive, and in certain termination circumstances, a payment to Blackstone of a multiple of the funded amounts may be required. At the time of executing these contracts, the occurrence of such circumstances was deemed to be remote.
8
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
5. Restructuring Charges
Restructuring, associated, and other costs for the three and six months ended October 24, 2025 were $13 million and $79 million, respectively, as compared to $46 million and $108 million for the three and six months ended October 25, 2024, respectively. Restructuring, associated, and other costs primarily related to employee termination benefits provided to employees who have been involuntarily terminated and facility related and contract termination costs.
The following table presents the classification of restructuring, associated, and other costs in the consolidated statements of income:
| Three months ended | Six months ended | ||||||||||||||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | |||||||||||||||||||
| Cost of products sold | $ | $ | $ | $ | |||||||||||||||||||
| Selling, general, and administrative expenses | |||||||||||||||||||||||
| Restructuring charges, net | |||||||||||||||||||||||
| Total restructuring, associated, and other costs | $ | $ | $ | $ | |||||||||||||||||||
The following table summarizes the activity for the six months ended October 24, 2025:
| (in millions) | Employee Termination Benefits | Associated and Other Costs | Total | ||||||||||||||
| April 25, 2025 | $ | $ | $ | ||||||||||||||
| Charges | |||||||||||||||||
| Cash payments | ( | ( | ( | ||||||||||||||
| Settled non-cash | ( | ( | |||||||||||||||
Accrual adjustments(1) | ( | ( | ( | ||||||||||||||
| October 24, 2025 | $ | $ | $ | ||||||||||||||
9
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
6. Financial Instruments
Debt Securities
The Company holds investments in marketable debt securities that are classified and accounted for as available-for-sale and are remeasured on a recurring basis. The following tables summarize the Company's investments in available-for-sale debt securities by significant investment category and the related consolidated balance sheet classification at October 24, 2025 and April 25, 2025:
| October 24, 2025 | |||||||||||||||||||||||||||||||||||
| Valuation | Balance Sheet Classification | ||||||||||||||||||||||||||||||||||
| (in millions) | Cost | Unrealized Gains | Unrealized Losses | Fair Value | Investments | Other Assets | |||||||||||||||||||||||||||||
| Level 1: | |||||||||||||||||||||||||||||||||||
| U.S. government and agency securities | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
| Level 2: | |||||||||||||||||||||||||||||||||||
| Corporate debt securities | ( | ||||||||||||||||||||||||||||||||||
| U.S. government and agency securities | ( | ||||||||||||||||||||||||||||||||||
| Mortgage-backed securities | ( | ||||||||||||||||||||||||||||||||||
| Non-U.S. government and agency securities | |||||||||||||||||||||||||||||||||||
| Other asset-backed securities | ( | ||||||||||||||||||||||||||||||||||
| Total Level 2 | ( | ||||||||||||||||||||||||||||||||||
| Level 3: | |||||||||||||||||||||||||||||||||||
| Auction rate securities | ( | ||||||||||||||||||||||||||||||||||
| Total available-for-sale debt securities | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
| April 25, 2025 | |||||||||||||||||||||||||||||||||||
| Valuation | Balance Sheet Classification | ||||||||||||||||||||||||||||||||||
| (in millions) | Cost | Unrealized Gains | Unrealized Losses | Fair Value | Investments | Other Assets | |||||||||||||||||||||||||||||
| Level 1: | |||||||||||||||||||||||||||||||||||
| U.S. government and agency securities | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
| Level 2: | |||||||||||||||||||||||||||||||||||
| Corporate debt securities | ( | ||||||||||||||||||||||||||||||||||
| U.S. government and agency securities | ( | ||||||||||||||||||||||||||||||||||
| Mortgage-backed securities | ( | ||||||||||||||||||||||||||||||||||
| Non-U.S. government and agency securities | |||||||||||||||||||||||||||||||||||
| Other asset-backed securities | ( | ||||||||||||||||||||||||||||||||||
| Total Level 2 | ( | ||||||||||||||||||||||||||||||||||
| Level 3: | |||||||||||||||||||||||||||||||||||
| Auction rate securities | ( | ||||||||||||||||||||||||||||||||||
| Total available-for-sale debt securities | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||
The amortized cost of debt securities excludes accrued interest, which is reported in other current assets in the consolidated balance sheets.
10
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
The following tables present the gross unrealized losses and fair values of the Company’s available-for-sale debt securities that have been in a continuous unrealized loss position deemed to be temporary, aggregated by investment category at October 24, 2025 and April 25, 2025:
| October 24, 2025 | |||||||||||||||||||||||
| Less than 12 months | More than 12 months | ||||||||||||||||||||||
| (in millions) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
| Corporate debt securities | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| U.S. government and agency securities | ( | ( | |||||||||||||||||||||
| Mortgage-backed securities | ( | ( | |||||||||||||||||||||
| Other asset-backed securities | ( | ||||||||||||||||||||||
| Auction rate securities | ( | ||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| April 25, 2025 | |||||||||||||||||||||||
| Less than 12 months | More than 12 months | ||||||||||||||||||||||
| (in millions) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
| Corporate debt securities | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| U.S. government and agency securities | ( | ( | |||||||||||||||||||||
| Mortgage-backed securities | ( | ( | |||||||||||||||||||||
| Other asset-backed securities | ( | ||||||||||||||||||||||
| Auction rate securities | ( | ||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | |||||||||||||||||
The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. There were no transfers into or out of Level 3 during the three and six months ended October 24, 2025 and October 25, 2024. When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement.
Gains and losses on available-for-sale debt securities are recognized in other non-operating income, net in the consolidated statements of income. During the three and six months ended October 24, 2025 and October 25, 2024, gross realized gains and losses on available-for-sale debt securities were not significant. During the three and six months ended October 24, 2025, proceeds from sales of available-for-sale debt securities were $1.9 billion and $3.9 billion, respectively. During the three and six months ended October 25, 2024, proceeds from sales of available-for-sale debt securities were $2.1 billion and $4.2 billion, respectively.
The contractual maturities of available-for-sale debt securities at October 24, 2025 are shown in the following table. Within the table, maturities of mortgage-backed securities have been allocated based upon timing of estimated cash flows assuming no change in the current interest rate environment. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.
| (in millions) | Amortized Cost | Fair Value | |||||||||
| Due in one year or less | $ | $ | |||||||||
| Due after one year through five years | |||||||||||
| Due after five years through ten years | |||||||||||
| Due after ten years | |||||||||||
| Total | $ | $ | |||||||||
Interest income, which includes income on marketable debt securities and the global liquidity structures, is recognized in other non-operating income, net, in the consolidated statements of income. During the three and six months ended October 24, 2025, there was $89 million and $208 million of interest income, respectively. During the three and six months ended October 25, 2024, there was $137 million and $249 million of interest income, respectively.
11
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
Equity Securities, Equity Method Investments, and Other Investments
The following table summarizes the Company's equity and other investments at October 24, 2025 and April 25, 2025, which are classified as primarily other assets in the consolidated balance sheets:
| (in millions) | October 24, 2025 | April 25, 2025 | ||||||||||||
| Investments with readily determinable fair value (marketable equity securities) | $ | $ | ||||||||||||
| Investments for which the fair value option has been elected | ||||||||||||||
| Investments without readily determinable fair values | ||||||||||||||
| Equity method and other investments | ||||||||||||||
| Total equity and other investments | $ | $ | ||||||||||||
Gains and losses on equity and other investments are recognized in other non-operating income, net in the consolidated statements of income. During the three and six months ended October 24, 2025, there were $11 million of net unrealized gains and $76 million of net unrealized losses, respectively, on equity securities and other investments still held at October 24, 2025. During the three and six months ended October 25, 2024, there were $10 million of net unrealized losses and $7 million of net unrealized gains, respectively, on equity securities and other investments still held at October 25, 2024.
Mozarc Medical Investment
In May 2022, the Company and DaVita Inc. (DaVita) entered into a definitive agreement for the Company to sell half of its Renal Care Solutions (RCS) business, and in April 2023, completed the transaction. This sale was part of an agreement between Medtronic and DaVita to form a new, independent kidney care-focused medical device company (“Mozarc Medical” or "Mozarc") with equal equity ownership. At closing, the Company retained a 50 % non-controlling equity interest in Mozarc valued at $307 million. Although the equity investment provides the Company with the ability to exercise significant influence over Mozarc, the Company has elected the fair value option to account for this equity investment. The Company believes the fair value option best reflects the economics of the underlying transaction.
Under the fair value option, changes in the fair value of the investment are recognized through earnings each reporting period in other non-operating income, net in the consolidated statements of income. During the six months ended October 24, 2025, the Company recognized a loss of $90 million primarily driven by historical financial results and projections of future cash flows. During the three months ended October 24, 2025 and the three and six months ended October 25, 2024, the change in fair value was not
The following table provides a reconciliation of the beginning and ending balances of the Mozarc investment for which the fair value option has been elected:
| Three months ended | Six months ended | ||||||||||||||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | |||||||||||||||||||
| Beginning Balance | $ | $ | $ | $ | |||||||||||||||||||
| Additions | |||||||||||||||||||||||
| Change in fair value | ( | ||||||||||||||||||||||
| Ending Balance | $ | $ | $ | $ | |||||||||||||||||||
12
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
7. Financing Arrangements
Commercial Paper
The Company maintains commercial paper programs that allow the Company to issue U.S. dollar or Euro-denominated unsecured commercial paper notes. The aggregate amount outstanding at any time under the commercial paper programs may not exceed the equivalent of $3.5 billion. There was $1.4 billion of commercial paper outstanding at October 24, 2025. During the three and six months ended October 24, 2025, the commercial paper outstanding had a weighted average original maturity of 18 days and 17 days, respectively, and a weighted average interest rate of 4.36 percent and 4.37 percent, respectively. There was no commercial paper outstanding at April 25, 2025. During fiscal year 2025, the weighted average original maturity of the commercial paper outstanding was approximately 13 days and the weighted average interest rate was 5.02 percent. The issuance of commercial paper reduces the amount of credit available under the Company’s existing Credit Facility, as defined below.
Line of Credit
The Company has a $3.5 billion five-year unsecured revolving credit facility (Credit Facility), which provides back-up funding for the commercial paper programs described above. The Credit Facility includes a multi-currency borrowing feature for certain specified foreign currencies. At October 24, 2025 and April 25, 2025, no
Interest rates on advances on the Credit Facility are determined by a pricing matrix, based on the Company’s long-term debt ratings, assigned by Standard & Poor’s Ratings Services and Moody’s Investors Service. Facility fees are payable on the Credit Facility and are determined in the same manner as the interest rates. The Company is in compliance with the covenants under the Credit Facility.
13
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
Debt Obligations
The Company's debt obligations consisted of the following:
| (in millions) | Maturity by Fiscal Year | October 24, 2025 | April 25, 2025 | |||||||||||||||||
| Current debt obligations | 2026 - 2027 | $ | $ | |||||||||||||||||
| Long-term debt | ||||||||||||||||||||
| 2027 | ||||||||||||||||||||
| 2028 | ||||||||||||||||||||
| 2029 | ||||||||||||||||||||
| 2029 | ||||||||||||||||||||
| 2030 | ||||||||||||||||||||
| 2031 | ||||||||||||||||||||
| 2031 | ||||||||||||||||||||
| 2032 | ||||||||||||||||||||
| 2032 | ||||||||||||||||||||
| 2033 | ||||||||||||||||||||
| 2033 | ||||||||||||||||||||
| 2035 | ||||||||||||||||||||
| 2035 | ||||||||||||||||||||
| 2037 | ||||||||||||||||||||
| 2038 | ||||||||||||||||||||
| 2039 | ||||||||||||||||||||
| 2039 | ||||||||||||||||||||
| 2040 | ||||||||||||||||||||
| 2040 | ||||||||||||||||||||
| 2041 | ||||||||||||||||||||
| 2042 | ||||||||||||||||||||
| 2043 | ||||||||||||||||||||
| 2044 | ||||||||||||||||||||
| 2044 | ||||||||||||||||||||
| 2045 | ||||||||||||||||||||
| 2046 | ||||||||||||||||||||
| 2050 | ||||||||||||||||||||
| 2051 | ||||||||||||||||||||
| 2054 | ||||||||||||||||||||
| Finance lease obligations | 2027 - 2041 | |||||||||||||||||||
| Debt discount, net | 2027 - 2054 | ( | ( | |||||||||||||||||
| Deferred financing costs | 2027 - 2054 | ( | ( | |||||||||||||||||
| Total long-term debt | $ | $ | ||||||||||||||||||
Interest expense on outstanding borrowings, including amortization of debt issuance costs and debt discounts and premiums, and the global liquidity structures is recognized in interest expense, net in the consolidated statements of income. During the three and six months ended October 24, 2025, there was $222 million and $439 million, respectively, of interest expense on outstanding borrowings, including amortization of debt issuance costs and debt discounts and premiums, and the global liquidity structures. During the three and six months ended October 25, 2024, there was $252 million and $469 million, respectively, of interest expense on outstanding borrowings, including amortization of debt issuance costs and debt discounts and premiums, and the global liquidity structures.
14
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
Senior Notes
The Company has outstanding unsecured senior obligations, described as senior notes in the tables above (collectively, the Senior Notes). The Senior Notes rank equally with all other unsecured and unsubordinated indebtedness of the Company. The Company is in compliance with all covenants related to the Senior Notes.
On September 29, 2025, Medtronic Inc. issued two tranches of Euro-denominated Senior Notes with an aggregate principal of €1.5 billion, with maturities in fiscal year 2031 and 2046, resulting in cash proceeds of approximately $1.7 billion, net of discounts and issuance costs.
In June 2024, Medtronic Inc. issued four tranches of Euro-denominated Senior Notes with an aggregate principal of €3.0 billion, with maturities ranging from fiscal year 2030 to 2054, resulting in cash proceeds of approximately $3.2 billion, net of discounts and issuance costs. In anticipation of the Euro-denominated debt issuance, the Company entered into forward currency exchange rate contracts to manage the exposure to exchange rate movements. These contracts were settled in conjunction with the issuance of the June 2024 Notes.
The Euro-denominated debt issued in September 2025 and June 2024 is designated as a net investment hedge of certain of the Company's European operations. Refer to Note 8 for additional information regarding net investment hedges.
Financial Instruments Not Measured at Fair Value
At October 24, 2025, the estimated fair value of the Company’s Senior Notes was $25.7 billion compared to a principal value of $27.8 billion. At April 25, 2025, the estimated fair value of the Company's Senior Notes was $26.2 billion compared to a principal value of $28.6 billion. The fair value was estimated using quoted market prices for the publicly registered Senior Notes, which are classified as Level 2 within the fair value hierarchy. The fair values and principal values consider the terms of the related debt and exclude the impacts of debt discounts and hedging activity.
8. Derivatives and Currency Exchange Risk Management
The Company uses derivative instruments and foreign currency denominated debt to manage the impact that currency exchange rate and interest rate changes have on reported financial statements. The Company does not enter into derivative contracts for speculative purposes.
Cash Flow Hedges
The Company uses foreign currency forward and option contracts designated as cash flow hedges to manage its exposure to the variability of future cash flows that are denominated in a foreign currency.
At inception, foreign currency forward and option contracts are designated as cash flow hedges. Changes in the fair value of these derivatives are reported as a component of accumulated other comprehensive loss until the hedged transaction affects earnings. When the hedged transaction affects earnings, the gain or loss on the derivative is reclassified to earnings. Amounts excluded from the measurement of hedge effectiveness are recognized in earnings on a straight-line basis over the term of the hedge. Cash flows are reported as operating activities in the consolidated statements of cash flows.
The Company's cash flow hedges will mature within the subsequent two-year period. At October 24, 2025 and April 25, 2025, the Company had $108 million and $149 million in after-tax unrealized losses, respectively, associated with cash flow hedging instruments recorded in accumulated other comprehensive loss. The Company expects that $73 million of after-tax net unrealized losses at October 24, 2025 will be recognized in the consolidated statements of income over the next 12 months.
