{"url_path":"/sec/mdt/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-18","source_url":"https://www.sec.gov/Archives/edgar/data/1613103/0001628280-26-044354-index.html","accession_number":"0001628280-26-044354","cik":"0001613103","ticker":"MDT","issuer_name":"Medtronic plc","edgar_url":"https://www.sec.gov/Archives/edgar/data/1613103/0001628280-26-044354-index.html","primary_entity_key":"0001613103","primary_entity_name":"Medtronic plc"},"word_count":11147,"has_tables":true,"body_markdown":"Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations\n\nUNDERSTANDING OUR FINANCIAL INFORMATION\n\nThe following discussion and analysis provides information management believes to be relevant to understanding the financial condition and results of operations of the Company. The discussion focuses on our financial results for the fiscal year ended April 24, 2026 (fiscal year 2026) and the fiscal year ended April 25, 2025 (fiscal year 2025). A discussion on our results of operations for fiscal year 2025 as compared to the fiscal year ended April 26, 2024 (fiscal year 2024) is included in Part II, Item 7. \"Management's Discussion and Analysis of Financial Condition and Results of Operations\" of our Annual Report on Form 10-K for the year ended April 25, 2025, filed with the SEC on June 20, 2025, and is incorporated by reference into this Form 10-K. You should read this discussion and analysis along with our consolidated financial statements and related notes thereto at April 24, 2026 and April 25, 2025 and for fiscal years 2026, 2025, and 2024, which are presented within \"Item 8. Financial Statements and Supplementary Data\" in this Annual Report on Form 10-K. Amounts reported in millions within this annual report are computed based on the actual amounts, 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.\n\nFinancial Trends\n\nThroughout 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.\n\nAs 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).\n\nIn 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. 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.\n\nFree cash flow is a non-GAAP financial measure calculated by subtracting property, plant, and equipment additions from operating cash flows.\n\nRefer 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.\n\n31\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\nEXECUTIVE LEVEL OVERVIEW\n\nThe following is a summary of revenue, diluted earnings per share, and operating cash flow for fiscal years 2026 and 2025:\n\nGAAP to Non-GAAP Reconciliations\n\nThe tables below present reconciliations of our non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with U.S. GAAP for fiscal years 2026 and 2025.\n\n \nFiscal Year 2026\n\n(in millions, except per share data)Income Before Income TaxesIncome Tax Provision (Benefit)Net Income Attributable to MedtronicDiluted EPSEffective Tax Rate\n\nGAAP$6,136 $1,299 $4,801 $3.73 21.2 %\n\nNon-GAAP adjustments:\n\nAmortization of intangible assets(1)\n1,772 329 1,444 1.12 18.6 \n\nRestructuring and associated costs(2)\n370 80 290 0.23 21.6 \n\nAcquisition and divestiture-related items(3)\n173 37 137 0.11 21.4 \n\nCertain litigation charges, net113 23 89 0.07 20.4 \n\n(Gain)/loss on minority investments(4)\n131 — 130 0.10 — \n\nOther(5)\n(39)(8)(30)(0.02)20.5 \n\nCertain tax adjustments, net(6)\n— (260)260 0.20 — \n\nNon-GAAP$8,656 $1,499 $7,120 $5.53 17.3 %\n\n32\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\n \nFiscal Year 2025\n\n(in millions, except per share data)Income Before Income TaxesIncome Tax Provision (Benefit)Net Income Attributable to MedtronicDiluted EPSEffective Tax Rate\n\nGAAP$5,628 $936 $4,662 $3.61 16.6 %\n\nNon-GAAP adjustments:\n\nAmortization of intangible assets(1)\n1,807 335 1,471 1.14 18.5 \n\nRestructuring and associated costs(2)\n303 65 238 0.18 21.5 \n\nAcquisition and divestiture-related items(3)\n124 23 101 0.08 18.5 \n\nCertain litigation charges, net317 68 249 0.19 21.5 \n\n(Gain)/loss on minority investments(4)\n213 26 185 0.14 12.2 \n\nMedical device regulations(7)\n52 10 42 0.03 19.2 \n\nOther(5)\n90 20 70 0.05 22.2 \n\nCertain tax adjustments, net(6)\n— (62)62 0.05 — \n\nNon-GAAP$8,533 $1,423 $7,079 $5.49 16.7 %\n\n(1)The Company recognized $121 million and $151 million of accelerated amortization on certain intangible assets within the Cardiovascular Portfolio for fiscal years 2026 and 2025, respectively.\n\n(2)The charges primarily relate to employee termination benefits, facility related and contract termination costs, and asset write offs.\n\n(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.\n\n(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.\n\n(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.\n\n(6)The net charges for fiscal year 2026 primarily relates to the impact of an intercompany sale of intellectual property, the net tax charge as a result of the separation of the Diabetes Business and amortization of previously established deferred tax assets arising from intercompany intellectual property transactions, which were partially offset by a tax benefit recognized due to a change in estimate of accrued interest on uncertain tax positions. The charges for fiscal year 2025 primarily includes amortization of previously established deferred tax assets from intercompany intellectual property transactions.\n\n(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.\n\nFree Cash Flow\n\nFree 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:\n\nFiscal Year\n\n(in millions)20262025\n\nNet cash provided by operating activities$7,330 $7,044 \n\nAdditions to property, plant, and equipment(1,904)(1,859)\n\nFree cash flow$5,426 $5,185 \n\nRefer to the \"Summary of Cash Flows\" section for drivers of the change in cash provided by operating activities.\n\n33\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\nMacroeconomic Trends\n\nLooking ahead, a number of macroeconomic and geopolitical factors could negatively impact our business, including without limitation:\n\n•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.\n\n•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 June 3, 2026, we estimate the pre-tax net tariff impact to be $250 million in fiscal year 2027, excluding any considerations of government refunds. 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. On February 20, 2026, the U.S. Supreme Court ruled that President Trump's tariff policies under the International Emergency Economic Powers Act (\"IEEPA\") are unconstitutional. As a result of this ruling, the U.S. Court of International Trade issued an order directing the U.S. Customs and Border Protection (\"CBP\") agency to begin formalizing a process for refunds. On April 20, 2026, the CBP launched an online portal that can be used to submit IEEPA tariff refund requests. All requests will be reviewed by the CBP to determine validity prior to the issuance of refunds. We continue to monitor the situation and the impact to our results of operations.