What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-06-20 compared with 2024-06-20 · 390 added, 319 removed, 1598 unchanged (31% of the section changed)

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Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Medtronic plc and its subsidiaries (the “Company”) as of April 26, 2024 and April 28, 2023, and the related consolidated statements of income, of comprehensive income, of equity and of cash flows for each of the three years in the period ended April 26, 2024, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended April 26, 2024 appearing under Item 15 (a)(1) (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Medtronic plc and its subsidiaries (the "Company") as of April 25, 2025 and April 26, 2024, and the related consolidated statements of income, of comprehensive income, of equity and of cash flows for each of the three years in the period ended April 25, 2025, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended April 25, 2025 appearing under Item 15 (collectively referred to as the "consolidated financial statements").

We also have audited the Company's internal control over financial reporting as of April 25, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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We have served as the Company’s auditor since 1963.

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Medtronic plc

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Certain litigation charges, net 317 149 ( 30 )

Other operating expense (income), net 464 ( 131 ) 862

Other operating (income) expense, net ( 23 ) 464 ( 131 )

Operating profit 5,955 5,144 5,485

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The accompanying notes are an integral part of these consolidated financial statements.

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Medtronic plc

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Translation adjustment 853 ( 848 ) ( 240 )

Net investment hedge 633 ( 596 ) 2,299

Net investment hedges ( 1,474 ) 633 ( 596 )

Net change in retirement obligations ( 110 ) 212 32

Unrealized gain (loss) on cash flow hedges 136 ( 381 ) 727

Other comprehensive income (loss) 178 ( 1,234 ) 1,213

Unrealized (loss) gain on cash flow hedges ( 381 ) 136 ( 381 )

Other comprehensive (loss) income ( 964 ) 178 ( 1,234 )

Comprehensive income including noncontrolling interests 3,727 3,883 2,549

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The accompanying notes are an integral part of these consolidated financial statements.

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Medtronic plc

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The accompanying notes are an integral part of these consolidated financial statements.

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Medtronic plc

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Net income — — — 3,758 — 3,758 26 3,784

Other comprehensive income (loss) — — — — 1,219 1,219 ( 6 ) 1,213

Other comprehensive loss — — — — ( 1,234 ) ( 1,234 ) — ( 1,234 )

Dividends to shareholders ($ 2.72 per ordinary share)

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Net income — — — 3,676 — 3,676 28 3,705

Other comprehensive loss — — — — ( 1,234 ) ( 1,234 ) — ( 1,234 )

Other comprehensive income (loss) — — — — 180 180 ( 2 ) 178

Dividends to shareholders ($ 2.76 per ordinary share)

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Net income — — — 4,662 — 4,662 29 4,691

Other comprehensive income (loss) — — — — 180 180 ( 2 ) 178

Other comprehensive (loss) income — — — — ( 966 ) ( 966 ) 2 ( 964 )

Dividends to shareholders ($ 2.80 per ordinary share)

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The accompanying notes are an integral part of these consolidated financial statements.

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Medtronic plc

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Accounts receivable, net ( 433 ) ( 391 ) ( 576 )

Inventories, net ( 139 ) ( 939 ) ( 560 )

Inventories ( 292 ) ( 139 ) ( 939 )

Accounts payable and accrued liabilities 209 391 696

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The Company provides innovative products and therapies to serve healthcare systems, physicians, clinicians, and patients.

Medtronic was founded in 1949 and is headquartered in Dublin, Ireland.

Medtronic was founded in 1949 and is headquartered in Galway, Ireland.

In May 2025, the Company announced its intent to separate the Diabetes business, with the intention to create a new independent, publicly traded company.

The separation is expected to be completed within 18 months of the initial announcement.

Principles of Consolidation The consolidated financial statements include the accounts of Medtronic plc, its wholly-owned subsidiaries, entities for which the Company has a controlling financial interest, and variable interest entities for which the Company is the primary beneficiary.

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GAAP) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

Estimates are used when accounting for items such as income taxes, contingencies, goodwill, intangible asset, equity investment, and liability valuations.

Estimates are used when accounting for items such as income taxes, contingencies, goodwill, intangible assets, equity investments, and liability valuations.

Actual results may or may not differ from those estimates.

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Uncollectible accounts are written-off against the allowance when it is deemed that a customer account is uncollectible.

Inventories Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis.

The Company reduces the carrying value of inventories for items that are potentially excess, obsolete, or slow-moving based on changes in customer demand, technology developments, or other economic factors.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Inventories Inventories are stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis.

Property, Plant, and Equipment Property, plant, and equipment is stated at cost and depreciated over the useful lives of the assets using the straight-line method.

Additions and improvements that extend the lives of the assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred.