Net Investment Hedges
The Company uses derivative instruments and foreign currency denominated debt to manage foreign currency risk associated with its net investment in foreign operations. The derivative instruments that the Company uses for this purpose may include foreign currency forward exchange contracts used on a standalone basis or in combination with option collars and standalone cross currency interest rate contracts.
For instruments that are designated as net investment hedges, the gains or losses are reported as a component of accumulated other comprehensive loss. The gains or losses are reclassified into earnings upon a liquidation event or deconsolidation of the foreign subsidiary. Amounts excluded from the assessment of effectiveness are recognized in interest expense, net on a straight-line basis over the term of the hedge. During the three and six months ended October 24, 2025, the Company recognized $40 million and $85 million, respectively, of after-tax unrealized gains representing excluded components in interest expense, net. During the three and six months ended October 25, 2024, the Company recognized $47 million and $98 million, respectively, of after-tax unrealized gains representing excluded components in interest expense, net. The cash flows related to the Company's derivative instruments designated as net investment hedges are reported as investing activities in the consolidated statements of cash flows. Cash flows attributable to amounts excluded from the assessment of effectiveness are reported as operating activities in the consolidated statements of cash flows.
15
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
Fair Value Hedges
In fiscal year 2025, the Company began using foreign currency forward contracts designated as fair value hedges to manage its exposure to changes in the fair value of a fixed-rate debt obligation. The contracts matured during the first quarter of fiscal year 2026.
At inception, foreign currency forward contracts are designated as fair value hedges. Changes in the fair value of these derivatives are reported as a component of other operating expense (income), net. Amounts excluded from the assessment of effectiveness are recognized in interest expense, net on a straight-line basis over the term of the hedge and were not significant for the six months ended October 24, 2025 and the three and six months ended October 25, 2024. Cash flows related to the Company's derivative instruments designated as fair value hedges are reported as financing activities in the consolidated statements of cash flows. Cash flows attributed to amounts excluded from the assessment of effectiveness are reported as operating activities in the consolidated statements of cash flows.
Undesignated Derivatives
The Company uses foreign currency forward exchange contracts to offset the Company’s exposure to the change in the value of non-functional currency denominated assets, liabilities, and cash flows.
These foreign currency forward exchange rate contracts are not designated as hedges at inception, and therefore, changes in the fair value of these contracts are recognized in the consolidated statements of income. Cash flows related to the Company’s undesignated derivative contracts are reported in the consolidated statements of cash flows based on the nature of the derivative instrument.
Outstanding Instruments
The following table presents the contractual amounts of the Company's outstanding instruments:
| As of | |||||||||||||||||
| (in billions) | Designation | October 24, 2025 | April 25, 2025 | ||||||||||||||
| Currency exchange rate contracts | Cash flow hedge | $ | $ | ||||||||||||||
Currency exchange rate contracts(1) | Net investment hedge | ||||||||||||||||
Foreign currency-denominated debt(2) | Net investment hedge | ||||||||||||||||
| Currency exchange rate contracts | Fair value hedge | ||||||||||||||||
| Currency exchange rate contracts | Undesignated | ||||||||||||||||
(1)At October 24, 2025, includes derivative contracts with a notional value of €4.0 billion, or $4.6 billion, designated as hedges of a portion of our net investment in certain European operations and derivative contracts with a notional value of ¥286 billion, or $1.9 billion, designated as hedges of a portion of our net investment in certain Japanese operations. These derivative contracts mature in fiscal years 2027 through 2033.
(2)At October 24, 2025, includes €18.0 billion, or $20.9 billion, of outstanding Euro-denominated debt designated as hedges of a portion of our net investment in foreign operations. This debt matures in fiscal years 2027 through 2054.
16
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
Gains and Losses on Hedging Instruments and Derivatives not Designated as Hedging Instruments
The amount of the gains and losses on hedging instruments and the classification of those gains and losses within our consolidated financial statements for the three and six months ended October 24, 2025 and October 25, 2024 were as follows:
| (Gain) Loss Recognized in Accumulated Other Comprehensive Loss | (Gain) Loss Reclassified into Income | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended | Six months ended | Three months ended | Six months ended | Location of (Gain) Loss in Income Statement | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | |||||||||||||||||||||||||||||||||||||||||||||
| Cash flow hedges | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency exchange rate contracts | $ | ( | $ | $ | ( | $ | $ | $ | ( | $ | $ | ( | Other operating expense (income), net | ||||||||||||||||||||||||||||||||||||||||
| Currency exchange rate contracts | ( | ( | ( | ( | ( | Cost of products sold | |||||||||||||||||||||||||||||||||||||||||||||||
| Net investment hedges | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency-denominated debt | ( | ( | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency exchange rate contracts | ( | ( | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value hedges | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency exchange rate contracts | ( | Other operating expense (income), net | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||
The amount of the gains and losses on our derivative instruments not designated as hedging instruments and the classification of those gains and losses within our consolidated financial statements during the three and six months ended October 24, 2025 and October 25, 2024 were as follows:
| (Gain) Loss Recognized in Income | |||||||||||||||||||||||||||||
| Three months ended | Six months ended | Location of (Gain) Loss in Income Statement | |||||||||||||||||||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | |||||||||||||||||||||||||
| Currency exchange rate contracts | $ | $ | ( | $ | $ | ( | Other operating expense (income), net | ||||||||||||||||||||||
Balance Sheet Presentation
The following table summarizes the balance sheet classification and fair value of derivative instruments included in the consolidated balance sheets at October 24, 2025 and April 25, 2025. The fair value amounts of qualified hedging instruments are presented on a gross basis and segregated between designated and not designated as hedging instruments. These hedging instruments are segregated by type of contract.
| Fair Value - Assets | Fair Value - Liabilities | ||||||||||||||||||||||||||||||||||
| (in millions) | October 24, 2025 | April 25, 2025 | Balance Sheet Classification | October 24, 2025 | April 25, 2025 | Balance Sheet Classification | |||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments | |||||||||||||||||||||||||||||||||||
| Currency exchange rate contracts | $ | $ | Other current assets | $ | $ | Other accrued expenses | |||||||||||||||||||||||||||||
| Currency exchange rate contracts | Other assets | Other liabilities | |||||||||||||||||||||||||||||||||
| Total derivatives designated as hedging instruments | |||||||||||||||||||||||||||||||||||
| Derivatives not designated as hedging instruments | |||||||||||||||||||||||||||||||||||
| Currency exchange rate contracts | Other current assets | Other accrued expenses | |||||||||||||||||||||||||||||||||
| Total return swaps | Other current assets | Other accrued expenses | |||||||||||||||||||||||||||||||||
| Total derivatives not designated as hedging instruments | |||||||||||||||||||||||||||||||||||
| Total derivatives | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
17
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
The following table provides information by level for the derivative assets and liabilities that are measured at fair value on a recurring basis.
| October 24, 2025 | April 25, 2025 | ||||||||||||||||||||||
| (in millions) | Derivative Assets | Derivative Liabilities | Derivative Assets | Derivative Liabilities | |||||||||||||||||||
| Level 1 | $ | $ | $ | $ | |||||||||||||||||||
| Level 2 | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
The Company has elected to present the fair value of derivative assets and liabilities within the consolidated balance sheets on a gross basis, even when derivative transactions are subject to master netting arrangements and may otherwise qualify for net presentation. The cash flows related to collateral posted and received are reported gross as investing and financing activities, respectively, in the consolidated statements of cash flows.
The following tables provide information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria as stipulated by the terms of the master netting arrangements with each of the counterparties. Derivatives not subject to master netting arrangements are not eligible for net presentation.
| October 24, 2025 | ||||||||||||||||||||||||||
| Gross Amount Not Offset on the Balance Sheet | ||||||||||||||||||||||||||
| (in millions) | Gross Amount of Recognized Assets (Liabilities) | Financial Instruments | Cash Collateral Posted | Net Amount | ||||||||||||||||||||||
| Derivative assets: | ||||||||||||||||||||||||||
| Currency exchange rate contracts | $ | $ | ( | $ | $ | |||||||||||||||||||||
| Total return swaps | ||||||||||||||||||||||||||
| ( | ||||||||||||||||||||||||||
| Derivative liabilities: | ||||||||||||||||||||||||||
| Currency exchange rate contracts | ( | ( | ||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| April 25, 2025 | ||||||||||||||||||||||||||
| Gross Amount Not Offset on the Balance Sheet | ||||||||||||||||||||||||||
| (in millions) | Gross Amount of Recognized Assets (Liabilities) | Financial Instruments | Cash Collateral Posted | Net Amount | ||||||||||||||||||||||
| Derivative assets: | ||||||||||||||||||||||||||
| Currency exchange rate contracts | $ | $ | ( | $ | $ | |||||||||||||||||||||
| Derivative liabilities: | ||||||||||||||||||||||||||
| Currency exchange rate contracts | ( | ( | ||||||||||||||||||||||||
| Total return swaps | ( | ( | ||||||||||||||||||||||||
| ( | ( | |||||||||||||||||||||||||
| Total | $ | ( | $ | $ | $ | |||||||||||||||||||||
18
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
9. Inventories
Inventory balances were as follows:
| (in millions) | October 24, 2025 | April 25, 2025 | |||||||||
| Finished goods | $ | $ | |||||||||
| Work-in-process | |||||||||||
| Raw materials | |||||||||||
| Total | $ | $ | |||||||||
10. Goodwill and Other Intangible Assets
Goodwill
The following table presents the changes in the carrying amount of goodwill by segment:
| (in millions) | Cardiovascular | Neuroscience | Medical Surgical | Diabetes | Total | ||||||||||||||||||||||||
| April 25, 2025 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Currency translation and other | |||||||||||||||||||||||||||||
| October 24, 2025 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Intangible Assets
The following table presents the gross carrying amount and accumulated amortization of intangible assets:
| October 24, 2025 | April 25, 2025 | ||||||||||||||||||||||
| (in millions) | Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | |||||||||||||||||||
| Definite-lived: | |||||||||||||||||||||||
| Customer-related | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Purchased technology and patents | ( | ( | |||||||||||||||||||||
| Trademarks and tradenames | ( | ( | |||||||||||||||||||||
| Other | ( | ( | |||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Indefinite-lived: | |||||||||||||||||||||||
| IPR&D | $ | $ | — | $ | $ | — | |||||||||||||||||
The Company did not
19
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
Amortization Expense
Intangible asset amortization expense for the three and six months ended October 24, 2025 was $463 million and $922 million, respectively, including $46 million and $91 million, respectively, of accelerated amortization on certain intangible assets within the Cardiovascular Portfolio. Intangible asset amortization expense for the three and six months ended October 25, 2024 was $413 million and $827 million, respectively. Estimated aggregate amortization expense by fiscal year based on the carrying value of definite-lived intangible assets at October 24, 2025, excluding any possible future amortization associated with acquired IPR&D which has not yet met technological feasibility, is as follows:
| (in millions) | Amortization Expense | ||||
| Remaining 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| 2031 | |||||
11. Income Taxes
On July 4, 2025, the U.S. Government enacted The One Big Beautiful Bill Act of 2025 which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Certain provisions are effective for the Company beginning fiscal year 2026 and the impact for the three and six months ended October 24, 2025 was not significant.
The Organization for Economic Co-operation and Development (OECD) published Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large multinational corporations at a minimum rate of 15% in each jurisdiction in which the group operates. The OECD has since issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax. A number of countries, including Ireland, have enacted legislation to implement the core elements of Pillar Two, which were effective for Medtronic in fiscal year 2025.
The Company's effective tax rate for the three and six months ended October 24, 2025 was 13.5 % and 16.2 %, respectively, as compared to 18.0 % and 17.7 % for the three and six months ended October 25, 2024, respectively. The decrease in the effective tax rate for the three and six months ended October 24, 2025 primarily relates to a tax benefit recognized during the three months ended October 24, 2025 related to a change in estimate of accrued interest on uncertain tax positions partially offset by an increase in the Pillar Two global minimum tax impact and year-over-year changes in operational results by jurisdiction.
At both October 24, 2025 and April 25, 2025, the Company's gross unrecognized tax benefits were $2.9 79 million in income tax provision in the consolidated statements of income. For the six months ended October 25, 2024, the gross interest expense recognized in the income tax provision in the consolidated income statements of income was not significant. The Company had a net receivable of $50 million at October 24, 2025 and a net payable of $74 million at April 25, 2025 for accrued interest and penalties. If all of the Company’s unrecognized tax benefits were recognized, approximately $2.7 billion would impact the Company’s effective tax rate. At October 24, 2025 and April 25, 2025, the amount of the Company's gross unrecognized tax benefits, net of cash advance, recorded as a noncurrent liability within accrued income taxes on the consolidated balance sheets was $2.0 billion and $1.9 billion, respectively. The Company recognizes interest and penalties related to income tax matters within income tax provision in the consolidated statements of income and records the liability within either current or noncurrent accrued income taxes on the consolidated balance sheets.
Refer to Note 16 to the consolidated financial statements for additional information regarding the status of current tax audits and proceedings.
12. Earnings Per Share
Basic earnings per share is computed based on the weighted average number of ordinary shares outstanding. Diluted earnings per share is computed based on the weighted number of ordinary shares outstanding, increased by the number of additional shares that would have been outstanding had the potentially dilutive ordinary shares been issued, and reduced by the number of shares the Company could have repurchased with the proceeds from issuance of the potentially dilutive shares. Potentially dilutive ordinary shares include stock-based awards granted under stock-based compensation plans and shares committed to be purchased under the employee stock purchase plan.
20
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
The table below sets forth the computation of basic and diluted earnings per share:
| Three months ended | Six months ended | ||||||||||||||||||||||
| (in millions, except per share data) | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | |||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income attributable to ordinary shareholders | $ | $ | $ | $ | |||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Basic – weighted average shares outstanding | |||||||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||
| Employee stock options | |||||||||||||||||||||||
| Employee restricted stock units | |||||||||||||||||||||||
| Employee performance share units | |||||||||||||||||||||||
| Diluted – weighted average shares outstanding | |||||||||||||||||||||||
| Basic earnings per share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted earnings per share | $ | $ | $ | $ | |||||||||||||||||||
The calculation of weighted average diluted shares outstanding excludes stock awards of approximately 17 million and 20 million ordinary shares for the three and six months ended October 24, 2025, respectively, and 28 million and 27 million ordinary shares for the three and six months ended October 25, 2024, respectively, because their effect would have been anti-dilutive on the Company’s earnings per share.
13. Stock-Based Compensation
The following table presents the components and classification of stock-based compensation expense for stock options, restricted stock, performance share units, and employee stock purchase plan shares recognized for the three and six months ended October 24, 2025 and October 25, 2024:
| Three months ended | Six months ended | ||||||||||||||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | |||||||||||||||||||
| Stock options | $ | $ | $ | $ | |||||||||||||||||||
| Restricted stock | |||||||||||||||||||||||
| Performance share units | |||||||||||||||||||||||
| Employee stock purchase plan | |||||||||||||||||||||||
| Total stock-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
| Cost of products sold | $ | $ | $ | $ | |||||||||||||||||||
| Research and development expense | |||||||||||||||||||||||
| Selling, general, and administrative expense | |||||||||||||||||||||||
| Total stock-based compensation expense | |||||||||||||||||||||||
| Income tax benefits | ( | ( | ( | ( | |||||||||||||||||||
| Total stock-based compensation expense, net of tax | $ | $ | $ | $ | |||||||||||||||||||
21
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
14. Retirement Benefit Plans
The Company sponsors various retirement benefit plans, including defined benefit pension plans, post-retirement medical plans, defined contribution savings plans, and termination indemnity plans, covering substantially all U.S. employees and many employees outside the U.S. The net periodic benefit cost of the defined benefit pension plans included the following components for the three and six months ended October 24, 2025 and October 25, 2024:
| U.S. | Non-U.S. | U.S. | Non-U.S. | ||||||||||||||||||||||||||||||||||||||||||||
| Three months ended | Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | |||||||||||||||||||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Interest cost | |||||||||||||||||||||||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Amortization of prior service cost | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Amortization of net actuarial loss | |||||||||||||||||||||||||||||||||||||||||||||||
| Net periodic benefit (credit) cost | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||
Components of net periodic benefit (credit) cost other than the service component are recognized in other non-operating income, net in the consolidated statements of income.