\n\n•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 in fiscal year 2026, including on accounts receivable and inventory reserves, was not material. For fiscal year 2026, the business of the Company in these countries represented less than 1% of the Company's consolidated revenues and assets.\n\n•Although the long-term implications of Israel's conflict are difficult to predict at this time, the financial and operational impact of the conflict in fiscal year 2026, including on accounts receivable and inventory reserves, was not material. As of April 24, 2026, the Company had 6 facilities and approximately 1,200 employees in Israel. For fiscal year 2026, the business of the Company in Israel represented less than 1% of the Company's consolidated revenues and assets.\n\n•Ongoing conflict in the Middle East may continue to disrupt global supply chains and contribute to higher energy, fuel, and transportation costs. Continued instability in the region may further increase costs and create operational challenges.\n\n•The planned exit of certain businesses, including our Diabetes Business, may involve separation activities, costs, and risks associated with transitioning operations, arrangements, and infrastructure. The timing and execution of these activities, as well as any related disposition steps, could affect our future results and financial condition.\n\n34\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\nNET SALES\n\nStarting in the fourth quarter of fiscal year 2026, the Diabetes Business is no longer considered a reportable segment. Prior period net sales have been recast to conform to the new presentation. The charts below illustrate the percent of net sales by business for fiscal years 2026 and 2025:\n\n35\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\nThe table below includes net sales by segment and division and market geography for fiscal years 2026 and 2025:\n\n  Net Sales by Fiscal YearPercent Change \n\n(in millions)20262025\n\nCardiac Rhythm & Heart Failure$7,504 $6,392 17 %\n\nStructural Heart & Aortic 3,817 3,554 7 \n\nCoronary & Peripheral Vascular 2,656 2,535 5 \n\nCardiovascular 13,976 12,481 12 \n\nCranial & Spinal Technologies5,222 4,973 5 \n\nSpecialty Therapies2,997 2,940 2 \n\nNeuromodulation2,068 1,932 7 \n\nNeuroscience10,287 9,846 4 \n\nSurgical & Endoscopy6,764 6,498 4 \n\nAcute Care & Monitoring2,051 1,909 7 \n\nMedical Surgical 8,815 8,407 5 \n\nReportable segment net sales33,079 30,734 8 \n\nDiabetes3,112 2,755 13 \n\nOther operating segment(1)\n135 137 (1)\n\nOther adjustments(2)\n39 (90)\nNM(3)\n\nTotal net sales$36,364 $33,537 8 %\n\nU.S.International\n\n(in millions)\nFiscal Year 2026\n\nFiscal Year 2025\n% Change\nFiscal Year 2026\n\nFiscal Year 2025\n% Change\n\nCardiovascular$6,435 $5,804 11 %$7,541 $6,677 13 %\n\nNeuroscience6,875 6,713 2 3,412 3,133 9 \n\nMedical Surgical3,778 3,664 3 5,037 4,744 6 \n\nReportable segment net sales17,088 16,181 6 15,991 14,553 10 \n\nDiabetes934 923 1 2,178 1,832 19 \n\nOther operating segment(1)\n81 68 19 54 70 (23)\n\nOther adjustments(2)\n— — — 39 (90)\nNM(3)\n\nTotal net sales$18,103 $17,171 5 %$18,261 $16,365 12 %\n\n(1)Includes operations and ongoing transition agreements from businesses the Company has exited or divested.\n\n(2)Reflects adjustments to the Company's Italian payback accruals as further described below.\n\n(3)Not meaningful (NM)\n\nThe increase in net sales for fiscal year 2026 was driven primarily by growth in most businesses, as further described in the business sections below. In addition, the net sales increase was driven by impacts of foreign currency fluctuations and 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 fiscal year 2026, 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 in fiscal year 2025.\n\nCardiovascular\n\nCardiovascular 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 fiscal year 2026 were $14.0 billion, an increase\n\n36\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\nof 12 percent as compared to fiscal year 2025. The net sales increase was primarily due to growth across most businesses and the impacts of foreign currency fluctuations.\n\nThe charts below illustrate the percent of Cardiovascular net sales by division for fiscal years 2026 and 2025:\n\nCardiac Rhythm & Heart Failure (CRHF) net sales increased 17 percent in fiscal year 2026 as compared to fiscal year 2025. Cardiac Ablation Solutions experienced strong growth in the pulsed ablation portfolio 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, and SelectSecure 3830 lead.\n\nStructural Heart & Aortic (SHA) net sales increased 7 percent in fiscal year 2026 as compared to fiscal year 2025. The net sales increase was driven by Structural Heart and in Cardiac Surgery driven by growth in Penditure LAA exclusion system, Avalus Ultra surgical valve, and VitalFlow ECMO system.\n\nCoronary & Peripheral Vascular (CPV) net sales increased 5 percent in fiscal year 2026 as compared to fiscal year 2025. 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.\n\nIn addition to the macroeconomic and geopolitical factors described in the Executive Level Overview, looking ahead, we expect Cardiovascular could be affected by the following:\n\n•Continued global penetration of our Micra transcatheter pacing portfolio.\n\n•Continued acceptance and growth of the 3830 lead.\n\n•Global adoption and growth of Aurora EV-ICD.\n\n•Growth of the Cobalt and Crome portfolio of ICDs and CRT-Ds.\n\n•Continued growth and utilization of the TYRX Envelope for implantable devices.\n\n•Continued use and acceptance of Reveal LINQ and expansion of the LINQ II cardiac monitor.\n\n•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.\n\n•Continued growth and market acceptance of Affera Sphere-360 pulsed field ablation single-shot catheter. The catheter received CE Mark in January 2026.\n\n37\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\n•Continued acceptance and growth of the self-expanding CoreValve Evolut transcatheter aortic valve replacement (TAVR) 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.\n\n•Market acceptance and reimbursement for the Symplicity Spyral renal denervation system, also known as the Symplicity blood pressure procedure, for the treatment of hypertension. The U.S. Centers for Medicare and Medicaid Services (CMS) finalized National Coverage Determination in October 2025.\n\n•Market acceptance and growth of the Penditure LAA Exclusion System. The system received CE Mark in October 2025.\n\n•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).\n\n•Strengthening our position in the Coronary & Peripheral Vascular division as a result of the April 2026 acquisition of CathWorks Ltd. The acquisition expands the CPV division by aiming to transform how coronary artery disease is diagnosed and treated.\n\n•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.\n\n•Market growth of Liberant mechanical thrombectomy system.