The Company assesses property, plant, and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of property, plant, and equipment asset groupings may not be recoverable.

The Company assesses property, plant, and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of asset groupings may not be recoverable.

The cost of interest that is incurred in connection with significant ongoing construction projects is capitalized using a weighted average interest rate.

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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.

When events or changes in circumstances indicate that the carrying amount of an asset group, which includes intangible assets, may not be recoverable, the Company calculates the excess of an asset group's carrying value over its undiscounted future cash flows.

When events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable, the Company compares the asset group's carrying value to its undiscounted future cash flows.

If the carrying value is not recoverable, an impairment loss is recognized based on the amount by which the carrying value exceeds the fair value.

The fair value of an asset group, which includes intangible assets, is estimated by utilizing a discounted cash flow analysis.

The fair value of an asset group is estimated by utilizing a discounted cash flow analysis.

Acquired IPR&D represents the fair value assigned to those research and development projects that were primarily acquired in a business combination for which the related products have not received regulatory approval and have no alternative future use.

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Changes in projected revenues, probabilities of payment, discount rates, and projected payment dates may result in adjustments to the fair value measurements.

Contingent consideration is remeasured each reporting period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized as income or expense within other operating expense (income), net in the consolidated statements of income.

Contingent consideration is remeasured each reporting period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized as income or expense within other operating (income) expense, net in the consolidated statements of income.

Contingent consideration payments made or received soon after the acquisition date are classified as investing activities in the consolidated statements of cash flows.

Contingent consideration payments not made or received soon after the acquisition date that are related to the acquisition date fair value are reported as financing activities in the consolidated statements of cash flows, and amounts paid or received in excess of the original acquisition date fair value are reported as operating activities in the consolidated statements of cash flows.

Contingent consideration payments not made or received soon after the acquisition date that are related to the acquisition date fair value are reported as financing activities in the consolidated

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

statements of cash flows, and amounts paid or received in excess of the original acquisition date fair value are reported as operating activities in the consolidated statements of cash flows.

Self-Insurance The Company self-insures the majority of its insurable risks, including medical and dental costs, disability coverage, physical loss to property, business interruptions, workers’ compensation, comprehensive general, and product liability.

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employees and many employees outside the U.S.

See Note 15 for assumptions used in determining pension and post-retirement benefit costs and liabilities.

Refer to Note 15 for assumptions used in determining pension and post-retirement benefit costs and liabilities.

Derivatives The Company recognizes all derivative financial instruments in its consolidated financial statements at fair value in accordance with authoritative guidance on derivatives and hedging, and presents assets and liabilities associated with derivative financial instruments on a gross basis in the consolidated financial statements.

For derivative instruments that are designated and qualify as hedging instruments, the hedging instrument must be designated as a cash flow hedge or hedges of net investments, based upon the exposure being hedged.

For derivative instruments that are designated and qualify as hedging instruments, the hedging instrument must be designated as a fair value hedge, cash flow hedge, or hedges of net investments, based upon the exposure being hedged.

See Note 7 for more information on the Company's derivative instruments and hedging programs.

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government and agency securities, mutual funds, short-term investments, and equity securities for which quoted market prices are available.

In addition, the Company classifies currency forward contracts as Level 1 since they are valued using quoted market prices in active markets which have identical assets or liabilities.

In addition, the Company classifies currency exchange rate contracts as Level 1 since they are valued using quoted market prices in active markets which have identical assets or liabilities.

The valuation for most fixed maturity securities are classified as Level 2.

Financial assets that are classified as Level 2 include corporate debt securities, government and agency securities, other asset-backed securities, certificates of deposits, and mortgage-backed securities whose value is determined using inputs that are observable in the market or may be derived principally from, or corroborated by, observable market data such as pricing for similar securities, recently executed transactions, cash flow models with yield curves, and benchmark securities.

Financial assets that are classified as Level 2 include corporate debt securities, government and agency securities, other asset-backed securities, and mortgage-backed securities whose value is determined using inputs that are observable in the market or may be derived principally from, or corroborated by, observable market data such as pricing for similar securities, recently executed transactions, cash flow models with yield curves, and benchmark securities.

In addition, total return swaps are included in Level 2 as the Company uses inputs other than quoted prices that are observable for the asset.

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The significant unobservable inputs used in the fair value measurement of the Company’s auction rate securities are years to principal recovery and the illiquidity premium that is incorporated into the discount rate.

Valuation techniques for investments valued using the fair value option are included in the "Investments" section above.

For goodwill, other

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

intangible assets, and IPR&D, inputs used in the fair value analysis fall within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value.

Valuation techniques for investments valued using the fair value option are included in the "Investments" section above.