15. Accumulated Other Comprehensive Loss
The following table provides changes in accumulated other comprehensive loss (AOCI), net of tax, and by component:
| (in millions) | Unrealized (Loss) Gain on Investment Securities | Cumulative Translation Adjustments | Net Investment Hedges | Net Change in Retirement Obligations | Unrealized (Loss) Gain on Cash Flow Hedges | Total Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||||||
| April 25, 2025 | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Reclassifications | |||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | ( | ||||||||||||||||||||||||||||||||||
| October 24, 2025 | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||
| (in millions) | Unrealized (Loss) Gain on Investment Securities | Cumulative Translation Adjustments | Net Investment Hedges | Net Change in Retirement Obligations | Unrealized Gain (Loss) on Cash Flow Hedges | Total Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||||||
| April 26, 2024 | $ | ( | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Reclassifications | ( | ( | |||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||||||||||||||
| October 25, 2024 | $ | ( | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||
The income tax on gains and losses on investment securities in other comprehensive income (loss) before reclassifications during the six months ended October 24, 2025 and October 25, 2024 was an expense of $14 million and $19 million, respectively. During the six months ended October 24, 2025 and October 25, 2024, realized gains and losses on investment securities reclassified from AOCI were reduced by income taxes of $1 million and $2 million, respectively. When realized, gains and losses on investment securities reclassified from AOCI are recognized within other non-operating income, net. Refer to Note 6 to the consolidated financial statements for additional information.
For the six months ended October 24, 2025 and October 25, 2024, there was no
The income tax on net investment hedges in other comprehensive income (loss) before reclassifications during the six months ended October 24, 2025 and October 25, 2024, was a benefit of $8 million and $1 million, respectively. Refer to Note 8 to the consolidated financial statements for additional information.
22
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
The net change in retirement obligations in other comprehensive income (loss) includes amortization of net actuarial losses included in net periodic benefit cost. During the six months ended October 24, 2025, the tax impact on retirement obligations in other comprehensive income (loss) before reclassifications was not significant. During the six months ended October 25, 2024, there were no tax impacts on retirement obligations in other comprehensive income (loss) before reclassifications. During the six months ended October 24, 2025 and October 25, 2024, the gains and losses on defined benefit and pension items reclassified from AOCI were reduced by income taxes of $1
The income tax on unrealized gains and losses on cash flow hedges in other comprehensive income (loss) before reclassifications during the six months ended October 24, 2025 and October 25, 2024, was an expense of $31 million and a benefit of $5 million, respectively. During the six months ended October 24, 2025 and October 25, 2024, gains and losses on cash flow hedges reclassified from AOCI were reduced by income taxes of $8 million and $22 million, respectively. When realized, gains and losses on currency exchange rate contracts reclassified from AOCI are recognized within other operating expense (income), net or cost of products sold. Refer to Note 8 to the consolidated financial statements for additional information.
16. Commitments and Contingencies
Legal Matters
The Company and its affiliates are involved in a number of legal actions from time to time involving product liability, employment, intellectual property and commercial disputes, shareholder-related matters, environmental proceedings, tax disputes, and governmental proceedings and investigations, including those described below. With respect to governmental proceedings and investigations, like other companies in our industry, the Company is subject to extensive regulation by national, state, and local governmental agencies in the United States and in other jurisdictions in which the Company and its affiliates operate. As a result, interaction with governmental agencies is ongoing. The Company’s standard practice is to cooperate with regulators and investigators in responding to inquiries. With respect to intellectual property disputes, the Company is involved in litigation relating to patents, trademarks, copyrights, trade secrets, and other intellectual property (IP) rights, and licenses, acquisitions or other agreements relating to such rights. This litigation includes, but is not limited to, alleged infringement or misappropriation of IP rights, or breach of obligations related to IP rights, or other claims asserted by competitors, individuals, or, consistent with a growing trend across technology-intensive industries, other entities created specifically to fund IP litigation. With respect to commercial disputes, antitrust and competition issues have gained increased prominence, enforcement and private litigation have increased globally, and the Company is involved in or at risk for antitrust litigation, investigations or enforcement actions regarding a range of commercial activities, including challenges to mergers and acquisition transactions, joint ventures, co-development or co-marketing arrangements, contracting practices, distribution agreements and employment agreements. The outcomes of legal actions are not within the Company’s complete control and may not be known for prolonged periods of time. In some actions, the enforcement agencies or private claimants seek significant monetary damages and/or royalty payments, as well as other civil or criminal remedies (including injunctions barring or restricting the sale of products that are the subject of the proceeding, placing restrictions on competitive strategies or practices, or unwinding consummated transactions), any or all of which could have a material adverse impact on the Company’s consolidated earnings, financial position, and/or cash flows.
The Company records a liability in the consolidated financial statements on an undiscounted basis for loss contingencies related to legal actions when a loss is known or considered probable and the amount may be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible but not known or probable, and may be reasonably estimated, the estimated loss or range of loss is disclosed. When determining the estimated loss or range of loss, significant judgment is required. Estimates of probable losses resulting from litigation and governmental proceedings involving the Company are inherently difficult to predict, particularly when the matters are in early procedural stages with incomplete scientific facts or legal discovery, involve unsubstantiated or indeterminate claims for damages, potentially involve penalties, fines or punitive damages, or could result in a change in business practice. The Company classifies certain specified litigation charges and gains related to significant legal matters as certain litigation charges, net in the consolidated statements of income. The Company recognized no certain litigation charges during the three months ended October 24, 2025 and October 25, 2024. The Company recognized $27 million and $81 million of certain litigation charges during the six months ended October 24, 2025 and October 25, 2024, respectively. At October 24, 2025 and April 25, 2025, accrued litigation was approximately $0.2 billion and $0.4 billion, respectively. The ultimate cost to the Company with respect to accrued litigation could be materially different than the amount of the current estimates and accruals and could have a material adverse impact on the Company’s consolidated earnings, financial position, and/or cash flows. The Company includes accrued litigation in other accrued expenses and other liabilities on the consolidated balance sheets. While it is not possible to predict the outcome for most of the legal matters discussed below, the Company believes it is possible that the costs associated with these matters could have a material adverse impact on the Company’s consolidated earnings, financial position, and/or cash flows.
23
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
Intellectual Property Matters
Colibri
The Company is a defendant in patent litigation brought by Colibri Heart Valve LLC (Colibri) in the U.S. District Court for the Central District of California. Colibri alleges infringement of one patent by the Company’s Evolut family of transcatheter aortic valve replacement devices. The patent asserted by Colibri has expired. On February 8, 2023, a jury returned a verdict against the Company for approximately $106 million. In July 2023, the Company filed its appeal with the U.S. Court of Appeals for the Federal Circuit. On July 18, 2025, the U.S. Court of Appeals for the Federal Circuit ruled in favor of the Company and reversed the lower court, vacating the jury verdict and ruling that Medtronic did not infringe the Colibri patent. The Company will continue to monitor the case until all additional appellate periods have expired.
Product Liability Matters
Hernia Mesh Litigation
Starting in fiscal year 2020, plaintiffs began filing lawsuits against certain subsidiaries of the Company in U.S. state and federal courts that allege personal injury from hernia mesh products sold by those subsidiaries. As of October 22, 2025, the Company and certain of its subsidiaries have been named as defendants in lawsuits filed on behalf of approximately 10,000 individual plaintiffs, and certain plaintiffs’ law firms have advised the Company that they may file additional cases in the future. Approximately 7,400 plaintiffs have pending lawsuits in a coordinated proceeding in Massachusetts state court, where they have been consolidated before a single judge. Approximately 500 plaintiffs have pending lawsuits in a coordinated action in Minnesota state court, and there are approximately 2,100 actions coordinated in a federal Multidistrict Litigation in the U.S. District Court for the District of Massachusetts plus fewer than ten one-off cases filed in other courts. The pending lawsuits relate almost entirely to hernia mesh products that have not been subject to recalls, withdrawals, or other adverse regulatory action. The Company has not recorded an expense related to damages in connection with these matters because any potential loss is not currently probable and reasonably estimable. Additionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from these matters.
Diabetes Pump Retainer Ring Litigation
Starting in fiscal year 2021, plaintiffs began filing lawsuits against the Diabetes operating unit in U.S. state and federal courts alleging personal injury from Series 600 insulin pumps with allegedly defective clear retainer rings that were subject to field corrective actions in 2019 and 2021. As of October 31, 2025, after a number of recent dismissals, there are seven lawsuits filed on behalf of 14 individuals. Plaintiffs’ firms previously notified the Company that they may file additional lawsuits in the future on behalf of several thousand additional claimants. Most of the filed suits are coordinated in California state court. The Company recognized certain litigation charges in the first quarter of fiscal year 2026 in connection with certain of these matters, and the Company's accrued expenses for these matters are included within accrued litigation as of October 24, 2025 as discussed above.
Antitrust Matters
Applied Medical
The Company is a defendant in civil antitrust litigation brought by Applied Medical Resources Corporation in the U.S. District Court for the Central District of California, alleging that the Company has engaged in anticompetitive and monopolistic conduct relating to its sales of advanced bipolar devices, including under contracts with group purchasing organizations. On August 15, 2025, the court denied the Company's motion for summary judgment concluding that there are disputed factual issues to be resolved at trial. Trial is set to begin on or shortly after January 20, 2026. The Company has not recorded an expense related to damages in connection with this matter because any potential loss is not currently probable and reasonably estimable. Additionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from this matter.
Environmental Proceedings
The Company is a successor to several investigation and cleanup actions at various stages related to environmental remediation matters at a number of sites, including in Orrington, Maine. These projects relate to a variety of activities, including removal of solvents, metals and other hazardous substances from soil and groundwater. The ultimate cost of site cleanup and timing of future cash flows is difficult to predict given uncertainties regarding the extent of the required cleanup, the interpretation of applicable laws and regulations, and alternative cleanup methods.
24
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
The Company is also a successor to a party named in a lawsuit filed in the U.S. District Court for the District of Maine in the early 2000's by the Natural Resources Defense Council and the Maine People's Alliance relating to mercury contamination of the Penobscot River and Bay and options for remediating such contamination. In October 2022, the court issued a final order approving the settlement and the parties are working with consultants on implementation of remedial activities. The final court order did not result in a change to the Company's previous accrual for this matter.
The Company's accrued expenses for these various environmental proceedings are included within accrued litigation as discussed above.
Anti-Corruption Matters
The Company has regular and ongoing interactions with governmental agencies, and its practice is to cooperate with such inquiries. In addition, from time to time, the Company self-discloses potential concerns to governmental regulators. Like many in the medical device industry or with international operations, the Company engages in periodic discussions with the U.S. Securities and Exchange Commission, U.S. Department of Justice, and various authorities in other countries regarding certain activities in different global markets. The Company is committed to regularly evaluating and, as appropriate, strengthening its anti-corruption compliance programs and practices. Any possible future determination that certain of our operations and activities, and/or those of our third-party distributors, are not in compliance with existing laws could result in the imposition of fines, penalties, and equitable remedies in the United States or in other jurisdictions. The Company has not recorded an expense in connection with these matters because any potential loss is not currently probable and reasonably estimable. Additionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from these matters.
Other Matters
Italian Payback
In 2015, “payback” legislation was enacted in Italy requiring companies selling medical devices to make payments to the Italian state if Italy’s medical device expenditures exceed annual regional maximum ceilings. The payment amounts are calculated based upon the amount by which the regional ceilings were exceeded for any given year. There has been significant scrutiny on the legality and enforceability of the payback law since its inception, and litigation challenging the law has been proceeding through the Italian Courts. Since the law was enacted, the Company has recognized an estimate for the amount of variable consideration.
In July 2024, two rulings by the Constitutional Court of Italy found that the medical device payback law is constitutional. Therefore, the Company increased its liability pertaining to certain prior years since 2015 by $90 million during the six months ended October 25, 2024, as a reduction to net sales in the consolidated statements of income.
In June 2025, the Italian government published a legislative decree confirming a reduction of the amounts due for years 2015 to 2018. The decree was formalized into law in August 2025. As a result, the Company decreased its liability pertaining to these years by $39 million during the six months ended October 24, 2025, as an increase to net sales in the consolidated statements of income. Discussions are ongoing between the Italian government and industry groups related to the applicability of this legislation for years 2019 and beyond, as such, it is possible that the amount of the Company’s liability could materially differ from the amount currently accrued.
Contract Termination with Blackstone
As described in Note 4, the Company is party to various research and development funding arrangements with Blackstone, which are subject to certain termination provisions. During fiscal year 2025, the parties negotiated a contractual dispute resolution under one of the funding arrangements. As a result, the Company recognized certain litigation charges in connection with the resolution and included the accrued litigation charge in other accrued expenses on the consolidated balance sheets as of April 25, 2025. Termination charges related to one of the Blackstone Agreements were paid in the first quarter of fiscal year 2026.
Mallinckrodt Bankruptcy Litigation
Certain of the Company’s affiliates are defendants in a lawsuit brought by a trust created in the bankruptcy of Mallinckrodt PLC (the “Trust”) in Delaware bankruptcy court. The Trust claims that Covidien spun off its pharmaceuticals business, Mallinckrodt, in 2013 to avoid potential liability relating to opioids. In January 2024, the Delaware bankruptcy court granted in part and denied in part an early-stage motion to dismiss all claims, finding that the claims alleging actual fraudulent transfer and alter ego or related liability could go forward, while dismissing the claims alleging constructive fraudulent transfer and breaches of fiduciary duty. In August 2025, the court granted in part and denied in part a motion for summary judgment filed by the Company’s affiliates arguing the Trust’s claims should be dismissed as a matter of law based on application of a safe harbor provision of the bankruptcy code. The case will now proceed to discovery into the merits of the Trust’s intentional fraudulent transfer and related claims. The Company’s affiliates believe they have substantial legal and factual defenses and intend to defend themselves vigorously. The Company has not recorded a liability in connection with this matter because any potential loss is not currently probable and reasonably estimable. Additionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from this matter.
25
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
Income Taxes
In March 2009, the IRS issued its audit report on Medtronic, Inc. for fiscal years 2005 and 2006. Medtronic, Inc. reached agreement with the IRS on some, but not all matters related to these fiscal years. The remaining unresolved issue for fiscal years 2005 and 2006 relates to the allocation of income between Medtronic, Inc. and its wholly-owned subsidiary operating in Puerto Rico, which is one of the Company's key manufacturing sites. The Tax Court reviewed this dispute, and in June 2016, issued an opinion with respect to the allocation of income between the parties for fiscal years 2005 and 2006 whereby it generally rejected the IRS’s position, but also made certain modifications to the Medtronic, Inc. tax returns as filed. In April 2017, the IRS filed a Notice of Appeal to the U.S. Court of Appeals for the Eighth Circuit regarding the Tax Court opinion. The U.S. Court of Appeals issued its opinion in August 2018 and remanded the case back to the Tax Court for additional factual findings. The Tax Court issued its second opinion in August 2022, the IRS filed a Notice of Appeal to the U.S. Court of Appeals for the Eighth Circuit in September 2023, and Medtronic subsequently filed a cross-appeal in October 2023. In September 2025, the Appellate Court remanded the case back to the Tax Court for additional proceedings.
The IRS has issued its audit reports on Medtronic, Inc. for fiscal years 2007 through 2016. Medtronic, Inc. and the IRS have reached agreement on all significant issues except for the allocation of income between Medtronic, Inc. and its wholly-owned subsidiary operating in Puerto Rico for the businesses that are the subject of the U.S. Tax Court matter for fiscal years 2005 and 2006.
Medtronic, Inc.’s fiscal years 2017 through 2023 U.S. federal income tax returns are currently being audited by the IRS.