\n\n•Market acceptance and growth of OmniaSecure defibrillation lead. OmniaSecure received CE Mark in March 2026.\n\n•Market acceptance and growth of the Neuroguard IEP carotid stenting system.\n\n•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 VT indication expansion for Sphere 9 and commercialization of Affera Sphere-360 pulsed field ablation single-shot catheter.\n\nNeuroscience\n\nNeuroscience'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 the 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 fiscal year 2026 were $10.3 billion, an increase of 4 percent as compared to fiscal year 2025, resulting from growth in Cranial and Spinal Technologies, Neuromodulation, ENT, and the impacts of foreign currency fluctuations.\n\n38\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\nThe charts below illustrate the percent of Neuroscience net sales by division for fiscal years 2026 and 2025:\n\nCranial & Spinal Technologies (CST) net sales for fiscal year 2026 increased 5 percent as compared to fiscal year 2025. 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.\n\nSpecialty Therapies (Specialty) net sales for fiscal year 2026 increased 2 percent as compared to fiscal year 2025. The net sales increase was driven by growth in ENT and Flow Diversion, offset by Pelvic Health and the Pipeline Vantage recall.\n\nNeuromodulation (NM) net sales for fiscal year 2026 increased 7 percent as compared to fiscal year 2025. The net sales increase was driven by the Inceptiv closed-loop spinal cord stimulator, the Percept RC neurostimulator with BrainSense technology, and Interventional.\n\nIn addition to the macroeconomic and geopolitical factors described in the Executive Level Overview, looking ahead we expect Neuroscience could be affected by the following:\n\n•Continued global adoption, growth, and market acceptance of 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. The Stealth AXiS Surgical System received U.S. FDA approval for spinal procedures in February 2026, followed by expanded approval for cranial and ENT applications in March 2026. The system received CE mark approval for spinal and cranial procedures in April 2026, and for ENT procedures in June 2026. The system incorporates navigation workflows with a modular robotic architecture.\n\n•Market acceptance and continued global adoption of innovative spine products and procedural solutions within our CST operating unit, such as Catalyft PL & PL40, CD Horizon ModuLeX and Voyager Systems, and our Infinity OCT System, as well as continued growth from Titan spine titanium interbody implants with Nanolock technology.\n\n•Continued global growth of commercially available Pipeline Embolization Devices, endovascular treatments for certain wide-necked brain aneurysms.\n\n•Continued global acceptance of the Solitaire X revascularization device for treatment of acute ischemic stroke and our React Catheter and Riptide aspiration system.\n\n•Continued global 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 urinary urge incontinence.\n\n39\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\n•Continued global adoption, growth, and market acceptance of our ENT therapies, including the intraoperative NIM nerve monitoring system, the Propel sinus implants used in the treatment of chronic rhinosinusitis, and global capital equipment sales of the StealthStation ENT surgical navigation system and the U.S. FDA approved Stealth AXiS Surgical System for ENT applications, which received approval in March 2026, followed by CE mark approval in June 2026.\n\n•Continued global 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.\n\n•Continued global 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. BrainSense Adaptive DBS and BrainSense Electrode Identifier received CE Mark in January 2025 and U.S. FDA approval in February 2025.\n\n•Continued market acceptance and growth of the Neuroguard IEP carotid stenting system.\n\n•The acquisition of Scientia Vascular and pending acquisition of SPR Therapeutics, which will expand the Neuroscience Portfolio. Refer to Acquisitions and Dispositions for additional information.\n\n•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 device, our next-generation spine enabling technologies, and the implantable tibial bladder control stimulator.\n\nMedical Surgical\n\nMedical 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 fiscal year 2026 were $8.8 billion, an increase of 5 percent as compared to fiscal year 2025, resulting from growth across most businesses and the impacts of foreign currency fluctuations.\n\nThe charts below illustrate the percent of Medical Surgical net sales by division for fiscal years 2026 and 2025:\n\nSurgical & Endoscopy (SE) net sales for fiscal year 2026 increased 4 percent as compared to fiscal year 2025. The net sales increase was primarily due to growth in Surgical, with strength in LigaSure vessel-sealing technology, ProGrip self-gripping polyester mesh, V-Loc\n\n40\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\nbarbed sutures, Electrosurgery, and Surgical Robotics. The growth in Surgical was partially offset by Advanced Stapling due to shifts to robotic surgery and bariatric procedure declines. The net sales increase was also driven by growth in Endoscopy driven by Nexpowder endoscopic hemostasis system and Endoflip 300 system.\n\nAcute Care & Monitoring (ACM) net sales for fiscal year 2026 increased 7 percent as compared to fiscal year 2025. The net sales increase was primarily due to growth in Nellcor pulse oximetry, McGRATH MAC video laryngoscope, and BIS and INVOS advanced monitoring sensors.\n\nIn 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:\n\n•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.\n\n•Continued global acceptance and future growth of powered stapling and energy platform.\n\n•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.\n\n•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.\n\n•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.\n\n•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.\n\n•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.\n\n•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 (AI) powered surgical videos and analytics platform to make it easier to analyze performance, train, and discover new techniques within the robotics platform. The Hugo RAS system 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. The Hugo RAS system received U.S. FDA clearance for use in urologic surgical procedures in December 2025.\n\n•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 includes general surgery and gynecology indications for 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.\n\nDiabetes\n\nDiabetes' products primarily include insulin pumps, continuous glucose monitoring (CGM) systems, and consumables. Diabetes' net sales for fiscal year 2026 were $3.1 billion, an increase of 13 percent as compared to fiscal year 2025. 