Q3 2026 results
| Metric | Result | Change |
|---|---|---|
| Consolidated Revenue | $5.138 billion | 1.5% growth |
| Adjusted EPS | $0.73 | declined 3% |
| Adjusted Gross Margin | 68.0% | 300 basis point decrease |
| Adjusted Operating Margin | 26.5% | 150 basis point contraction |
| Free Cash Flow | $867 million | Not stated |
Guidance and outlook
- Q4 2026 organic revenue: decline of 1% to 3%
- Q4 2026 adjusted EPS: $0.77 to $0.79
- Full year 2026 organic revenue growth: approximately 3.75%
- Full year 2026 adjusted EPS: $3.16 to $3.18
How management sounded
Balanced (+2 on our -10 to +10 scale). Management acknowledged a challenging down cycle in 2027 and significant cyber incident impacts, though they remain confident in their long-term innovation pipeline. Management sounded more upbeat than on 0% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Cyber Incident Impact
Asked: Robbie Marcus with JPMorgan asked about the underlying impact of the cyber hack and why it bleeds into Q4.
Answer: Management explained the cyber incident caused a 300 basis point headwind in Q3 and will cause a 200 to 300 basis point impact in Q4 as inventory levels normalize.
2027 Outlook
Asked: Larry Biegelsen with Wells Fargo asked about confidence in improving growth in 2028 and the drivers.
Answer: Management expects 2027 to be a trough year and looks to new product launches in 2028, including CRM platform launches and EP and WATCHMAN portfolio improvements, to drive growth.
Restructuring
Asked: Joanne Wuensch with Citi asked about internal actions to build the bridge to 2028.
Answer: Management is implementing a restructuring program to delayer the organization and reduce discretionary spend, targeting over $500 million in savings over 3 years.
Penumbra Acquisition
Asked: Matt Taylor with Jefferies asked about the growth profile and dilution of the Penumbra acquisition.
Answer: Management expects to close the deal in early 2027 and noted that higher interest rates will likely increase the previously estimated $0.06 to $0.08 of dilution.
What to watch before the next call
- The closing of the Penumbra acquisition, now expected in early 2027.
- The progress of the company-wide restructuring program and its ability to deliver $500 million in savings.
- Market performance of the WATCHMAN and EP franchises in 2027.