Covidien LP (a wholly owned subsidiary of Medtronic plc) has either reached agreement with the IRS or the statute of limitations has lapsed on its U.S. federal income tax returns through fiscal year 2021. Covidien LP’s fiscal year 2023 federal income tax return is currently being audited by the IRS.
Although it is not possible to predict the outcome for most of the income tax matters discussed above, the Company believes it is possible that charges associated with these matters could have a material adverse impact on the Company’s consolidated earnings, financial position, and/or cash flows.
Refer to Note 11 for additional discussion of income taxes.
Guarantees
In the normal course of business, the Company and/or its affiliates periodically enter into agreements that require one or more of the Company and/or its affiliates to indemnify customers or suppliers for specific risks, such as claims for injury or property damage arising as a result of the Company or its affiliates’ products, the negligence of the Company's personnel, or claims alleging that the Company's products infringe on third-party patents or other intellectual property. The Company also offers warranties on various products. The Company’s maximum exposure under these guarantees is unable to be estimated. Historically, the Company has not experienced significant losses on these types of guarantees.
We also enter into standby letters of credit agreements, bank guarantees, and surety bonds with financial institutions to support various performance and other obligations, as well as ongoing tax matters. As of October 24, 2025, the aggregated amount outstanding under these instruments was approximately $1.3 billion.
The Company believes the ultimate resolution of the above guarantees is not expected to have a material effect on the Company’s consolidated earnings, financial position, and/or cash flows.
17. Segment and Geographic Information
The Company has four reportable segments: Cardiovascular Portfolio, Neuroscience Portfolio, Medical Surgical Portfolio, and Diabetes Operating Unit. The chief operating decision maker (CODM) is our Chief Executive Officer (CEO) and has chosen to organize the entity based upon therapy solutions provided by each segment. The four reportable segments are strategic businesses that are managed separately, as each one develops and manufactures products and provides services oriented toward targeted therapy solutions.
The CODM measures and evaluates segment performance and allocates resources based on net sales and segment operating profit. Net sales include end-customer revenues from products developed, manufactured, and distributed by the segments. Significant expense categories include cost of products sold excluding amortization of intangible assets, research and development expense, and selling, general, and administrative expenses. The CODM uses segment operating profit in the budget and forecasting process and to monitor budget and forecast variances versus actual when assessing segment performance and allocating capital resources to each segment.
26
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
Segment operating profit excludes interest income and expense, amortization of intangible assets, currency impact of remeasurement and hedging recorded in other operating expense (income), net, non-operating income or expense items, and other items not allocated to the segments. During the first quarter of fiscal year 2026, the segment operating profit utilized by the CODM to evaluate segment performance and allocate resources changed to include allocations of certain corporate expenses, stock-based compensation, and centralized distribution expenses. For the three and six months ended October 25, 2024, segment operating profit includes allocations of $1.0 billion and $1.9 billion, respectively, of corporate, stock-based compensation and centralized distribution expenses that were previously excluded from segment operating profit. Prior period information has been recast to conform to the current classification.
The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in Note 1 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended April 25, 2025. Certain depreciable assets may be recorded by one segment, while the depreciation expense is allocated to another segment. The allocation of depreciation expense is based on the proportion of the assets used by each segment.
The following tables present reconciliations of financial information from the segments to the applicable line items in the Company's consolidated financial statements:
Segment Operating Profit
Three months ended October 24, 2025 | |||||||||||||||||||||||||||||
| (in millions) | Cardiovascular | Neuroscience | Medical Surgical | Diabetes | Total | ||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Reconciliation of revenues | |||||||||||||||||||||||||||||
Other operating segment net sales(1) | |||||||||||||||||||||||||||||
| Total consolidated net sales | $ | ||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Cost of products sold, excluding amortization of intangible assets | |||||||||||||||||||||||||||||
| Research and development expense | |||||||||||||||||||||||||||||
| Selling, general, and administrative expense | |||||||||||||||||||||||||||||
Other segment items(2) | ( | ( | |||||||||||||||||||||||||||
| Reportable segment operating profit | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Reconciliation of segment profit / (loss) | |||||||||||||||||||||||||||||
Other operating segment profit(1) | |||||||||||||||||||||||||||||
| Currency and other | ( | ||||||||||||||||||||||||||||
| Interest expense, net | ( | ||||||||||||||||||||||||||||
| Other non-operating income, net | |||||||||||||||||||||||||||||
| Amortization of intangible assets | ( | ||||||||||||||||||||||||||||
| Restructuring and associated costs | ( | ||||||||||||||||||||||||||||
| Income before income taxes | $ | ||||||||||||||||||||||||||||
27
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
Three months ended October 25, 2024 | |||||||||||||||||||||||||||||
| (in millions) | Cardiovascular | Neuroscience | Medical Surgical | Diabetes | Total | ||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Reconciliation of revenues | |||||||||||||||||||||||||||||
Other operating segment net sales(1) | |||||||||||||||||||||||||||||
| Total consolidated net sales | $ | ||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Cost of products sold, excluding amortization of intangible assets | |||||||||||||||||||||||||||||
| Research and development expense | |||||||||||||||||||||||||||||
| Selling, general, and administrative expense | |||||||||||||||||||||||||||||
Other segment items(2) | ( | ( | ( | ( | |||||||||||||||||||||||||
| Reportable segment operating profit | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Reconciliation of segment profit / (loss) | |||||||||||||||||||||||||||||
Other operating segment profit(1) | |||||||||||||||||||||||||||||
| Currency and other | ( | ||||||||||||||||||||||||||||
| Interest expense, net | ( | ||||||||||||||||||||||||||||
| Other non-operating income, net | |||||||||||||||||||||||||||||
| Amortization of intangible assets | ( | ||||||||||||||||||||||||||||
| Restructuring and associated costs | ( | ||||||||||||||||||||||||||||
| Acquisition and divestiture-related items | |||||||||||||||||||||||||||||
| Medical device regulations | ( | ||||||||||||||||||||||||||||
| Income before income taxes | $ | ||||||||||||||||||||||||||||
(1)Includes the operations and ongoing transition agreements from businesses the Company has exited or divested.
(2)Other segment items for the Cardiovascular, Neuroscience, and Medical Surgical segments include royalty expense. The Cardiovascular segment for both periods and the Diabetes segment for the three months ended October 25, 2024 also include income from funded research and development arrangements.
28
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
| Six months ended October 24, 2025 | |||||||||||||||||||||||||||||
| (in millions) | Cardiovascular | Neuroscience | Medical Surgical | Diabetes | Total | ||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Reconciliation of revenues | |||||||||||||||||||||||||||||
Other operating segment net sales(1) | |||||||||||||||||||||||||||||
Other adjustments(2) | |||||||||||||||||||||||||||||
| Total consolidated net sales | $ | ||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Cost of products sold, excluding amortization of intangible assets | |||||||||||||||||||||||||||||
| Research and development expense | |||||||||||||||||||||||||||||
| Selling, general, and administrative expense | |||||||||||||||||||||||||||||
Other segment items(3) | ( | ( | ( | ||||||||||||||||||||||||||
| Reportable segment operating profit | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Reconciliation of segment profit / (loss) | |||||||||||||||||||||||||||||
Other operating segment profit(1) | |||||||||||||||||||||||||||||
| Currency and other | ( | ||||||||||||||||||||||||||||
| Interest expense, net | ( | ||||||||||||||||||||||||||||
| Other non-operating income, net | |||||||||||||||||||||||||||||
| Amortization of intangible assets | ( | ||||||||||||||||||||||||||||
| Restructuring and associated costs | ( | ||||||||||||||||||||||||||||
| Acquisition and divestiture-related items | ( | ||||||||||||||||||||||||||||
| Certain litigation charges, net | ( | ||||||||||||||||||||||||||||
Other adjustments(2) | |||||||||||||||||||||||||||||
| Income before income taxes | $ | ||||||||||||||||||||||||||||
29
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
| Six months ended October 25, 2024 | |||||||||||||||||||||||||||||
| (in millions) | Cardiovascular | Neuroscience | Medical Surgical | Diabetes | Total | ||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Reconciliation of revenues | |||||||||||||||||||||||||||||
Other operating segment net sales(1) | |||||||||||||||||||||||||||||
Other adjustments(2) | ( | ||||||||||||||||||||||||||||
| Total consolidated net sales | $ | ||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Cost of products sold, excluding amortization of intangible assets | |||||||||||||||||||||||||||||
| Research and development expense | |||||||||||||||||||||||||||||
| Selling, general, and administrative expense | |||||||||||||||||||||||||||||
Other segment items(3) | ( | ( | ( | ||||||||||||||||||||||||||
| Reportable segment operating profit | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Reconciliation of segment profit / (loss) | |||||||||||||||||||||||||||||
Other operating segment profit(1) | |||||||||||||||||||||||||||||
| Currency and other | ( | ||||||||||||||||||||||||||||
| Interest expense, net | ( | ||||||||||||||||||||||||||||
| Other non-operating income, net | |||||||||||||||||||||||||||||
| Amortization of intangible assets | ( | ||||||||||||||||||||||||||||
| Restructuring and associated costs | ( | ||||||||||||||||||||||||||||
| Acquisition and divestiture-related items | |||||||||||||||||||||||||||||
| Certain litigation charges, net | ( | ||||||||||||||||||||||||||||
| Medical device regulations | ( | ||||||||||||||||||||||||||||
Other adjustments(2) | ( | ||||||||||||||||||||||||||||
| Income before income taxes | $ | ||||||||||||||||||||||||||||
(1)Includes the operations and ongoing transition agreements from businesses the Company has exited or divested.
(2)Includes adjustments to the Company's Italian payback accruals resulting from the two July 22, 2024 rulings by the Constitutional Court and the Legislative Decree published by the Italian government on June 30, 2025 for certain prior years since 2015.
(3)Other segment items for the Cardiovascular, Neuroscience, and Medical Surgical segments include royalty expense. The Cardiovascular segment for both periods and the Diabetes segment for the six months ended October 25, 2024 also include income from funded research and development arrangements.
30
Medtronic plc
Notes to Consolidated Financial Statements
(Unaudited)
Total Assets
| (in millions) | October 24, 2025 | April 25, 2025 | |||||||||
| Cardiovascular | $ | $ | |||||||||
| Neuroscience | |||||||||||
| Medical Surgical | |||||||||||
| Diabetes | |||||||||||
| Total reportable segments | |||||||||||
Other operating segment(1) | |||||||||||
| Corporate | |||||||||||
| Total | $ | $ | |||||||||
(1)Includes the operations and ongoing transition agreements from businesses the Company has exited or divested.
Depreciation Expense
| Three months ended | Six months ended | ||||||||||||||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | |||||||||||||||||||
| Cardiovascular | $ | $ | $ | $ | |||||||||||||||||||
| Neuroscience | |||||||||||||||||||||||
| Medical Surgical | |||||||||||||||||||||||
| Diabetes | |||||||||||||||||||||||
| Total reportable segments | |||||||||||||||||||||||
| Corporate | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
Geographic Information
Net sales are attributed to the country based on the location of the customer taking possession of the products or in which the services are rendered. The following table presents net sales for the three and six months ended October 24, 2025 and October 25, 2024 for the Company's country of domicile, countries with significant concentrations, and all other countries:
| Three months ended | Six months ended | ||||||||||||||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | |||||||||||||||||||
| Ireland | $ | $ | $ | $ | |||||||||||||||||||
| United States | |||||||||||||||||||||||
| Rest of world | |||||||||||||||||||||||
| Total other countries, excluding Ireland | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
31
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
UNDERSTANDING OUR FINANCIAL INFORMATION
The following discussion and analysis provides information management believes to be relevant to understanding the financial condition and results of operations of Medtronic plc and its subsidiaries (Medtronic plc, Medtronic, or the Company, or we, us, or our). For a full understanding of financial condition and results of operations, you should read this discussion along with Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended April 25, 2025. In addition, you should read this discussion along with our consolidated financial statements and related notes thereto at and for the three and six months ended October 24, 2025. Amounts reported in millions within this quarterly report are computed based on the amounts in thousands, and therefore, the sum of the components may not equal the total amount reported in millions due to rounding. Additionally, certain columns and rows within tables may not sum due to rounding.
Financial Trends
Throughout this Management’s Discussion and Analysis, we present certain financial measures that facilitate management's review of the operational performance of the Company and as a basis for strategic planning; however, such financial measures are not presented in our financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S.) (U.S. GAAP). These financial measures are considered "non-GAAP financial measures" and are intended to supplement, and should not be considered as superior to, financial measures presented in accordance with U.S. GAAP. We believe that non-GAAP financial measures provide information useful to investors in understanding the Company's underlying operational performance and trends and may facilitate comparisons with the performance of other companies in the medical technologies industry.
As presented in the GAAP to Non-GAAP Reconciliations section on the following pages, our non-GAAP financial measures exclude the impact of amortization of intangible assets and certain charges or benefits that contribute to or reduce earnings and that may affect financial trends and include certain charges or benefits that result from transactions or events that we believe may or may not recur with similar materiality or impact to our operations in future periods (Non-GAAP Adjustments).
In the event there is a Non-GAAP Adjustment recognized in our operating results, the tax cost or benefit attributable to that item is separately calculated and reported. Because the effective rate can be significantly impacted by the Non-GAAP Adjustments that take place during the period, we often refer to our tax rate using both the effective rate and the non-GAAP nominal tax rate (Non-GAAP Nominal Tax Rate). The Non-GAAP Nominal Tax Rate is calculated as the income tax provision, adjusted for the impact of Non-GAAP Adjustments, as a percentage of income before income taxes, excluding Non-GAAP Adjustments.
Free cash flow is a non-GAAP financial measure calculated by subtracting property, plant, and equipment additions from operating cash flows.
Refer to the “GAAP to Non-GAAP Reconciliations," "Income Taxes," and "Free Cash Flow" sections for reconciliations of the non-GAAP financial measures to their most directly comparable financial measures prepared in accordance with U.S. GAAP.
32
EXECUTIVE LEVEL OVERVIEW
Medtronic is the leading global healthcare technology company — alleviating pain, restoring health, and extending life for millions of people around the world. Our primary products include those for cardiac rhythm disorders, cardiovascular disease, neurological disorders and diseases, spinal conditions and musculoskeletal trauma, ear, nose, and throat conditions, urological and digestive disorders, advanced and general surgical care, respiratory and monitoring solutions, and diabetes conditions.
The following is a summary of net sales and diluted earnings per share for the three months ended October 24, 2025 and October 25, 2024 and operating cash flow for the six months ended October 24, 2025 and October 25, 2024:
33
GAAP to Non-GAAP Reconciliations
The tables below present our GAAP to Non-GAAP reconciliations for the three months ended October 24, 2025 and October 25, 2024:
| Three months ended October 24, 2025 | |||||||||||||||||||||||||||||
| (in millions, except per share data) | Income Before Income Taxes | Income Tax Provision (Benefit) | Net Income Attributable to Medtronic | Diluted EPS | Effective Tax Rate | ||||||||||||||||||||||||
| GAAP | $ | 1,597 | $ | 215 | $ | 1,374 | $ | 1.07 | 13.5 | % | |||||||||||||||||||
| Non-GAAP Adjustments: | |||||||||||||||||||||||||||||
Amortization of intangible assets(1) | 463 | 87 | 376 | 0.29 | 18.8 | ||||||||||||||||||||||||
Restructuring and associated costs(2) | 13 | 3 | 9 | 0.01 | 23.1 | ||||||||||||||||||||||||
Acquisition and divestiture-related items(3) | — | 9 | (8) | (0.01) | — | ||||||||||||||||||||||||
(Gain)/loss on minority investments(4) | 24 | — | 24 | 0.02 | — | ||||||||||||||||||||||||
Certain tax adjustments, net(5) | — | 29 | (29) | (0.02) | — | ||||||||||||||||||||||||
| Non-GAAP | $ | 2,097 | $ | 344 | $ | 1,746 | $ | 1.36 | 16.4 | % | |||||||||||||||||||
| Three months ended October 25, 2024 | |||||||||||||||||||||||||||||
| (in millions, except per share data) | Income Before Income Taxes | Income Tax Provision (Benefit) | Net Income Attributable to Medtronic | Diluted EPS | Effective Tax Rate | ||||||||||||||||||||||||
| GAAP | $ | 1,559 | $ | 281 | $ | 1,270 | $ | 0.99 | 18.0 | % | |||||||||||||||||||
| Non-GAAP Adjustments: | |||||||||||||||||||||||||||||
| Amortization of intangible assets | 413 | 75 | 338 | 0.26 | 18.2 | ||||||||||||||||||||||||
Restructuring and associated costs(2) | 46 | 9 | 37 | 0.03 | 19.6 | ||||||||||||||||||||||||
Acquisition and divestiture-related items(3) | (25) | 5 | (30) | (0.02) | (20.0) | ||||||||||||||||||||||||
(Gain)/loss on minority investments(4) | (10) | 10 | (21) | (0.02) | (100.0) | ||||||||||||||||||||||||
Medical device regulations(6) | 12 | 2 | 10 | 0.01 | 16.7 | ||||||||||||||||||||||||
| Certain tax adjustments, net | — | (16) | 16 | 0.01 | — | ||||||||||||||||||||||||
| Non-GAAP | $ | 1,995 | $ | 366 | $ | 1,620 | $ | 1.26 | 18.3 | % | |||||||||||||||||||
(1)The Company recognized $46 million of accelerated amortization on certain intangible assets within the Cardiovascular Portfolio.