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, Extended Infusion Sets, and the impacts of foreign currency fluctuations.\n\nRefer to the Executive Level Overview for other factors that could impact the Diabetes Business.\n\n41\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\nCOSTS AND EXPENSES\n\nThe following is a summary of cost of products sold, research and development, and selling, general, and administrative expenses as a percent of net sales:\n\nCost of Products Sold Cost of products sold for fiscal year 2026 was $12.7 billion as compared to $11.6 billion for fiscal year 2025. Cost of products sold as a percentage of net sales increased as compared to the prior fiscal year. The increase in cost of products sold as a percentage of net sales was primarily due to $185 million of increased tariffs and duties on imported goods and $84 million of asset write offs. The increase in costs of products sold as a percentage of net sales was partially offset by net favorable impact of currency on net sales and cost of products sold in addition to changes in the Italian payback accruals impacting net sales. For additional information about the asset write offs, refer to Note 4 to our consolidated financial statements in \"Item 8. Financial Statements and Supplementary Data\" of this Annual Report on Form 10-K. Looking ahead, we anticipate incurring additional costs related to current imposed and proposed tariffs. For additional information on tariffs and duties, refer to the Executive Level Overview.\n\nResearch 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 fiscal year 2026 was $2.9 billion as compared to $2.7 billion for fiscal year 2025.\n\nSelling, 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 fiscal year 2026 was $11.8 billion as compared to $10.8 billion for fiscal year 2025. The increase in selling, general, and administrative expense was primarily due to selling expenses in line with sales growth, new product launches and related commercialization activities, and increased expenses to support the impending separation of the Diabetes Business.\n\nThe following is a summary of other costs and expenses (income):\n\nFiscal Year\n\n(in millions)20262025\n\nAmortization of intangible assets$1,772 $1,807 \n\nRestructuring charges, net249 267 \n\nCertain litigation charges, net113 317 \n\nOther operating expense (income), net386 (23)\n\nOther non-operating expense (income), net(384)(402)\n\nInterest expense, net715 729 \n\n42\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\nAmortization 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.\n\nDuring fiscal years 2026 and 2025, the Company recognized $121 million and $151 million, respectively, of accelerated amortization on certain intangible assets within the Cardiovascular Segment.\n\nRestructuring Charges, Net In fiscal years 2026 and 2025, restructuring costs primarily consist of employee termination benefits, facility related and contract termination costs, and asset write-offs.\n\nFor additional information about our restructuring programs, refer to Note 4 to our consolidated financial statements in \"Item 8. Financial Statements and Supplementary Data\" of this Annual Report on Form 10-K.\n\nCertain 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 18 to our consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.\n\nOther 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 expenses and income associated with funded research and development arrangements.\n\nFor fiscal year 2026, 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 $238 million in fiscal year 2026 as compared to a net loss of $3 million in fiscal year 2025. Additionally, the change was driven by a $157 million charge related to a future minimum royalty payment obligation under one of the research and development funding arrangements during fiscal year 2026.\n\nFor additional information on the research and development funding arrangements, refer to Note 3 to our consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.\n\nOther Non-Operating Expense (Income), Net Other non-operating expense (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.\n\nThe decrease in other non-operating expense (income), net was primarily driven by a decrease of $93 million of interest income partially offset by decreased losses on minority investments. Net losses on minority investments were $131 million and $213 million for fiscal years 2026 and 2025, respectively.\n\nInterest 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.\n\nThe decrease in interest expense, net was primarily driven by changes in our global liquidity structure, partially offset by increased expense associated with higher coupon rates on the senior notes issued in the second quarter of fiscal year 2026.\n\nINCOME TAXES\n\n Fiscal Year\n\n(in millions)20262025\n\nIncome tax provision$1,299 $936 \n\nIncome before income taxes6,136 5,628 \n\nEffective tax rate21.2 %16.6 %\n\nNon-GAAP income tax provision$1,499 $1,423 \n\nNon-GAAP income before income taxes8,656 8,533 \n\nNon-GAAP nominal tax rate17.3 %16.7 %\n\nDifference between the effective tax rate and non-GAAP nominal tax rate(3.9)%0.1 %\n\nOn 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. The provisions of the Act, including immediate expensing\n\n43\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\nof qualifying research and development costs, that were effective for fiscal year 2026 did not materially impact the Company's fiscal year 2026 effective tax rate. The Company does not expect the provisions of the Act to materially impact fiscal years 2027 and beyond.\n\nThe 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 Model Rules. A number of countries, including Ireland, have enacted legislation to implement the core elements of Pillar Two Model Rules, which were effective for Medtronic in fiscal year 2025.\n\nOur effective tax rate for fiscal year 2026 was 21.2 percent, as compared to 16.6 percent in fiscal year 2025. The increase in our effective tax rate was primarily attributable to the increase in certain tax adjustments discussed below, an increase in the Pillar Two Global Minimum Tax, and year-over-year changes in operational results by jurisdiction, partially offset by the net operational tax benefits mentioned below; all of which occurred in fiscal year 2026.\n\nOur non-GAAP nominal tax rate for fiscal year 2026 was 17.3 percent, as compared to 16.7 percent in fiscal year 2025. The increase in our non-GAAP nominal tax rate was primarily due to an increase in the Pillar Two Global Minimum Tax, and year-over-year changes in operational results by jurisdiction inclusive of the net operational tax benefits discussed below.\n\nDuring fiscal year 2026, we recognized $148 million of net operational tax benefits. The net operational tax benefits primarily included a $122 million benefit associated with prior year tax resolutions and statute lapses, finalization of certain tax returns, and a change in estimate of accrued interest on uncertain tax positions and a $32 million benefit associated with a change in the realizability of certain deferred tax assets. During fiscal year 2025, operational tax costs were immaterial.