By Robb M. Stewart

Medtronic bumped up its dividend payout and unveiled plans to spin off its diabetes business as the medical-device company targeted revenue growth for the new fiscal year of roughly 5%.

The Galway-based, New York-listed company recorded a jump in fourth-quarter net income to $1.06 billion, or 82 cents a share, from $654 million, or 49 cents, a year earlier.

Stripping out one-time items, adjusted per-share earnings came in at $1.62 a share for the three months to April 25. That topped the $1.58 mean estimate of analysts polled by FactSet

Sales for the quarter rose 3.9% to $8.93 billion, beating the $8.81 billion analysts expected.

Cardiavascular segment revenue increased 6.6% on last year to $3.34 billion. Revenue from the company's neuroscience portfolio, which includes cranial and spinal technologies and specialty therapies, was up 2.9% to $2.62 billion. And revenue from its medical surgical portfolio, which includes surgical and endoscopy and acute care and monitoring businesses, saw 0.6% rise in revenue to $2.21 billion.

Medtronic, whose technologies include cardiac devices, surgical robotics, insulin pumps and surgical tools, said it now plans to focus on its highest margin growth drivers and will separate its diabetes business into a standalone company. The split is set to be carried out within 18 months through a series of transactions that the company said it hopes includes an initial public offering.

The separation is expected to boost margins and earnings per share, it said.

With news of the split, Medtronic said its board approved a 1 cent increase to the quarterly dividend, bringing it to 71 cents a share for the fiscal first quarter. The 1.4% dividend increase maintains Medtronic's spot in the S&P 500 Dividend Aristocrats Index, whose 69 members have paid a higher dividend for at least 25 straight years.

Medtronic forecast organic revenue growth for fiscal 2026 of about 5%. If recent foreign exchange rates hold, that would translate into reported revenue growth of between 4.8% and 5.1%, it said.

Excluding the potential affects from increased tariffs, the company expected adjusted earnings per share growth of about 4%. It projected a range for its earnings of between $5.50 to $5.60 for the fiscal year, with the lower end assuming bilateral import tariffs imposed by the U.S. and China resume at higher rates following the current 90-day pause and the higher end factoring in the currently scaled back tariffs between the two countries.

Medtronic logged a 6% rise in fiscal 2025 adjusted earnings to $5.49 a share on a 3.6% increase in revenue to $33.54 billion.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

May 21, 2025 07:23 ET (11:23 GMT)

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