(2)The charges primarily relate to employee termination benefits and facility related and contract termination costs.
(3)The charges primarily include business combination costs, changes in fair value of contingent consideration, exit of business-related charges, and gains related to certain business or asset sales. Exit of business-related charges primarily relate to the impending separation of the Diabetes business and costs associated with the Company's June 2021 decision to stop the distribution and sale of the Medtronic HVAD System.
(4)We exclude unrealized and realized gains and losses on our minority investments as we do not believe that these components of income or expense have a direct correlation to our ongoing or future business operations.
(5)Primarily includes a tax benefit recognized due to a change in estimate of accrued interest on uncertain tax positions, partially offset by amortization of previously established deferred tax assets arising from intercompany intellectual property transactions.
(6)The charges represent incremental costs of complying with the new European Union (E.U.) medical device regulations for previously registered products and primarily include charges for contractors supporting the project and other direct third-party expenses. We consider these costs to be duplicative of previously incurred costs and/or one-time costs.
34
The tables below present our GAAP to Non-GAAP reconciliations for the six months ended October 24, 2025 and October 25, 2024:
| Six months ended October 24, 2025 | |||||||||||||||||||||||||||||
| (in millions, except per share data) | Income Before Income Taxes | Income Tax Provision (Benefit) | Net Income attributable to Medtronic | Diluted EPS | Effective Tax Rate | ||||||||||||||||||||||||
| GAAP | $ | 2,898 | $ | 470 | $ | 2,414 | $ | 1.87 | 16.2 | % | |||||||||||||||||||
| Non-GAAP Adjustments: | |||||||||||||||||||||||||||||
Amortization of intangible assets(1) | 922 | 172 | 750 | 0.58 | 18.7 | ||||||||||||||||||||||||
Restructuring and associated costs(2) | 79 | 19 | 61 | 0.05 | 24.1 | ||||||||||||||||||||||||
Acquisition and divestiture-related items(3) | 58 | 18 | 40 | 0.03 | 31.0 | ||||||||||||||||||||||||
| Certain litigation charges, net | 27 | 6 | 21 | 0.02 | 22.2 | ||||||||||||||||||||||||
(Gain)/loss on minority investments(4) | 137 | 7 | 130 | 0.10 | 5.1 | ||||||||||||||||||||||||
Other(5) | (39) | (8) | (30) | (0.02) | 20.5 | ||||||||||||||||||||||||
Certain tax adjustments, net(6) | — | 13 | (13) | (0.01) | — | ||||||||||||||||||||||||
| Non-GAAP | $ | 4,084 | $ | 698 | $ | 3,372 | $ | 2.62 | 17.1 | % | |||||||||||||||||||
| Six months ended October 25, 2024 | |||||||||||||||||||||||||||||
| (in millions, except per share data) | Income Before Income Taxes | Income Tax Provision (Benefit) | Net Income attributable to Medtronic | Diluted EPS | Effective Tax Rate | ||||||||||||||||||||||||
| GAAP | $ | 2,827 | $ | 500 | $ | 2,312 | $ | 1.79 | 17.7 | % | |||||||||||||||||||
| Non-GAAP Adjustments: | |||||||||||||||||||||||||||||
| Amortization of intangible assets | 827 | 149 | 678 | 0.52 | 18.0 | ||||||||||||||||||||||||
Restructuring and associated costs(2) | 108 | 21 | 87 | 0.07 | 19.4 | ||||||||||||||||||||||||
Acquisition and divestiture-related items(3) | (13) | 6 | (19) | (0.01) | (46.2) | ||||||||||||||||||||||||
| Certain litigation charges, net | 81 | 13 | 68 | 0.05 | 16.0 | ||||||||||||||||||||||||
(Gain)/loss on minority investments(4) | (27) | 10 | (38) | (0.03) | (37.0) | ||||||||||||||||||||||||
Medical device regulations(7) | 27 | 5 | 22 | 0.02 | 18.5 | ||||||||||||||||||||||||
Other(5) | 90 | 20 | 70 | 0.05 | 22.2 | ||||||||||||||||||||||||
Certain tax adjustments, net(6) | — | (33) | 33 | 0.03 | — | ||||||||||||||||||||||||
| Non-GAAP | $ | 3,921 | $ | 693 | $ | 3,213 | $ | 2.49 | 17.7 | % | |||||||||||||||||||
(1)The Company recognized $91 million of accelerated amortization on certain intangible assets within the Cardiovascular Portfolio.
(2)The charges primarily relate to employee termination benefits and facility related and contract termination costs.
(3)The charges primarily include business combination costs, changes in fair value of contingent consideration, exit of business-related charges, and gains related to certain business or asset sales. Exit of business-related charges primarily relate to the impending separation of the Diabetes business and costs associated with the Company's June 2021 decision to stop the distribution and sale of the Medtronic HVAD System.
(4)We exclude unrealized and realized gains and losses on our minority investments as we do not believe that these components of income or expense have a direct correlation to our ongoing or future business operations.
(5)Reflects adjustments to the Company's Italian payback accruals resulting from the two July 22, 2024 rulings by the Constitutional Court and the Legislative Decree published by the Italian government on June 30, 2025 for certain prior years since 2015.
(6)The net benefit for the six months ended October 24, 2025 primarily includes a tax benefit recognized due to a change in estimate of accrued interest on uncertain tax positions, partially offset by amortization of previously established deferred tax assets arising from intercompany intellectual property transactions. The charges for the six months ended October 25, 2024 includes amortization of previously established deferred tax assets arising from intercompany intellectual property transactions.
(7)The charges represent incremental costs of complying with the new European Union (E.U.) medical device regulations for previously registered products and primarily include charges for contractors supporting the project and other direct third-party expenses. We consider these costs to be duplicative of previously incurred costs and/or one-time costs.
35
Free Cash Flow
Free cash flow, a non-GAAP financial measure, is calculated by subtracting additions to property, plant, and equipment from net cash provided by operating activities. Management uses this non-GAAP financial measure, in addition to U.S. GAAP financial measures, to evaluate our operating results. Free cash flow should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with U.S. GAAP. Reconciliations between net cash provided by operating activities (the most comparable U.S. GAAP measure) and free cash flow are as follows:
| Six months ended | |||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | |||||||||
| Net cash provided by operating activities | $ | 2,013 | $ | 1,944 | |||||||
| Additions to property, plant, and equipment | (972) | (924) | |||||||||
| Free cash flow | $ | 1,041 | $ | 1,020 | |||||||
Refer to the Summary of Cash Flows section for drivers of the change in cash provided by operating activities.
Macroeconomic Trends
Looking ahead, a number of macroeconomic and geopolitical factors could negatively impact our business, including without limitation:
•Competitive product launches and pricing pressure, geographic macroeconomic developments including changes in global trade policies and fluctuations in currency exchange rates, general price inflation, changes in interest rates, reimbursement challenges, impacts from changes in the mix of our product offerings, delays in product registration approvals, national and provincial tender pricing for certain products, particularly in China, replacement cycle challenges, and supply chain challenges from time to time.
•Recent developments in global trade policy have introduced new uncertainties for our business. The U.S., China, and other jurisdictions have recently imposed or proposed additional tariffs on imported goods. Based on current rates as of November 18, 2025, we estimate the pre-tax net tariff impact to be $185 million in fiscal year 2026, with the majority recognized in the consolidated statements of income in the second half of the fiscal year. The actual amount could vary based on changes in tariff rates, duration of tariffs, scope of tariffs, and potential countermeasures or mitigation actions. While we are taking proactive steps to mitigate the effects of these tariffs, the evolving nature of international trade policy continues to present a risk to our cost structure and financial performance. Further escalation or expansion of trade barriers could have a material adverse effect on our results of operations.
•The sanctions and other measures being imposed in response to the Russia-Ukraine conflict are having and could continue to have impacts on revenue and supply chain. The financial impact of the conflict for the three and six months ended October 24, 2025, including on accounts receivable and inventory reserves, was not material. For the three and six months ended October 24, 2025, the business of the Company in these countries represented less than 1% of the Company's consolidated revenues and assets.
•Although the long-term implications of Israel's conflict are difficult to predict at this time, the financial and operational impact of the conflict for the three and six months ended October 24, 2025, including on accounts receivable and inventory reserves, was not material. As of October 24, 2025, the Company had 6 facilities and approximately 1,300 employees in Israel and the business of the Company represented less than 1% of the Company's consolidated revenues and assets.
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NET SALES
The charts below illustrate the percent of net sales by segment for the three months ended October 24, 2025 and October 25, 2024:
The table below illustrates net sales by segment and division and market geography for the three and six months ended October 24, 2025 and October 25, 2024:
Three months ended | Six months ended | ||||||||||||||||||||||||||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | % Change | October 24, 2025 | October 25, 2024 | % Change | |||||||||||||||||||||||||||||
| Cardiac Rhythm & Heart Failure | $ | 1,825 | $ | 1,578 | 16 | % | $ | 3,538 | $ | 3,114 | 14 | % | |||||||||||||||||||||||
| Structural Heart & Aortic | 956 | 881 | 9 | 1,885 | 1,736 | 9 | |||||||||||||||||||||||||||||
| Coronary & Peripheral Vascular | 655 | 643 | 2 | 1,298 | 1,259 | 3 | |||||||||||||||||||||||||||||
| Cardiovascular | 3,436 | 3,102 | 11 | 6,721 | 6,108 | 10 | |||||||||||||||||||||||||||||
| Cranial & Spinal Technologies | 1,299 | 1,234 | 5 | 2,509 | 2,382 | 5 | |||||||||||||||||||||||||||||
| Specialty Therapies | 744 | 737 | 1 | 1,446 | 1,450 | — | |||||||||||||||||||||||||||||
| Neuromodulation | 520 | 480 | 8 | 1,023 | 937 | 9 | |||||||||||||||||||||||||||||
| Neuroscience | 2,562 | 2,451 | 5 | 4,978 | 4,768 | 4 | |||||||||||||||||||||||||||||
| Surgical & Endoscopy | 1,679 | 1,649 | 2 | 3,291 | 3,193 | 3 | |||||||||||||||||||||||||||||
| Acute Care & Monitoring | 493 | 478 | 3 | 964 | 930 | 4 | |||||||||||||||||||||||||||||
| Medical Surgical | 2,171 | 2,128 | 2 | 4,255 | 4,123 | 3 | |||||||||||||||||||||||||||||
| Diabetes | 757 | 686 | 10 | 1,478 | 1,333 | 11 | |||||||||||||||||||||||||||||
| Reportable segment net sales | 8,926 | 8,366 | 7 | 17,432 | 16,333 | 7 | |||||||||||||||||||||||||||||
Other operating segment(1) | 35 | 37 | (6) | 68 | 75 | (9) | |||||||||||||||||||||||||||||
Other adjustments(2) | — | — | — | 39 | (90) | NM(3) | |||||||||||||||||||||||||||||
| Total net sales | $ | 8,961 | $ | 8,403 | 7 | % | $ | 17,539 | $ | 16,318 | 8 | % | |||||||||||||||||||||||
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U.S. | International | ||||||||||||||||||||||||||||||||||
| Three months ended | Three months ended | ||||||||||||||||||||||||||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | % Change | October 24, 2025 | October 25, 2024 | % Change | |||||||||||||||||||||||||||||
| Cardiovascular | $ | 1,592 | $ | 1,434 | 11 | % | $ | 1,844 | $ | 1,668 | 11 | % | |||||||||||||||||||||||
| Neuroscience | 1,730 | 1,677 | 3 | 832 | 774 | 8 | |||||||||||||||||||||||||||||
| Medical Surgical | 943 | 944 | — | 1,228 | 1,183 | 4 | |||||||||||||||||||||||||||||
| Diabetes | 230 | 232 | (1) | 527 | 455 | 16 | |||||||||||||||||||||||||||||
| Reportable segment net sales | 4,494 | 4,286 | 5 | 4,432 | 4,080 | 9 | |||||||||||||||||||||||||||||
Other operating segment(1) | 22 | 18 | 22 | 13 | 19 | (32) | |||||||||||||||||||||||||||||
| Total net sales | $ | 4,516 | $ | 4,304 | 5 | % | $ | 4,445 | $ | 4,099 | 8 | % | |||||||||||||||||||||||
U.S. | International | ||||||||||||||||||||||||||||||||||
| Six months ended | Six months ended | ||||||||||||||||||||||||||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | % Change | October 24, 2025 | October 25, 2024 | % Change | |||||||||||||||||||||||||||||
| Cardiovascular | $ | 3,071 | $ | 2,836 | 8 | % | $ | 3,650 | $ | 3,272 | 12 | % | |||||||||||||||||||||||
| Neuroscience | 3,354 | 3,242 | 3 | 1,624 | 1,526 | 6 | |||||||||||||||||||||||||||||
| Medical Surgical | 1,827 | 1,825 | — | 2,427 | 2,298 | 6 | |||||||||||||||||||||||||||||
| Diabetes | 447 | 447 | — | 1,031 | 886 | 16 | |||||||||||||||||||||||||||||
| Reportable segment net sales | 8,699 | 8,350 | 4 | 8,733 | 7,983 | 9 | |||||||||||||||||||||||||||||
Other operating segment(1) | 42 | 37 | 14 | 27 | 38 | (29) | |||||||||||||||||||||||||||||
Other adjustments(2) | — | — | — | 39 | (90) | NM(3) | |||||||||||||||||||||||||||||
| Total net sales | $ | 8,741 | $ | 8,387 | 4 | % | $ | 8,799 | $ | 7,931 | 11 | % | |||||||||||||||||||||||
(1)Includes operations and ongoing transition agreements from businesses the Company has exited or divested.
(2)Reflects adjustments to the Company's Italian payback accruals as further described below.
(3)Not meaningful (NM).
The increase in net sales for the three and six months ended October 24, 2025, as compared to the corresponding periods in the prior fiscal year, was driven primarily by growth in most businesses, including strong growth in Cardiac Ablation Solutions, TAVR, Neuromodulation, Diabetes, Cardiac Surgery, and Cardiac Pacing Therapies. In addition, the net sales increase was driven by impacts of foreign currency fluctuations and, for the six months ended October 24, 2025, changes in estimates relating to our Italian payback accrual resulting from the two July 2024 rulings by the Constitutional Court and the Legislative Decree published by the Italian government in June 2025 and formalized into law in August 2025 for certain prior years since 2015. For the six months ended October 24, 2025, the impact of the Italian payback adjustment was an increase to net sales of $39 million as compared to a decrease in net sales of $90 million for the six months ended October 25, 2024.