\n\nAn increase in our non-GAAP nominal tax rate of one percent would result in an additional income tax provision for fiscal years 2026 and 2025 of approximately $87 million and $85 million, respectively.\n\nCertain Tax Adjustments\n\nDuring fiscal year 2026, the net cost from certain tax adjustments of $260 million, recognized in income tax provision in the consolidated statements of income included the following:\n\n•A net cost of $150 million associated with the intercompany sale of intellectual property and the establishment of a deferred tax asset.\n\n•A net cost of $70 million associated with the separation of the Diabetes Business.\n\n•A cost of $66 million associated with the amortization of the previously established deferred tax assets from intercompany intellectual property transactions.\n\n•A benefit of $51 million related to a change in estimate of accrued interest on uncertain tax positions.\n\n•A cost of $25 million primarily related to the write off of certain deferred tax assets on previous transactions.\n\nDuring fiscal year 2025, the net cost from certain tax adjustments of $62 million, recognized in income tax provision in the consolidated statements of income, included amortization of the previously established deferred tax assets from intercompany intellectual property transactions.\n\nCertain tax adjustments will affect the comparability of our operating results between periods. Therefore, we consider these non-GAAP adjustments. Refer to the Executive Level Overview for further discussion of these adjustments.\n\n44\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\nLIQUIDITY AND CAPITAL RESOURCES\n\nWe are currently in a strong financial position, and we believe our balance sheet and liquidity as of April 24, 2026 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.\n\nOur liquidity and capital structure 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.\n\nSummary of Cash Flows\n\nThe 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:\n\n Fiscal Year\n\n(in millions)20262025\n\nCash provided by (used in):  \n\nOperating activities$7,330 $7,044 \n\nInvesting activities(2,934)(1,937)\n\nFinancing activities(4,751)(4,361)\n\nEffect of exchange rate changes on cash and cash equivalents85 188 \n\nNet change in cash and cash equivalents$(269)$934 \n\nOperating Activities There was a $286 million increase in net cash provided, as compared to the prior fiscal year, 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, including duties from tariffs, and other vendors, cash paid for taxes, and certain litigation payments.\n\nInvesting Activities There was a $997 million increase in net cash used, as compared to the prior fiscal year, primarily attributable to an increase in net purchases of investments of $889 million and an increase in cash paid for acquisitions of $308 million. The remaining change primarily relates to derivatives activity and intangible asset acquisitions.\n\nFinancing Activities There was a $390 million increase in net cash used compared to the prior fiscal year.\n\nThe increase was driven by a $3.3 billion change in debt year-over-year, with $1.2 billion outflow in fiscal year 2026 as compared to an inflow of $2.1 billion in fiscal year 2025. In fiscal year 2026, 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. Additionally, the Company repaid €1.0 billion, or $1.2 billion, of Senior Notes. In fiscal year 2025, the Company issued four tranches of Euro-denominated Senior Notes with an aggregate principal of €3.0 billion, or $3.2 billion, which was partially offset by repayments of commercial paper of $1.1 billion.\n\nPartially offsetting the increase in net cash used was $538 million of proceeds from the MiniMed Group, Inc. (MiniMed) initial public offering (the IPO) in fiscal year 2026, and $2.2 billion of fewer net share repurchase in fiscal year 2026 as compared to fiscal year 2025. The remaining change primarily relates to derivative and dividend activity.\n\nFor additional information on short-term borrowings and Senior Notes issued and repaid, refer to Debt and Capital below.\n\nDebt and Capital\n\nOur 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.\n\nTotal debt at April 24, 2026 was $28.0 billion as compared to $28.5 billion at April 25, 2025. The decrease in total debt was primarily driven by repayments of Euro-denominated debt, net of issuances, as discussed below, partially offset by the impact of foreign exchange rates on our foreign currency denominated debt.\n\nIn July 2025, the Company repaid at maturity €1.0 billion, or $1.2 billion, of Senior Notes. 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 years 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\n\n45\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\n€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.\n\nWe 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 fiscal years 2026 and 2025, the Company repurchased a total of 10 million and 38 million shares, respectively, under this program at an average price of $93.25 and $83.36, respectively. At April 24, 2026, we had approximately $1.2 billion remaining under the share repurchase program authorized by our Board of Directors.\n\nFor additional information on credit arrangements, refer to Note 6 to our consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.\n\nLiquidity\n\nOur liquidity sources at April 24, 2026 included $1.9 billion of cash and cash equivalents and $7.3 billion of current investments. Additionally, we maintain commercial paper programs and a Credit Facility.\n\nOur 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 5 to our consolidated financial statements in \"Item 8. Financial Statements and Supplementary Data\" of this Annual Report on Form 10-K for additional information regarding fair value measurements.\n\nWe 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 April 24, 2026 and April 25, 2025, we had no commercial paper outstanding. The issuance of commercial paper reduces the amount of credit available under our existing line of credit, as explained below.\n\nWe also have a $3.5 billion five-year syndicated credit facility (Credit Facility), which expires in December 2030. 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 April 24, 2026 and April 25, 2025, no amounts were outstanding under the Credit Facility.\n\nInterest 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.\n\nThe following table is a summary of our S&P and Moody's long-term debt ratings and short-term debt ratings:\n\nAgency Rating (1)\n\nApril 24, 2026April 25, 2025\n\nStandard & Poor's Ratings Services\n\n   Long-term debtAA\n\n   Short-term debtA-1A-1\n\nMoody's Investors Service\n\n   Long-term debtA3A3\n\n   Short-term debtP-2P-2\n\n(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.