Medtronic (MDT) Earnings and Spinoff – Should You Buy This New Robotic-Surgery Competitor?

In the early 2000s, U.S. doctors only did a few hundred robotic procedures each year...

That number is well beyond 1 million today – and still climbing.

Urology and gynecology are the most common types of robotic procedures. And now, robots can also help with orthopedics, general surgery, and even lung and heart procedures.

In short, demand for surgical robotic systems is booming. Experts project a 16.5% compound annual growth rate for the global surgical robotics market from 2024 to 2029.

As an investor, you want to get involved in this growing industry.

In this essay, I'll show you the best way to play this megatrend right now. As you'll see, robotic surgery isn't just science fiction anymore. It's saving lives...

The Miracle of Robotic Surgery

For more than 30 years, Carol served as the rock for thousands of strangers...

As a nurse, she moved swiftly and selflessly through hospital corridors in Eastern Tennessee. She checked vitals, calmed nerves, and helped her patients through life's most vulnerable moments.

But over the past few years, Carol's own health deteriorated. And at age 63, Carol was used to doing whatever she could to manage her pain...

Asthma. Immune deficiency. Arthritis. Steroid dependence.

Each doctor's visit brought more medications, more side effects, and less relief. And for Carol, breathing felt like trying to suck air through a collapsing straw.

Eventually, doctors found the issue...

Carol had tracheomalacia. In this rare condition, the walls of the windpipe collapse as the patient exhales.

So her doctors at Ascension Saint Thomas Hospital West turned to a robot.

On February 13, 2024, Carol became the first patient in Tennessee to undergo a robotic tracheobronchoplasty. This surgery rebuilt the structural integrity of Carol's airway and helped her breathe normally again.

Dr. John Lazar, a thoracic surgeon, guided the surgery. And importantly, the robot allowed for a minimally invasive approach...

Its arms made smaller, more precise incisions. Its camera system gave a magnified, 3D view of Carol's airway.

Within weeks, Carol's quality of life was significantly better...

She didn't need the steroids that had once ruled her daily routine anymore. She could take deep breaths again. She even walked in the Great Smoky Mountains National Park – a big change from the past, when even climbing a few stairs left her winded.

We could find countless other stories like Carol's. The point is that robotic surgery is real. And right now, it's presenting investors with an opportunity to make a lot of money...

Challenging the Leader in Robotic Surgery

The clear leader in the surgical robotics space is Intuitive Surgical (ISRG).

Intuitive Surgical makes the da Vinci system. Doctors have used this system to perform robotic urological procedures for more than two decades.

And as an innovator in this area, Intuitive Surgical has long rewarded shareholders. The company's stock has returned roughly 200% over the past five years. Take a look...

That's a great return.

But Intuitive Surgical is facing a challenge from another health care giant...

Medtronic (MDT) started in 1949 as a pioneer of battery-powered pacemakers. Today, it's a diverse medical-devices company. And now, it's going head to head with Intuitive Surgical...

Last month, Medtronic announced that it filed for U.S. Food and Drug Administration ("FDA") approval of its Hugo surgical robot. It aims to break into the U.S. market with a focus on urologic procedures – a direct challenge to Intuitive Surgical's dominance.

Hugo is cart based, modular, and more portable than many competing systems. And it has already received approval in Europe for urologic and gynecologic use (since 2021).

Medtronic's FDA submission follows a large U.S. trial, known as Expand URO.

In this trial, officials tested Hugo in "multiport" urologic surgeries on cancer patients. "Multiport" means the surgeon uses several access points (typically three to five small incisions) instead of one. Each port holds a different robotic arm or tool.

Participants in Medtronic's study underwent prostate, kidney, or bladder-tissue removal.

Officials shared the results at the American Urological Association's annual meeting in Las Vegas in April. The study showed a 98.5% success rate and fewer serious complications than historical benchmarks.

Urology serves as Medtronic's entry point into the robotic-surgery market. But the company won't stop there...

Medtronic is already planning trials for Hugo's use in treating hernias and noncancerous gynecological ailments. And the FDA has already authorized Medtronic's proposed studies in gynecologic cancer.

Medtronic has to make up a lot of ground to catch market leader Intuitive Surgical. But as you can see, it's quickly becoming a major competitor. That should make you excited...

Spinning Off Medtronic's Diabetes Business

Medtronic just reported its fourth-quarter earnings for fiscal year 2025 (ended on April 25).

The medical-devices leader reported $8.9 billion in revenue during the quarter. That figure beat analysts' expectations. And adjusted earnings per share ($1.62) also came in higher than projections.

It wasn't all good news...

Medtronic said that it expects tariffs to hurt its business. Specifically, the company believes tariffs could increase its costs of goods sold by about $200 million to $350 million in 2026.

As part of its earnings release, Medtronic also made a big announcement...

It plans to separate its diabetes business into a standalone company. That way, Medtronic can focus on its more profitable segments – like making devices for cardiovascular, neuroscience, and medical surgery (robots!).

We love the move to separate the diabetes business into a standalone company...

The diabetes business has long dragged down the company's profits.

These struggles go all the way back to 2021. That's when the FDA warned Medtronic about product safety issues for its MiniMed insulin pumps.

By offloading the diabetes business, Medtronic can focus on what it does best – cardiovascular and medical surgery products. It can also spend more time and energy competing with Intuitive Surgical in the surgical robotics market.

That's a big opportunity for investors...

This 'Dividend Aristocrat' Trades at a Great Price Today

Again, Intuitive Surgical is the undisputed leader in robotic surgery...

At the end of 2024, the company had more than 10,000 active da Vinci systems worldwide. And the company performed more than 2.6 million procedures using these systems last year.

But as a market dominator... it's also priced like one.

Intuitive Surgical currently trades at about 22 times its sales. That's an extreme valuation.

The company is growing fast. Its revenues have increased 19% over the past 12 months. And it's highly profitable.

Still, investors need to pay a steep price for this growth story today. At the current price, Intuitive Surgical almost needs to be flawless in its execution of new robotic systems.

On the other hand, Medtronic trades at just 3.1 times sales today.

Medtronic typically grows its sales in the low-single-digits range. And it generates a lot of cash, which it gives back to shareholders. Its dividend yield is currently 3.3%.

Most important, Medtronic has increased its dividend for 47 straight years. That means it's solidly a "Dividend Aristocrat" – and it's just a few years away from "Dividend King" status.

Demand for surgical robotic systems is booming. You don't want to miss this megatrend.

And as I hope you've seen today, Medtronic is an ideal way to play it.

We should soon find out the FDA's decision about Medtronic's Hugo surgical robot. And from there, we'll see if Medtronic can start to chip away at Intuitive Surgical's market share.

Keep an eye on this company in the weeks and months ahead.

Good investing,

Jeff Havenstein