Cardiovascular
Cardiovascular products include pacemakers, insertable cardiac monitors, cardiac resynchronization therapy devices, implantable cardioverter defibrillators, leads and delivery systems, products for the treatment of atrial fibrillation, information systems for the management of patients with Cardiac Rhythm & Heart Failure devices, products designed to reduce surgical site infections, coronary and peripheral stents and related delivery systems, balloons and related delivery systems, endovascular stent graft systems, heart valve replacement technologies, cardiac tissue ablation systems, open heart and coronary bypass grafting surgical products, and renal denervation systems for the treatment of hypertension. Cardiovascular also includes Care Management Services and Cath Lab Managed Services (CLMS) within the Cardiac Rhythm & Heart Failure division. Cardiovascular's net sales for the three and six months ended October 24, 2025 were $3.4 billion and $6.7 billion, respectively, an increase of 11 percent and 10 percent, respectively, as compared to the corresponding periods in the prior fiscal year, resulting from growth across most businesses and the impacts of foreign currency fluctuations.
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The graphs below illustrate the percent of Cardiovascular net sales by division for the three months ended October 24, 2025 and October 25, 2024:
Cardiac Rhythm & Heart Failure (CRHF) net sales for the three and six months ended October 24, 2025 increased 16 percent and 14 percent, respectively, as compared to the corresponding periods in the prior fiscal year. Cardiac Ablation Solutions experienced strong growth in PulseSelect and Affera Sphere-9 pulsed field ablation with partially offsetting declines in cryoablation. Net sales growth was also due to increases within Cardiac Rhythm Management, driven by growth in Micra leadless pacemakers, Aurora extravascular implantable cardioverter defibrillator (EV-ICD) system, SelectSure 3830 lead, and TYRX.
Structural Heart & Aortic (SHA) net sales for the three and six months ended October 24, 2025 increased 9 percent for both periods, as compared to the corresponding periods in the prior fiscal year. The net sales increase was driven by growth in Structural Heart from Evolut FX+ TAVR system and in Cardiac Surgery driven by Perfusion and Surgical Valves.
Coronary & Peripheral Vascular (CPV) net sales for the three and six months ended October 24, 2025 increased 2 percent and 3 percent, respectively, as compared to the corresponding periods in the prior fiscal year. The net sales increase was driven by growth in the Symplicity Spyral renal denervation system, guide catheters and balloons, as well as growth in Peripheral Vascular Health from endovenous. The net sales increase was partially offset by declines in coronary stents.
In addition to the macroeconomic and geopolitical factors described in the Executive Level Overview, looking ahead, we expect Cardiovascular could be affected by the following:
•Continued global penetration of our Micra transcatheter pacing portfolio.
•Continued acceptance and growth from the Azure XT and Azure S SureScan pacing systems and the 3830 lead.
•Global adoption of Aurora EV-ICD.
•Growth of the Cobalt and Crome portfolio of ICDs and CRT-Ds.
•Growth of the CRT-P quadripolar pacing system.
•Continued growth and utilization of the TYRX Envelope for implantable devices.
•Continued use and acceptance of Reveal LINQ and expansion of the LINQ II cardiac monitor.
•Continued acceptance, adoption, and growth of our innovative portfolio of products in the electrophysiology (EP) segment, including the PulseSelect pulsed field ablation system and the Affera mapping and ablation system with Sphere-9 catheter. The Affera mapping and ablation system and Sphere-9 catheter received U.S. FDA approval in late October 2024.
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•Continued acceptance and growth of the self-expanding CoreValve Evolut transcatheter aortic valve replacement platform. This includes Evolut PRO which provides enhanced hemodynamics, reliable delivery, enhanced durability, advanced sealing, and Evolut FX, a system designed to improve the overall procedural experience through enhancements in deliverability, implant visibility, and deployment stability. The Evolut FX+ TAVR system maintains the valve performance benefits of the legacy Evolut TAVR platform and is designed to facilitate coronary access. The system was approved by the U.S. FDA in March 2024 and received CE Mark in late October 2024.
•Market acceptance and reimbursement for the Symplicity Spyral renal denervation system, also known as the Symplicity blood pressure procedure, for the treatment of hypertension. U.S. Centers for Medicare and Medicaid Services (CMS) finalized National Coverage Determination in October 2025.
•Market acceptance and growth of the Penditure LAA Exclusion System. The system received CE Mark in October 2025.
•Continued acceptance and growth of the Onyx Frontier drug-eluting stent (DES) platform. Onyx Frontier is a DES that introduces an enhanced delivery system and is used for complex percutaneous coronary intervention (PCI).
•Acceptance and growth of IN.PACT 018 drug-coated balloons (DCB). IN.PACT 018 adds to the existing IN.PACT Admiral DCB portfolio and is used to treat femoropopliteal disease.
•Market acceptance and growth of the Neuroguard IEP Carotid stenting system.
•Our ability to meet growing demand for our existing products and to successfully develop, obtain regulatory approval of, and commercialize the products within our pipeline, including the Liberant mechanical thrombectomy system and Affera Sphere-360 pulsed field ablation single-shot catheter.
Neuroscience
Neuroscience's products include various spinal implants, bone graft substitutes, biologic products, image-guided surgery and intra-operative imaging systems, robotic guidance systems used in the robot-assisted spine procedures, and systems that incorporate advanced energy surgical instruments. Neuroscience's products also focus on therapies to treat the diseases of the vasculature in and around the brain, including coils, neurovascular stents, and flow diversion products, as well as products to treat ear, nose, and throat (ENT), and the treatment of overactive bladder and urinary retention. Neuroscience also manufactures products related to implantable neurostimulation therapies and drug delivery systems for the treatment of chronic pain, movement disorders, and epilepsy. Neuroscience’s net sales for the three and six months ended October 24, 2025 were $2.6 billion and $5.0 billion, respectively, an increase of 5 percent and 4 percent, respectively, as compared to the corresponding periods in the prior fiscal year, resulting from growth in Neuromodulation, Cranial and Spinal Technologies, and ENT, and the impacts of foreign currency fluctuations.
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The graphs below illustrate the percent of Neuroscience net sales by division for the three months ended October 24, 2025 and October 25, 2024:
Cranial & Spinal Technologies (CST) net sales for the three and six months ended October 24, 2025 increased 5 percent for both periods, as compared to the corresponding periods in the prior fiscal year. The net sales increase was driven by the continued adoption of the AiBLE ecosystem of spine implants and enabling technology with growth in Core Spine and Neurosurgery.
Specialty Therapies (Specialty) net sales for the three and six months ended October 24, 2025 increased 1 percent and remained flat, respectively, as compared to the corresponding periods in the prior fiscal year. The net sales results were driven by impacts from tender pricing in China and the Pipeline Vantage recall for Neurovascular, offset by growth in ENT.
Neuromodulation (NM) net sales for the three and six months ended October 24, 2025 increased 8 percent and 9 percent, respectively, as compared to the corresponding periods in the prior fiscal year. The net sales increase was driven by the Inceptiv closed-loop spinal cord stimulator, the Percept RC deep brain neurostimulator, and Interventional.
In addition to the macroeconomic and geopolitical factors described in the Executive Level Overview, looking ahead we expect Neuroscience could be affected by the following:
•Continued adoption and growth of our integrated solutions through the AiBLE offering, which integrates spinal implants with enabling technologies (StealthStation, O-arm Imaging Systems, and Midas), Mazor robotics, and UNiD Adaptive Spine Intelligence AI-driven technology for surgical planning and personalized spinal implants.
•Market acceptance and continued global adoption of innovative spine products and procedural solutions within our CST operating unit, such as Catalyft PL, ModuLeX, CD Horizon Voyager System, and our Infinity OCT System, as well as continued growth from Titan spine titanium interbody implants with Nanolock technology.
•Continued growth of commercially available Pipeline Embolization Devices, endovascular treatments for certain wide-necked brain aneurysms.
•Continued acceptance of the Solitaire X revascularization device for treatment of acute ischemic stroke and our React Catheter and Riptide aspiration system.
•Continued acceptance and growth of our Pelvic Health therapies, including our InterStim therapy with InterStim X and InterStim II recharge-free neurostimulators and InterStim Micro rechargeable neurostimulator for patients suffering from overactive bladder, (non-obtrusive) urinary retention, and chronic fecal incontinence. The Altaviva implantable tibial neuromodulation system received U.S. FDA approval in September 2025 for urge urinary incontinence.
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•Continued acceptance and growth of our ENT therapies, including capital equipment sales of the StealthStation ENT surgical navigation system and intraoperative NIM nerve monitoring system, and the Propel sinus implants used in the treatment of chronic rhinosinusitis.
•Continued acceptance and growth from spinal cord stimulation (SCS) therapy for treating chronic pain and Diabetic Peripheral Neuropathy (DPN) on the Inceptiv closed-loop rechargeable neurostimulator, Intellis rechargeable neurostimulator and Vanta recharge-free neurostimulator. The Inceptiv closed-loop rechargeable SCS received U.S. FDA approval in April 2024.
•Continued acceptance and growth of our Percept family of deep brain stimulation (DBS) devices with proprietary BrainSense technology for objectifying and personalizing the treatment of Parkinson's Disease, epilepsy, and other movement disorders. In August 2024, the U.S. FDA approved Asleep DBS surgery for people with Parkinson's and people with essential tremor. BrainSense Adaptive DBS and BrainSense Electrode Identifier received CE Mark in January 2025 and U.S. FDA approval in February 2025.
•Our ability to meet growing demand for our existing products and to successfully develop, obtain regulatory approval of, and commercialize the products within our pipeline, which include the hemorrhagic stroke intravascular device, our next-generation spine enabling technologies, the tibial bladder control stimulator, and the percutaneous tibial neuromodulation system.
Medical Surgical
Medical Surgical’s products span the entire continuum of patient care from diagnosis to recovery, with a focus on diseases of the gastrointestinal tract, lungs, pelvic region, obesity, and preventable complications. The products include those for advanced and general surgical products, surgical stapling devices, vessel sealing instruments, wound closure, electrosurgery products, hernia mechanical devices, mesh implants, advanced ablation, interventional lung, airway products, and sensors and monitors for pulse oximetry, capnography, level of consciousness and cerebral oximetry. Medical Surgical's net sales for the three and six months ended October 24, 2025 were $2.2 billion and $4.3 billion, respectively, an increase of 2 percent and 3 percent, respectively, as compared to the corresponding periods in the prior fiscal year, resulting from growth in Advanced Energy, Acute Care & Monitoring, Endoscopy, and the impacts of foreign currency fluctuations.
The graphs below illustrate the percent of Medical Surgical net sales by division for the three months ended October 24, 2025 and October 25, 2024:
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Surgical & Endoscopy (SE) net sales for the three and six months ended October 24, 2025 increased 2 percent and 3 percent, respectively as compared to the corresponding periods in the prior fiscal year. The net sales increase was primarily due to growth in LigaSure vessel sealing technology, ProGrip self-gripping polyester mesh, Electrosurgery, and Esophageal. The net sales increase was also driven by international growth in Surgical Robotics partially offset by Advanced Stapling due to pressures on the U.S. bariatric segment and continued shifts to robotic surgery.
Acute Care & Monitoring (ACM) net sales for the three and six months ended October 24, 2025 increased 3 percent and 4 percent, respectively, as compared to the corresponding periods in the prior fiscal year. The net sales increase was primarily due to growth in Nellcor pulse oximetry and Airways from growth of the McGRATH MAC video laryngoscope.
In addition to the macroeconomic and geopolitical factors described in the Executive Level Overview, looking ahead we expect Medical Surgical could be affected by the following:
•Acceptance and continued growth of Open-to-MIS (minimally invasive surgery) techniques and tools through our efforts to transition open surgery to MIS. Open-to-MIS initiative focuses on capturing the market opportunity that exists in transitioning open procedures to MIS, whether through traditional MIS, advanced instrumentation, or robotics. Through our approach, in parallel, we also expand our presence and optimize open surgery in current open surgery markets.
•Continued global acceptance and future growth of powered stapling and energy platform.
•Our ability to execute ongoing strategies addressing the pressures to bariatric surgery procedure volumes in the U.S. from pharmaceuticals, and growth of surgical soft tissue robotics procedures in the U.S.
•Our ability to create markets and drive products and procedures into emerging markets with our high quality and cost-effective surgical products designed for customers in emerging markets.
•Continued acceptance and growth in patient monitoring and airway management. Key products in this area include Microstream Capnography, Nellcor pulse oximetry system with OxiMax technology, Shiley tracheostomy and endotracheal tubes, and McGRATH MAC video laryngoscopes.
•Acceptance of less invasive standards of care in chronic and colorectal, as well as hepatology products, including products that span the care continuum from diagnostics to therapeutics.
•Expanding the use of less invasive treatments and furthering our commitment to improving options for women with abnormal uterine bleeding. Our expanded and strengthened surgical offerings complement our global gynecology business.
•Global adoption of robotic-assisted surgery and the safe and effective use of the Hugo robotic assisted surgery (RAS) system, including system reliability and acceptability, for urologic, bariatric, gynecologic, hernia, and general surgery procedures. This includes continued integration and adoption of Touch Surgery Enterprise with the first artificial intelligence powered surgical videos and analytics platform to make it easier to train and discover new techniques within the robotics platform. The Hugo RAS system, which received CE Mark in October 2021, as well as secured additional regulatory approvals outside the U.S., is designed to help reduce unwanted variability, improve patient outcomes, and, by extension, lower per procedure cost. LigaSure RAS vessel-sealing technology received CE Mark in July 2025, expanding Hugo RAS system capabilities for gynecologic, general, and urologic procedures.
•Our ability to meet growing demand for our existing products and to successfully develop, obtain regulatory approval of, and commercialize the products within our pipeline, which include our Hugo RAS system in the U.S., the adoption of AI in Endoscopy and Digital Surgical Technologies, Signia powered stapling devices, and our next-gen Ligasure and Sonicision vessel sealing devices.
Diabetes
Diabetes' products include insulin pumps, continuous glucose monitoring (CGM) systems, and consumables. Diabetes' net sales for the three and six months ended October 24, 2025 were $757 million and $1.5 billion, respectively, an increase of 10 percent and 11 percent, respectively, as compared to the corresponding periods in the prior fiscal year. The increase in net sales was primarily driven by strong international growth due to the continued adoption of the MiniMed 780G AID system, including the Simplera Sync and Guardian 4 CGM sensors and Extended Infusion Sets, and the impacts of foreign currency fluctuations.
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In addition to the macroeconomic and geopolitical factors described in the Executive Level Overview, looking ahead we expect Diabetes could be affected by the following:
•The pending separation of the Diabetes business from the Company. In May 2025, the Company announced its intent to separate the Diabetes Operating Unit into a new standalone company, and its expectation to complete the separation within 18 months from the announcement date.
•Continued acceptance and growth for the MiniMed 780G insulin pump system, available with Simplera Sync, Guardian 4 CGM sensor, and the Abbott Instinct sensor, which received U.S. FDA approval for use with the SmartGuard dosing algorithm in September 2025. The MiniMed 780G insulin pump system received FDA approval for use in adults 18+ with insulin-requiring type 2 diabetes and CE Mark for expanded indications for use by children as young as two, during pregnancy, as well as type 2 insulin-requiring diabetes in 2025.
•Market acceptance and growth of our sensor Simplera, which received U.S FDA approval in August 2024 and CE Mark in September 2023.
•Continued acceptance and growth of the Guardian Connect CGM system, which displays glucose information directly to a smartphone to provide patients access to their glucose levels seamlessly and discretely. The Guardian Connect CGM system is available on both Apple iOS and Android devices.
•Market acceptance and growth of our InPen smart pen system, which allows users to have their Medtronic CGM readings in real-time alongside insulin dose information, all in one view.
•Continued pump, CGM, and consumable competition in an expanding global market.
•Changes in medical reimbursement policies and programs, along with additional payor coverage on insulin pumps.