\n\nS&P and Moody's long-term debt ratings and short-term debt ratings at April 24, 2026 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.\n\nContractual Obligations and Cash Requirements\n\nWe have future contractual obligations and other minimum commercial commitments that are entered into in the normal course of business, some of which are recorded in our consolidated balance sheet. Information regarding our obligations under contingent consideration, debt,\n\n46\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\nlease arrangements, and legal matters are provided in Notes 3, 6, 16, and 18, respectively, to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.\n\nIn the normal course of business, we periodically enter into off-balance sheet arrangements. Certain commitments and contingencies arise and are not recorded in the consolidated balance sheets in accordance with U.S. GAAP.\n\nWe have inventory purchase commitments, research and development, and other arrangements that are legally binding and specify minimum purchase quantities or spending amounts. These purchase commitments do not exceed our projected requirements and are in the normal course of business. At April 24, 2026, excluding open purchase orders with a remaining term of less than one year, we estimate that these future purchase commitments will be $0.5 billion and $1.1 billion in the short-term and long-term, respectively.\n\nWe have commitments related to the funding of minority investments, estimated milestone payments, and royalty obligations. It is not certain if and/or when payments will be made. The timing and amount of payments under these agreements are uncertain, as obligations generally become due only upon the achievement of specified development, regulatory, commercialization, or sales-based milestones. Such events may occur over several years or may never occur at all. Because the occurrence and timing of these triggering events are inherently uncertain, the related payment amounts and timing cannot be reasonably estimated.\n\nWe have contractual interest payments on our outstanding debt. Contractual interest payments on our outstanding debt, excluding the impacts of debt premium and discount amortization, required on our short-term and long-term debt outstanding at April 24, 2026, are projected to be $0.7 billion and $7.9 billion, respectively.\n\nWe periodically enter into agreements that require us to indemnify customers or suppliers for specific risks, such as claims for injury or property damage arising as a result of our products or the negligence of our personnel or claims alleging that our products infringe third-party patents or other intellectual property. Our maximum exposure under these indemnification provisions is unable to be estimated, and we have not accrued any liabilities within our consolidated financial statements. Historically, we have not experienced material losses on these types of indemnification agreements.\n\nNote 18 to the consolidated financial statements in \"Item 8. Financial Statements and Supplementary Data\" in this Annual Report on Form 10-K provides information regarding other arrangements we enter into, which include standby letters of credit agreements, bank guarantees, and surety or other bonds with financial institutions to support various performance and other obligations, as well as ongoing tax matters.\n\nWe record tax liabilities in our consolidated financial statements for amounts that we expect to repatriate from subsidiaries (to the extent the repatriation would be subject to tax); however, no tax liabilities are recorded for amounts we consider to be permanently reinvested. We expect to have access to the majority of our cash flows in the future. In addition, we continue to evaluate our legal entity structure supporting our business operations, and to the extent such evaluation results in a change to our overall business structure, we may be required to accrue for additional tax obligations. Refer to Note 13 to our consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional information.\n\nAdditionally, we have 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, which may give rise to potential regulatory or commercialization milestone payments and royalties based on a percentage of sales of such products. Payments under these agreements generally become due and payable only upon the achievement of certain development, regulatory and/or commercialization milestones or relevant product sales, which may span several years and which may never occur. Refer to Note 3 to our consolidated financial statements in \"Item 8. Financial Statements and Supplementary Data\" of this Annual Report on Form 10-K for additional information.\n\nBeyond the contractual obligations and other minimum commercial commitments outlined above, we have recurring cash requirements arising from the normal operation of our business that include capital expenditures, research and developments costs, and other operational costs.\n\nWe believe our balance sheet and liquidity provide us with flexibility, and our cash, cash equivalents, current investments, Credit Facility and related commercial paper programs, as well as our ability to generate operating cash flows, will satisfy our current and future contractual obligations and cash requirements. We regularly review our capital needs and consider various investing and financing alternatives to support our requirements.\n\nACQUISITIONS AND DISPOSITIONS\n\nInformation regarding acquisitions and disposition activity is included in Note 3 of the consolidated financial statements in \"Item 8. Financial Statements and Supplementary Data\" within this Annual Report on Form 10-K.\n\n47\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\nMiniMed Separation\n\nIn May 2025, the Company announced its intent to separate the Diabetes Business, with the intention to create a new independent, publicly traded company, MiniMed Group, Inc. On March 9, 2026, MiniMed completed an initial public offering. As of closing of the IPO, the Company owns 252,813,348 shares of MiniMed Common Stock, or approximately 90.03% of the total outstanding shares of MiniMed Common Stock. Due to the Company retaining a controlling financial interest, the consolidated financial statements reflect the financial results of MiniMed. See Note 20 to the consolidated financial statements for additional details. The Company plans to complete the separation of its Diabetes Business within the next fiscal year.\n\nCathWorks Ltd. Acquisition\n\nOn April 20, 2026, the Company acquired all the remaining outstanding shares of CathWorks Ltd. (CathWorks), a privately held medical device company, for $525 million of consideration transferred, including $115 million of contingent consideration. The acquisition expands the Coronary & Peripheral Vascular division within the Cardiovascular portfolio by aiming to transform how coronary artery disease is diagnosed and treated.