•Our ability to meet growing demand for our existing products and to successfully develop, obtain regulatory approval, manufacture and commercialize the products within our pipeline, including our partnership with Abbott to expand CGM options for people living with diabetes, our next generation insulin delivery options, as well as expanded labeling in Type 2 diabetes, and fast acting insulins.
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COSTS AND EXPENSES
The following is a summary of cost of products sold, research and development, and selling, general, and administrative expenses as a percent of net sales for the three and six months ended October 24, 2025 and October 25, 2024:
Cost of Products Sold Cost of products sold for the three and six months ended October 24, 2025 was $3.1 billion and $6.1 billion, respectively, as compared to $2.9 billion and $5.7 billion, respectively, for the corresponding periods in the prior fiscal year. The decrease in cost of products sold as a percentage of net sales for the three and six months ended October 24, 2025 was primarily due to favorable currency impact on cost of products sold and net sales in addition to changes in the Italian payback accruals impacting net sales for the six months ended October 24, 2025 and October 25, 2024, partially offset by increased duties from tariffs on imported goods.
Research and Development Expense We remain committed to deliver the best possible experiences for patients, physicians, and caregivers we serve; to create technologies that expand what’s possible across the human body to transform lives; to turn data and insights into real action to serve patient needs, improving care; and to expand healthcare access and deliver positive outcomes. Research and development expense for the three and six months ended October 24, 2025 was $754 million and $1.5 billion, respectively, as compared to $697 million and $1.4 billion, respectively, for the corresponding periods in the prior fiscal year.
Selling, General, and Administrative Expense Our goal is to continue to leverage selling, general, and administrative expense management initiatives. Selling, general, and administrative expense primarily consists of salaries and wages, other administrative costs, such as professional fees and marketing expenses, and certain acquisition and divestiture-related costs. Selling, general, and administrative expense for the three and six months ended October 24, 2025 was $3.0 billion and $5.8 billion, respectively, as compared to $2.8 billion and $5.4 billion, respectively, for the corresponding periods in the prior fiscal year. The increase in selling, general, and administrative expense was primarily due to increased selling expenses in line with sales growth, new product launches and related commercialization activities, increased incentive performance in the current year, and increased expenses to support the impending separation of the Diabetes Operating Unit.
The following is a summary of other costs and expenses (income):
| Three months ended | Six months ended | ||||||||||||||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | |||||||||||||||||||
| Amortization of intangible assets | $ | 463 | $ | 413 | $ | 922 | $ | 827 | |||||||||||||||
| Restructuring charges, net | 10 | 30 | 55 | 77 | |||||||||||||||||||
| Certain litigation charges, net | — | — | 27 | 81 | |||||||||||||||||||
| Other operating expense (income), net | 22 | (34) | 92 | (33) | |||||||||||||||||||
| Other non-operating income, net | (92) | (173) | (125) | (330) | |||||||||||||||||||
| Interest expense, net | 181 | 209 | 357 | 376 | |||||||||||||||||||
Amortization of Intangible Assets Amortization of intangible assets includes the amortization expense of our definite-lived intangible assets, consisting of customer relationships, purchased technology and patents, trademarks, tradenames, and other intangible assets.
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For the three months and six months ended October 24, 2025, the Company recognized $46 million and $91 million, respectively, of accelerated amortization on certain intangible assets within the Cardiovascular Segment.
Restructuring Charges, Net For the three and six months ended October 24, 2025 and October 25, 2024, restructuring costs primarily consist of employee termination benefits.
For additional information about our restructuring activities, refer to Note 5 to the current period's consolidated financial statements.
Certain Litigation Charges, Net We classify specified certain litigation charges and gains related to significant legal matters as certain litigation charges, net in the consolidated statements of income. For additional information, refer to Note 16 in the current period's consolidated financial statements.
Other Operating Expense (Income), Net Other operating expense (income), net primarily includes expenses associated with royalties paid for the in-license of intellectual property from third parties, currency remeasurement and derivative gains and losses, changes in the fair value of contingent consideration, certain acquisition and divestiture-related items, and income from funded research and development arrangements.
For the three and six months ended October 24, 2025, the change in other operating expense (income), net was largely driven by the net impact of currency remeasurement and our hedging programs resulting in a net loss of $69 million and $132 million, respectively, as compared to a net loss of $39 million and $44 million, respectively, in the corresponding periods in the prior fiscal year.
Other Non-Operating Income, Net Other non-operating income, net includes the non-service component of net periodic pension and postretirement benefit cost, investment gains and losses, and interest income, which includes income on marketable debt securities and our global liquidity structures.
Interest income for the three and six months ended October 24, 2025 was $89 million and $208 million, respectively, as compared to $137 million and $249 million, respectively, for the corresponding periods in the prior fiscal year. The decrease in interest income was primarily driven by changes in our global liquidity structures. For the three and six months ended October 24, 2025, net losses on minority investments were $24 million and $137 million, respectively, as compared to net gains of $10 million and $27 million, respectively, for the corresponding periods in the prior fiscal year.
Interest Expense, Net Interest expense, net includes interest incurred on our outstanding borrowings, global liquidity structures, amortization of debt issuance costs and debt premiums or discounts, and amortization of amounts excluded from the effectiveness assessment of certain net investment and fair value hedges.
For the three and six months ended October 24, 2025, the decrease in interest expense, net was largely driven by changes in our global liquidity structures.
INCOME TAXES
| Three months ended | Six months ended | ||||||||||||||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | October 24, 2025 | October 25, 2024 | |||||||||||||||||||
| Income tax provision | $ | 215 | $ | 281 | $ | 470 | $ | 500 | |||||||||||||||
| Income before income taxes | 1,597 | 1,559 | 2,898 | 2,827 | |||||||||||||||||||
| Effective tax rate | 13.5 | % | 18.0 | % | 16.2 | % | 17.7 | % | |||||||||||||||
| Non-GAAP income tax provision | $ | 344 | $ | 366 | $ | 698 | $ | 693 | |||||||||||||||
| Non-GAAP income before income taxes | 2,097 | 1,995 | 4,084 | 3,921 | |||||||||||||||||||
| Non-GAAP Nominal Tax Rate | 16.4 | % | 18.3 | % | 17.1 | % | 17.7 | % | |||||||||||||||
| Difference between the effective tax rate and Non-GAAP Nominal Tax Rate | 2.9 | % | 0.3 | % | 0.9 | % | — | % | |||||||||||||||
On July 4, 2025, the U.S. Government enacted The One Big Beautiful Bill Act of 2025, which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Certain provisions are effective for the Company beginning fiscal year 2026. The impact for the three and six months ended October 24, 2025 was not significant, and impacts to fiscal year 2026 and beyond are not expected to be significant.
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The Organization for Economic Co-operation and Development (OECD) published Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large multinational corporations at a minimum rate of 15% in each jurisdiction in which the group operates. The OECD has since issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax. A number of countries, including Ireland, have enacted legislation to implement the core elements of Pillar Two, which were effective for the Company in fiscal year 2025.
Our effective tax rate for the three and six months ended October 24, 2025 was 13.5% and 16.2%, respectively, as compared to 18.0% and 17.7% for the three and six months ended October 25, 2024, respectively. The decrease in the effective tax rate for both periods primarily relates to a tax benefit recognized during the three months ended October 24, 2025 related to a change in estimate of accrued interest on uncertain tax positions partially offset by an increase in the Pillar Two global minimum tax impact and year-over-year changes in operational results by jurisdiction.
Our Non-GAAP Nominal Tax Rate for the three and six months ended October 24, 2025 was 16.4% and 17.1%, respectively, as compared to 18.3% and 17.7% for the three and six months ended October 25, 2024, respectively. The decrease in our Non-GAAP Nominal Tax Rate for both periods was primarily due to a tax benefit recognized during the three months ended October 24, 2025 related to a change in estimate of accrued interest on uncertain tax positions partially offset by an increase in the Pillar Two global minimum tax impact and year-over-year changes in operational results. An increase in our Non-GAAP Nominal Tax Rate of 1 percent would result in an additional income tax provision for the three and six months ended October 24, 2025 of approximately $21 million and $41 million, respectively.
LIQUIDITY AND CAPITAL RESOURCES
We are currently in a strong financial position, and we believe our balance sheet and liquidity as of October 24, 2025, provide us with flexibility, and our cash, cash equivalents, and current investments, along with our credit facility and related commercial paper programs will satisfy our foreseeable operating needs.
Our liquidity and capital structures are evaluated regularly within the context of our annual operating and strategic planning processes. We consider the liquidity necessary to fund our operations, which includes working capital needs, investments in research and development, property, plant, and equipment, and other operating costs. We also consider capital allocation alternatives that balance returning value to shareholders through dividends and share repurchases, satisfying maturing debt, and acquiring businesses and technology.
Summary of Cash Flows
The following is a summary of cash provided by (used in) operating, investing, and financing activities, the effect of exchange rate changes on cash and cash equivalents, and the net change in cash and cash equivalents:
| Six months ended | |||||||||||
| (in millions) | October 24, 2025 | October 25, 2024 | |||||||||
| Cash provided by (used in): | |||||||||||
| Operating activities | $ | 2,013 | $ | 1,944 | |||||||
| Investing activities | (1,201) | (604) | |||||||||
| Financing activities | (1,776) | (1,265) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 28 | 35 | |||||||||
| Net change in cash and cash equivalents | $ | (936) | $ | 110 | |||||||
Operating Activities The $69 million increase in net cash provided was primarily driven by an increase in cash collected from customers due to an increase in sales, partially offset by an increase in cash paid to suppliers and certain litigation payments.
Investing Activities The $597 million increase in cash used was primarily attributable to an increase in net purchases of investments of $562 million.
Financing Activities There was a $511 million increase in net cash used during the six months ended October 24, 2025, as compared to the corresponding period in the prior fiscal year.
During the six months ended October 24, 2025, the Company issued two tranches of Euro-denominated Senior Notes with an aggregate principal of €1.5 billion, or $1.7 billion. The Company used the net proceeds to repay in full €1.5 billion, or $1.8 billion, of Senior Notes. Further, in July 2025, the Company repaid at maturity €1.0 billion, or $1.2 billion, of Senior Notes. During the six months ended October 25, 2024, the Company issued four tranches of Euro-denominated Senior Notes with an aggregate principal of €3.0 billion, or $3.2 billion, partially offset by net share repurchases of $2.6 billion. The above changes were partially offset by an increase in short-term borrowings of $1.4 billion as compared to a decrease of $67 million in the prior year. For more information on commercial paper and Senior Notes issued and repaid, refer to the Debt and Capital section below.
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Debt and Capital
Our capital structure consists of equity and interest-bearing debt. We primarily utilize unsecured senior debt obligations to meet our financing needs and, to a lesser extent, bank borrowings. From time to time, we may repurchase our outstanding debt obligations in the open market or through privately negotiated transactions.
Total debt at October 24, 2025 was $29.1 billion as compared to $28.5 billion at April 25, 2025. The increase in total debt was primarily driven by the increase in commercial paper outstanding and the impact of foreign exchange rates on our foreign currency denominated debt. This was partially offset by repayments of Euro-denominated debt, net of issuances, as discussed below.
In September 2025, Medtronic, Inc. issued two tranches of Euro-denominated Senior Notes with an aggregate principal of €1.5 billion, with maturities in fiscal year 2031 and 2046, resulting in cash proceeds of approximately $1.7 billion, net of discounts and issuance costs. The Company used the net proceeds to repay at maturity €500 million of Medtronic Luxco’s 2.625% Senior Notes for $587 million in September 2025 and €1.0 billion of Medtronic Luxco's 0.000% Senior Notes for $1.2 billion in October 2025. Further, in July 2025, the Company repaid at maturity €1.0 billion, or $1.2 billion, of Senior Notes.
In June 2024, Medtronic, Inc. issued four tranches of Euro-denominated Senior Notes with an aggregate principal of €3.0 billion, with maturities ranging from fiscal year 2030 to 2054, resulting in cash proceeds of approximately $3.2 billion, net of discounts and issuance costs. In anticipation of the Euro-denominated debt issuance, the Company entered into forward currency exchange rate contracts to manage the exposure to exchange rate movements. These contracts were settled in conjunction with the issuance of the June 2024 Notes.
We repurchase our ordinary shares on occasion as part of our focus on returning value to our shareholders. In March 2024, the Company's Board of Directors authorized the repurchase of $5.0 billion of the Company's ordinary shares. There is no specific time period associated with these repurchase authorizations. During the six months ended October 24, 2025, the Company repurchased a total of 5 million shares under this program at an average price of $91.37. At October 24, 2025, we had approximately $1.7 billion remaining under the share repurchase program authorized by our Board of Directors.
For more information on credit arrangements, refer to Note 7 to the current period's consolidated financial statements and Note 6 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended April 25, 2025.
Liquidity
Our liquidity sources at October 24, 2025 included $1.3 billion of cash and cash equivalents and $7.0 billion of current investments. Additionally, we maintain commercial paper programs and a Credit Facility.
Our investments primarily include available-for-sale debt securities, including U.S. and non-U.S. government and agency securities, corporate debt securities, mortgage-backed securities, and other asset-backed securities. Refer to Note 6 to the current period's consolidated financial statements for additional information regarding fair value measurements.
We maintain multicurrency commercial paper programs for short-term financing, which allow us to issue unsecured commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of $3.5 billion. At October 24, 2025 and April 25, 2025, we had $1.4 billion and no commercial paper outstanding, respectively. The issuance of commercial paper reduces the amount of credit available under our existing line of credit, as explained below.
We also have a $3.5 billion five-year syndicated credit facility (Credit Facility), which expires in December 2029. At each anniversary date of the Credit Facility we can request a one-year extension of the maturity date. The Credit Facility provides backup funding for the commercial paper programs and may also be used for general corporate purposes. The Credit Facility provides us with the ability to increase our borrowing capacity by an additional $1.0 billion at any time during the term of the agreement. At October 24, 2025 and April 25, 2025, no amounts were outstanding under the Credit Facility.
Interest rates on advances of our Credit Facility are determined by a pricing matrix based on our long-term debt ratings assigned by Standard & Poor's Ratings Services (S&P) and Moody's Investors Service (Moody’s). Facility fees are payable on the Credit Facility and are determined in the same manner as the interest rates. We are in compliance with all covenants related to the Credit Facility.
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The following table is a summary of our S&P and Moody's long-term debt ratings and short-term debt ratings:
Agency Rating(1) | ||||||||||||||
| October 24, 2025 | April 25, 2025 | |||||||||||||
| Standard & Poor's Ratings Services | ||||||||||||||
| Long-term debt | A | A | ||||||||||||
| Short-term debt | A-1 | A-1 | ||||||||||||
| Moody's Investors Service | ||||||||||||||
| Long-term debt | A3 | A3 | ||||||||||||
| Short-term debt | P-2 | P-2 | ||||||||||||
(1)Agency ratings are subject to change, and there may be no assurance that an agency will continue to provide ratings and/or maintain its current ratings. A security rating is not a recommendation to buy, sell or hold securities, and may be subject to revision or withdrawal at any time by the rating agency, and each rating should be evaluated independently of any other rating.
S&P and Moody's long-term debt ratings and short-term debt ratings at October 24, 2025 were unchanged as compared to the ratings at April 25, 2025. We do not expect the S&P and Moody's ratings to have a significant impact on our liquidity or future flexibility to access additional liquidity given our balance sheet, Credit Facility, and related commercial paper programs.
We have future contractual obligations and other minimum commercial commitments that are entered into in the normal course of business. We believe our off-balance sheet arrangements do not have a material current or anticipated future effect on our consolidated earnings, financial position, and/or cash flows. Refer to the Debt and Capital section above for changes in debt obligations during the first two quarters of fiscal year 2026; there have been no other material changes to our long-term contractual obligations as reported in our most recent Annual Report filed on Form 10-K for the fiscal year ended April 25, 2025.
ACQUISITIONS AND DISPOSITIONS
Information regarding acquisitions and disposition activity is included in Note 4 to the current period's consolidated financial statements. In May 2025, we announced our intent to separate the Diabetes business, with the intention to create a new independent, publicly traded company. The separation is expected to be completed within 18 months of the initial announcement.