\n\nScientia Vascular Acquisition\n\nOn June 12, 2026, the Company closed on the acquisition of all outstanding shares of Scientia Vascular (Scientia) (a privately held company). As the Company closed on this acquisition subsequent to April 24, 2026, this acquisition is considered a subsequent event. The acquisition will expand the Neuroscience portfolio through Scientia’s differentiated access products used to treat complex neurovascular conditions. The Company anticipates total consideration to be comprised of approximately $550 million up-front, subject to customary closing adjustments, and certain revenue and regulatory-based contingent consideration payments up to $375 million.\n\nSPR Therapeutics, Inc. Pending Acquisition\n\nOn May 20, 2026, the Company announced its intent to acquire all outstanding equity of SPR Therapeutics, Inc., a privately held medical technology company. The acquisition enhances the Neuromodulation division within the Neuroscience portfolio with temporary peripheral nerve stimulation (PNS) technology, enabling earlier intervention for chronic pain sufferers. We expect consideration for the business to be approximately $650 million subject to customary closing adjustments. The acquisition is expected to close in the first half of fiscal year 2027, subject to regulatory approvals and satisfaction of other closing conditions.\n\nCRITICAL ACCOUNTING ESTIMATES\n\nWe 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 in \"Item 8. Financial Statements and Supplementary Data\" in this Annual Report on Form 10-K.\n\nThe 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.\n\nOur critical accounting estimates include the following:\n\nRevenue Recognition Revenue recognition on our products varies depending on the amount of consideration we ultimately receive due to return terms, sales rebates, chargebacks, discounts, and other incentives, which are accounted for as variable consideration. The estimate of variable consideration for rebates and distributor chargebacks is considered critical due to the materiality of the balances and use of estimates. Estimates for rebates are based on sales terms, historical experience, and trend analysis. The Company considers the lag time between the point of sale and payment of the rebate claim, the stated rebate rates, and other relevant information to estimate rebates.\n\nRevenue adjustments related to distributor chargebacks are the difference between distributor sales price and the end-customer negotiated price. A provision for outstanding chargebacks is recorded when we recognize revenue from our sale to the distributor and requires estimates for the distributor chargeback rate, expected sell-through levels by the distributors to contracted customers, as well as estimated distributor inventory levels.\n\nAt April 24, 2026 and April 25, 2025, there were $1.9 billion and $2.0 billion of rebates, chargebacks, and other adjustments recorded in the consolidated balance sheets, respectively. During fiscal years 2026 and 2025, adjustments to rebates, chargebacks, and other adjustments recorded in prior periods were not material.\n\n48\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\nLitigation Contingencies We 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. 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 damages, as well as other civil or criminal remedies (including injunctions barring the sale of products that are the subject of the proceeding), that could require significant expenditures, result in lost revenues, or limit the Company's ability to conduct business in the applicable jurisdictions. Estimating probable losses from our litigation and governmental proceedings is inherently difficult, 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. We base our judgments on the best information available at the time. Our estimates related to our legal and product liability accruals may change as additional information becomes available to us, including information related to the nature or existence of claims against us, trial court or appellate proceedings, and mediation, arbitration or settlement proceedings. Any revision of our estimates of potential liability could have a material impact on our financial position and operating results. Our significant legal proceedings are discussed in Note 18 to the consolidated financial statements in \"Item 8. Financial Statements and Supplementary Data\" in this Annual Report on Form 10-K.\n\nIncome Tax Reserves We establish reserves when, despite our belief that our tax return positions are fully supportable, we believe that certain positions are likely to be challenged and that we may or may not prevail. Under U.S. GAAP, if we determine that a tax position is more likely than not of being sustained upon audit, based solely on the technical merits of the position, we recognize the benefit. We measure the benefit by determining the amount that is greater than 50 percent likely of being realized upon settlement. We presume that all tax positions will be examined by a taxing authority with full knowledge of all relevant information. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions across our global operations. We regularly monitor our tax positions and tax liabilities. We reevaluate the technical merits of our tax positions and recognize an uncertain tax benefit, or derecognize a previously recorded tax benefit, when there is (i) a completion of a tax audit, (ii) effective settlement of an issue, (iii) a change in applicable tax law including a tax case or legislative guidance, or (iv) the expiration of the applicable statute of limitations. These reserves are subject to a high degree of estimation and management judgment. Although we believe that we have adequately reserved for liabilities resulting from tax assessments by taxing authorities, positions taken by these tax authorities could have a material impact on our effective tax rate, consolidated earnings, financial position, and/or cash flows.\n\nValuation of Intangible Assets and Goodwill When we acquire a business, the assets acquired and liabilities assumed are recorded at their respective fair values at the acquisition date. Goodwill is the excess of the purchase price over the estimated fair value of identified net assets of acquired businesses. Intangible assets primarily include patents, trademarks, tradenames, customer relationships, purchased technology, and in-process research and development.\n\nDetermining the fair value of intangible assets acquired as part of a business combination requires us to make significant estimates. These estimates include the amount and timing of projected future cash flows of each project or technology, the discount rate used to discount those cash flows to present value, and the assessment of the asset’s life cycle. The estimates could be impacted by legal, technical, regulatory, economic, and competitive risks.