GOODWILL
Information regarding goodwill is included in Note 10 to the current period's consolidated financial statements.
CRITICAL ACCOUNTING ESTIMATES
We have used various accounting policies to prepare the consolidated financial statements in accordance with U.S. GAAP. Our significant accounting policies are disclosed in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended April 25, 2025.
The preparation of the consolidated financial statements, in conformity with U.S. GAAP, requires us to use judgment in making estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates reflect our best judgment about economic and market conditions and the potential effects on the valuation and/or carrying value of assets and liabilities based upon relevant information available. We base our estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
As of October 24, 2025, there were no material changes to our critical accounting estimates.
NEW ACCOUNTING PRONOUNCEMENTS
Information regarding new accounting pronouncements is included in Note 2 to the current period's consolidated financial statements.
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SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
Medtronic plc and Medtronic Global Holdings S.C.A. (Medtronic Luxco), a wholly-owned subsidiary guarantor, each have provided full and unconditional guarantees of the obligations of Medtronic, Inc., a wholly-owned subsidiary issuer, under the Senior Notes (Medtronic Senior Notes) and full and unconditional guarantees of the obligations of Covidien International Finance S.A. (CIFSA), a wholly-owned subsidiary issuer, under the Senior Notes (CIFSA Senior Notes). The guarantees of the CIFSA Senior Notes are in addition to the guarantees of the CIFSA Senior Notes by Covidien Ltd. and Covidien Group Holdings Ltd., both of which are wholly-owned subsidiary guarantors of the CIFSA Senior Notes. Medtronic plc and Medtronic, Inc. each have provided a full and unconditional guarantee of the obligations of Medtronic Luxco under the Senior Notes (Medtronic Luxco Senior Notes). The following is a summary of these guarantees:
Guarantees of Medtronic Senior Notes
•Parent Company Guarantor – Medtronic plc
•Subsidiary Issuer – Medtronic, Inc.
•Subsidiary Guarantor – Medtronic Luxco
Guarantees of Medtronic Luxco Senior Notes
•Parent Company Guarantor – Medtronic plc
•Subsidiary Issuer – Medtronic Luxco
•Subsidiary Guarantor – Medtronic, Inc.
Guarantees of CIFSA Senior Notes
•Parent Company Guarantor – Medtronic plc
•Subsidiary Issuer – CIFSA
•Subsidiary Guarantors – Medtronic Luxco, Covidien Ltd., and Covidien Group Holdings Ltd. (CIFSA Subsidiary Guarantors)
The following tables present summarized financial information for the six months ended October 24, 2025 and summarized balance sheet information at October 24, 2025 and April 25, 2025 for the obligor groups of Medtronic and Medtronic Luxco Senior Notes, and CIFSA Senior Notes. The obligor group consists of the parent company guarantor, subsidiary issuer, and subsidiary guarantors for the applicable senior notes. The summarized financial information is presented after elimination of (i) intercompany transactions and balances among the guarantors and issuers and (ii) equity in earnings from and investments in any subsidiary that is a non-guarantor or issuer.
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The summarized results of operations information for the six months ended October 24, 2025 was as follows:
| (in millions) | Medtronic & Medtronic Luxco Senior Notes (1) | CIFSA Senior Notes (2) | |||||||||
| Net sales | $ | 1,513 | $ | — | |||||||
| Operating profit (loss) | 197 | 5 | |||||||||
| Loss before income taxes | (69) | (47) | |||||||||
| Net loss attributable to Medtronic | (68) | (89) | |||||||||
The summarized balance sheet information at October 24, 2025 was as follows:
| (in millions) | Medtronic & Medtronic Luxco Senior Notes (1) | CIFSA Senior Notes (2) | |||||||||
Total current assets(3) | $ | 19,387 | $ | 4,399 | |||||||
Total noncurrent assets(4) | 11,813 | 5,121 | |||||||||
Total current liabilities(5) | 28,786 | 12,325 | |||||||||
Total noncurrent liabilities(6) | 38,660 | 25,710 | |||||||||
| Noncontrolling interests | 204 | 204 | |||||||||
(1)The Medtronic Senior Notes and Medtronic Luxco Senior Notes obligor group consists of the following entities: Medtronic plc, Medtronic Luxco, and Medtronic, Inc. Refer to the guarantee summary above for further details.
(2)The CIFSA Senior Notes obligor group consists of the following entities: Medtronic plc, Medtronic Luxco, CIFSA, and CIFSA Subsidiary Guarantors. Refer to the guarantee summary above for further details.
(3)Includes receivables due from non-guarantor subsidiaries of $16.1 billion and $1.8 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.
(4)Includes loans receivable due from non-guarantor subsidiaries of $5.0 billion and $4.9 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.
(5)Includes payables due to non-guarantor subsidiaries of $25.3 billion and $10.7 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.
(6)Includes loans payable due to non-guarantor subsidiaries of $9.0 billion and $7.7 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.
The summarized balance sheet information at April 25, 2025 was as follows:
| (in millions) | Medtronic & Medtronic Luxco Senior Notes (1) | CIFSA Senior Notes (2) | |||||||||
Total current assets(3) | $ | 18,268 | $ | 4,799 | |||||||
Total noncurrent assets(4) | 11,356 | 5,207 | |||||||||
Total current liabilities(5) | 21,099 | 7,625 | |||||||||
Total noncurrent liabilities(6) | 38,903 | 25,403 | |||||||||
| Noncontrolling interests | 232 | 232 | |||||||||
(1)The Medtronic Senior Notes and Medtronic Luxco Senior Notes obligor group consists of the following entities: Medtronic plc, Medtronic Luxco, and Medtronic, Inc. Refer to the guarantee summary above for further details.
(2)The CIFSA Senior Notes obligor group consists of the following entities: Medtronic plc, Medtronic Luxco, CIFSA, and CIFSA Subsidiary Guarantors. Refer to the guarantee summary above for further details.
(3)Includes receivables due from non-guarantor subsidiaries of $14.2 billion and $1.3 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.
(4)Includes loans receivable due from non-guarantor subsidiaries of $5.2 billion and $5.2 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.
(5)Includes payables due to non-guarantor subsidiaries of $16.0 billion and $4.6 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.
(6)Includes loans payable due to non-guarantor subsidiaries of $11.3 billion and $7.7 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, and other written reports of Medtronic plc, organized under the laws of Ireland (together with its consolidated subsidiaries, Medtronic, the Company, or we, us, or our), and oral statements made by or with the approval of one of the Company’s executive officers from time to time, may include “forward-looking” statements. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans, objectives of management for future operations and current expectations or forecasts of future results, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Our forward-looking statements may include statements related to: our growth and growth strategies; developments in the markets for our products, therapies and services; financial results; product development launches and effectiveness; research and development strategy; regulatory approvals; competitive strengths; the potential or anticipated direct or indirect impact of public health crises, geopolitical conflicts, or changing governmental executive actions and regulations (including relating to global trade policies, enforcement priorities and compliance requirements), on our business, results of operations and/or financial condition; restructuring and cost-saving initiatives; intellectual property rights; litigation and tax matters; governmental proceedings and investigations; mergers, acquisitions, and divestitures; market acceptance of our products, therapies and services; accounting estimates; financing activities; ongoing contractual obligations; working capital adequacy; the value of our investments; our effective tax rate; our expected returns to shareholders; and sales efforts. In some cases, such statements may be identified by the use of terminology such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “looking ahead,” “may,” “plan,” “possible,” “potential,” “project,” “should,” “will,” and similar words or expressions. Forward-looking statements in this Quarterly Report include, but are not limited to, statements regarding: our ability to drive long-term shareholder value; development and future launches of products and continued or future acceptance of products, therapies and services in our segments; expected timing for completion of research studies relating to our products; integration of new technologies, including artificial intelligence (AI) and data analytics, into our products, therapies and services; market positioning and performance of our products, including stabilization of certain product markets; divestitures and the potential benefits thereof; the costs and benefits of integrating previous acquisitions; anticipated timing for United States (U.S.) Food and Drug Administration (U.S. FDA) and non-U.S. regulatory approval of new products; increased presence in new markets, including markets outside the U.S.; changes in the market and our market share; our ability to meet growing demand for our existing products; acquisitions and investment initiatives, including the timing of regulatory approvals as well as integration of acquired companies into our operations; the resolution of tax matters; the effectiveness of our development activities in reducing patient care costs and hospital stay lengths; our approach towards cost containment; our expectations regarding the potential impact of changing governmental executive actions and regulations (including relating to global trade policies, enforcement priorities, and compliance requirements), on our business; our expectations regarding healthcare costs, including potential changes to reimbursement policies and pricing pressures; our expectations regarding changes to patient standards of care; our ability to identify and maintain successful business partnerships; the elimination of certain positions or costs related to restructuring initiatives; outcomes in our litigation matters and governmental proceedings and investigations; general economic conditions; the adequacy of available working capital and our working capital needs; our payment of dividends and redemption of shares; the continued strength of our balance sheet and liquidity; our accounts receivable exposure; our human capital management with respect to our global workforce; and the potential impact of our compliance with governmental regulations and accounting guidance.
We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, results of operations, financial condition, and/or cash flows. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the “Risk Factors” section and elsewhere in our Annual Report on Form 10-K. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. One must carefully consider forward-looking statements and understand that such forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, and involve a variety of risks and uncertainties, known and unknown, including, among others, those discussed in the sections entitled “Government Regulation” within “Item 1. Business” and “Item 1A. Risk Factors” in our Annual Report on Form 10-K, as well as those related to:
•competition in the medical device industry,
•delays in regulatory approvals,
•reduction or interruption in our supply,
•failure to complete or achieve the intended benefits of acquisitions or divestitures,
•adverse regulatory action,
•laws and governmental regulations,
•litigation results,
•quality problems,
•healthcare policy changes,
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•public health crises,
•cybersecurity and privacy incidents,
•international operations, including the impact of armed conflicts,
•self-insurance,
•commercial insurance,
•changes in applicable tax rates,
•positions taken by taxing authorities,
•decreasing selling prices and pricing pressure,
•liquidity shortfalls,
•fluctuations in currency exchange rates,
•inflation, or
•disruption of our current plans and operations.
Consequently, no forward-looking statement may be guaranteed, and actual results may vary materially from those projected in the forward-looking statements. We intend to take advantage of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 regarding our forward-looking statements and are including this sentence for the express purpose of enabling us to use the protections of the safe harbor with respect to all forward-looking statements. While we may elect to update these forward-looking statements at some point in the future, whether as a result of any new information, future events, or otherwise, we have no current intention of doing so except to the extent required by applicable law.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
CURRENCY EXCHANGE RATE RISK
Due to the global nature of our operations, we are exposed to currency exchange rate changes, which may cause fluctuations in earnings and cash flows. Fluctuations in the currency exchange rates of currency exposures that are unhedged, such as in certain emerging markets, may result in future earnings and cash flow volatility. The gross notional amount of all currency exchange rate derivative instruments outstanding at October 24, 2025 and April 25, 2025 was $20.6 billion and $23.6 billion, respectively. At October 24, 2025, these contracts were in a net unrealized gain position of $100 million. Additional information regarding our currency exchange rate derivative instruments is included in Note 8 to the current period's consolidated financial statements.
A sensitivity analysis of changes in the fair value of all currency exchange rate derivative contracts at October 24, 2025 and April 25, 2025 indicates that, if the U.S. dollar uniformly strengthened/weakened by 10 percent against all currencies, the fair value of these contracts would increase/decrease by approximately $1.7 billion and $1.6 billion, respectively. Any gains and losses on the fair value of derivative contracts would generally be offset by gains and losses on the underlying transactions. These offsetting gains and losses are not reflected in the above analysis.
INTEREST RATE RISK
We are subject to interest rate risk on our short-term investments and our borrowings. We manage interest rate risk in the aggregate, while focusing on our immediate and intermediate liquidity needs. Our debt portfolio at October 24, 2025 was comprised of debt predominantly denominated in U.S. dollars and Euros, which is primarily fixed rate debt. We are also exposed to interest rate changes affecting our investments in interest rate sensitive instruments, which include our marketable debt securities.
A sensitivity analysis of the impact on our interest rate-sensitive financial instruments of a hypothetical 50 basis point change in interest rates, as compared to interest rates at October 24, 2025 and April 25, 2025, indicates that the fair value of these instruments would correspondingly change by $86 million and $74 million, respectively.
For a discussion of current market conditions and the impact on our financial condition and results of operations, please see the “Liquidity” section of the current period's Management's Discussion and Analysis. For additional discussion of market risk, refer to Notes 6 and 8 to the current period's consolidated financial statements.
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Item 4. Controls and Procedures
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) and changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) are effective.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
In accordance with Item 103 of Regulation S-K, we have adopted a $1 million disclosure threshold for proceedings under environmental laws to which a governmental authority is a party, as we believe matters under this threshold are not material to the Company. A discussion of the Company’s legal proceedings and other loss contingencies are described in Note 16 to the current period's consolidated financial statements.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The following table provides information about the shares repurchased by the Company during the second quarter of fiscal year 2026:
| Fiscal Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as a Part of Publicly Announced Program | Maximum Approximate Dollar Value of Shares that may yet be Purchased Under the Program | ||||||||||||||||||||||
| 7/26/2025-8/22/2025 | 1,102,078 | $ | 91.57 | 1,102,078 | $ | 1,906,618,015 | ||||||||||||||||||||
| 8/23/2025-9/26/2025 | 1,272,904 | 93.53 | 1,272,904 | 1,787,565,802 | ||||||||||||||||||||||
| 9/27/2025-10/24/2025 | 925,179 | 95.91 | 925,179 | 1,698,829,312 | ||||||||||||||||||||||
| Total | 3,300,161 | $ | 93.54 | 3,300,161 | $ | 1,698,829,312 | ||||||||||||||||||||
In March 2024, the Company's Board of Directors authorized the repurchase of $5.0 billion of the Company's ordinary shares. There is no specific time period associated with these repurchase authorizations.
Item 5. Other Information
Exchange Act Section 3(r) Disclosure
Medtronic has engaged in certain activities that it is required to disclose pursuant to Section 13(r)(1)(D)(ii) of the Securities Exchange Act of 1934, as amended. In particular, during the second quarter of fiscal year 2026, Medtronic engaged in certain regulatory activities involving Russia’s Federal Security Service (“FSB”) related to its medical devices that were expressly authorized by the U.S. Government under applicable economic sanctions regulations.
During the second quarter of fiscal year 2026 ending October 24, 2025, in the normal course of business and consistent with the Office of Foreign Assets Control ("OFAC") authorizations as in effect at the time, Medtronic Russia filed five notifications with the FSB, as required under local Russian law for the import of medical devices that make use of encryption functionality. This activity did not directly result in any revenues or profits for Medtronic. To the extent that notifications with the FSB remain permissible under U.S. law, Medtronic may decide to continue engaging in such activities for the limited purposes of complying with local law requirements in Russia.
Rule 10b5-1 Director and Officer Trading Arrangements
During the quarter ended October 24, 2025, none of our directors or officers adopted terminated
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Item 6. Exhibits
| (a) | Exhibits | |||||||||||||
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||||||||
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||||||||
32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||||||||
32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||||||||
| 101.SCH | Inline XBRL Schema Document. | |||||||||||||
| 101.CAL | Inline XBRL Calculation Linkbase Document. | |||||||||||||
| 101.DEF | Inline XBRL Definition Linkbase Document. | |||||||||||||
| 101.LAB | Inline XBRL Label Linkbase Document. | |||||||||||||
| 101.PRE | Inline XBRL Presentation Linkbase Document. | |||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||||||||
55
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned authorized officer.
| Medtronic plc | |||||||||||
| (Registrant) | |||||||||||
| Date: | November 25, 2025 | /s/ Denise L. Blomquist | |||||||||
| Denise L. Blomquist | |||||||||||
| Vice President, Global Controller and Chief Accounting Officer (Principal Accounting Officer) | |||||||||||
56
Medtronic
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