\n\nGoodwill and indefinite lived intangible assets are tested for impairment annually in the third quarter of the fiscal year and whenever an event occurs or circumstances change that would indicate the carrying amount may be impaired. Intangible assets with a definite life are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group, which includes intangible assets, may not be recoverable. If goodwill or intangible assets are determined to be impaired, they are written down to their estimated fair value.\n\nWe have four goodwill reporting units with goodwill assigned to them. The test for impairment of goodwill requires us to make several estimates related to projected future cash flows to determine the fair value of the goodwill reporting units. We estimated the fair value of these reporting units using the income and the market approaches, weighted 50 percent each. Fair value under the income approach was determined by discounting to present value the estimated future cash flows of the reporting unit. Fair value under the market approach utilized revenue and earnings multiples using comparable public company information, which uses valuation indicators determined from other businesses that are similar to our reporting unit. We use estimates that are consistent with the highest and best use of the assets based on a market participant's view of the assets being evaluated.\n\nThe most critical assumptions used in the calculation of the fair value of each reporting unit are the projected revenue, projected earnings, projected future cash flows, and discount rate. Our forecast of future cash flows is based on estimates of projected revenue and projected earnings, based primarily on pricing, raw material costs, market share, industry outlook, general economic conditions and strategic actions to improve our earnings. The fair value of the reporting unit’s goodwill is sensitive to differences between estimated and actual cash flows, including changes in the projected revenue, projected earnings, and discount rate used to evaluate the fair value of the reporting unit.\n\nAs part of our annual impairment analysis in the third quarter, we completed a quantitative impairment analysis of all of our reporting units to determine if their fair value was less than their carrying amount. Based on the quantitative test, the Medical Surgical reporting unit had an estimated fair value that exceeded its carrying value, including goodwill, by approximately 12%. The remaining reporting units' fair values\n\n49\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\nmaterially exceeded their carrying values. As of April 24, 2026, $20.0 billion of goodwill was allocated to the Medical Surgical reporting unit.\n\nThe following table highlights the sensitivities of the most critical assumptions used in the goodwill impairment test as of the date of our annual testing:\n\nAssumption:\n\nApproximate % by which the fair value exceeds the carrying value based on annual impairment test12% - 335%\n\nApproximate % by which the fair value exceeds the carrying value if the discount rate was to increase 1%3% - 307%\n\nApproximate % by which the fair value exceeds the carrying value if the future cash flows in the income approach and revenue and earnings in the market approach were to decrease by 5%7% - 313%\n\nAlthough we believe our estimate of fair value is reasonable, actual results may differ from our estimates due to a number of factors including, among others, changes in competitive conditions, timing of regulatory approval, results of clinical trials, changes in worldwide economic conditions, and fluctuations in currency exchange rates.\n\nSubsequent to IPO, MiniMed's stock price experienced a decline. As of the date of this filing, after evaluating macroeconomic conditions, MiniMed's market capitalization and current and future results of operations, the estimated fair value of MiniMed exceeds the carrying value and, therefore, did not have any impairment. There is a risk of future impairment charges if there is a decline in the fair value of MiniMed, an adverse change in valuation assumptions, or other macroeconomic factors that may exist. If future goodwill impairment charges occur, they could have a material adverse effect on our financial condition and results of operations.\n\nNEW ACCOUNTING PRONOUNCEMENTS\n\nInformation regarding new accounting pronouncements is included in Note 1 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.\n\nSUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION\n\nMedtronic 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:\n\nGuarantees of Medtronic Senior Notes\n\n•Parent Company Guarantor - Medtronic plc\n\n•Subsidiary Issuer - Medtronic, Inc.\n\n•Subsidiary Guarantor - Medtronic Luxco\n\nGuarantees of Medtronic Luxco Senior Notes\n\n•Parent Company Guarantor - Medtronic plc\n\n•Subsidiary Issuer - Medtronic Luxco\n\n•Subsidiary Guarantor - Medtronic, Inc.\n\nGuarantees of CIFSA Senior Notes\n\n•Parent Company Guarantor - Medtronic plc\n\n•Subsidiary Issuer - CIFSA\n\n•Subsidiary Guarantors - Medtronic Luxco, Covidien Ltd., and Covidien Group Holdings Ltd. (CIFSA Subsidiary Guarantors)\n\nThe following tables present summarized financial information for fiscal year 2026 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.\n\nThe summarized results of operations information for fiscal year 2026 were as follows:\n\n50\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)\n\n(in millions)\nMedtronic & Medtronic Luxco Senior Notes (1)\n\nCIFSA Senior Notes (2)\n\nNet sales$3,716 $— \n\nOperating profit (loss)107 (219)\n\nLoss before income taxes(429)(415)\n\nNet loss attributable to Medtronic(468)(432)\n\nThe summarized balance sheet information for fiscal year 2026 was as follows:\n\n(in millions)\nMedtronic & Medtronic Luxco Senior Notes (1)\n\nCIFSA Senior Notes (2)\n\nTotal current assets(3)\n$21,798 $4,640 \n\nTotal noncurrent assets(4)\n14,224 6,953 \n\nTotal current liabilities(5)\n26,263 16,216 \n\nTotal noncurrent liabilities(6)\n36,302 24,110 \n\nNoncontrolling interests609 609 \n\n(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.\n\n(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.\n\n(3)Includes receivables due from non-guarantor subsidiaries of $17.9 billion and $1.5 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.\n\n(4)Includes loans receivable due from non-guarantor subsidiaries of $6.8 billion and $6.7 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.\n\n(5)Includes payables due to non-guarantor subsidiaries of $21.9 billion and $14.1 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.\n\n(6)Includes loans payable due to non-guarantor subsidiaries of $8.5 billion and $7.7 billion for Medtronic & Medtronic Luxco Senior Notes, and CIFSA Senior Notes, respectively.\n\n51\n\n[Table of Conten](#i8ac9545bba26417b86662fb12ca4cf78_7)[ts](#i8ac9545bba26417b86662fb12ca4cf78_7)"}