For goodwill, other intangible assets, and IPR&D, inputs used in the fair value analysis fall within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value.

Certain investments for which the fair value is measured using the net asset value per share (or its equivalent) practical expedient are excluded from the fair value hierarchy.

Financial assets for which the fair value is measured using the net asset value per share practical expedient include equity and fixed income commingled trusts, partnership units, and registered investment companies.

Revenue Recognition The Company sells its products through direct sales representatives and independent distributors.

Revenue Recognition The Company primarily sells its products through direct sales representatives and independent distributors.

Additionally, a portion of the Company's revenue is generated from consignment inventory maintained at hospitals and royalty and intellectual property arrangements.

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For products sold through direct sales representatives and independent distributors, control is typically transferred upon shipment or upon delivery, based on the contract terms and legal requirements.

For certain of our capital equipment, control is transferred upon installation.

For consignment inventory, control is transferred when the product is used or implanted.

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Deferred tax liabilities generally represent tax expense for which payment has been deferred or expense has already been taken as a deduction on the Company’s tax return but has not yet been recognized as an expense in the consolidated statements of income.

See Footnote 13 for more information on the Company's uncertain tax positions and tax policies.

Other Operating Expense (Income), Net Other operating expense (income), net primarily includes royalty expense, currency remeasurement and derivative gains and losses, Puerto Rico excise taxes, changes in fair value of contingent consideration, certain

See Note 13 for more information on the Company's uncertain tax positions and tax policies.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

acquisition and divestiture-related items, income from funded research and development arrangements, and commitments to the Medtronic Foundation and Medtronic LABS.

Other Operating (Income) Expense, Net Other operating (income) expense, net primarily includes royalty expense, currency remeasurement and derivative gains and losses, changes in fair value of contingent consideration, certain acquisition and divestiture-related items, income from funded research and development arrangements, Puerto Rico excise taxes, and commitments to the Medtronic Foundation and Medtronic LABS.

Other Non-Operating Income, Net Other non-operating income, net includes the non-service component of net periodic pension and post-retirement benefit cost, investment gains and losses, and interest income, which includes income on marketable debt securities and our global liquidity structures.

Currency Translation Assets and liabilities of non-U.S.

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Elements of the consolidated statements of income are translated at the average monthly currency exchange rates in effect during the period.

Currency transaction gains and losses are included in other operating expense (income), net in the consolidated statements of income.

Currency transaction gains and losses are included in o ther operating (income) expense, net in the consolidated statements of income.

Stock-Based Compensation The Company measures stock-based compensation expense at the grant date based on the fair value of the award and recognizes the compensation expense over the requisite service period, which is generally the vesting period.

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The Company adopted this guidance on April 29, 2023.

The adoption of this standard did not have a material impact on the Company’s Consolidated Financial Statements .

Not Yet Adopted Accounting Standards

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements but did require additional disclosures.

Refer to Note 6 for additional information.

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, Improvements to Segment Reporting (Topic 280), which requires incremental disclosures on reportable segments, primarily through enhanced disclosures on significant segment expenses.

The Company will adopt this guidance beginning in the fourth quarter of fiscal year 2025 for our annual report and for interim periods starting in fiscal year 2026.

We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

The Company retrospectively adopted this guidance beginning in the fourth quarter of fiscal year 2025.

The adoption of this standard did not have a material impact on the Company's consolidated financial statements but did require additional disclosures.

Refer to Note 19 for additional information.

Not Yet Adopted Accounting Standards

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740), which requires incremental annual disclosures on income taxes, including rate reconciliations, income taxes paid, and other disclosures.

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We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

The Company's revenues are principally derived from device-based medical therapies and services related to cardiac rhythm disorders, cardiovascular disease, neurological disorders and diseases, spinal conditions and musculoskeletal trauma, chronic pain, urological and digestive disorders, ear, nose, and throat conditions, and diabetes conditions as well as advanced and general surgical care products, respiratory and monitoring solutions, and neurological surgery technologies.

The Company's primary customers include healthcare systems, clinics, third-party healthcare providers, distributors, and other institutions, including governmental healthcare programs and group purchasing organizations.

Prior period revenue has been recast to reflect the new reporting structure.

The activity of the Company's Renal Care Solutions business and the ventilator product line were moved out of Medical Surgical and into the Other line, and the retained PMRI businesses were combined into one business unit called Acute Care & Monitoring in Medical Surgical.

Refer to Note 19 to the consolidated financial statements for additional information regarding the Company's reporting structure.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Topic 220-40), which requires tabular disclosures disaggregating certain costs and expenses within relevant income statement captions.

The Company will adopt this guidance beginning in the fourth quarter of fiscal year 2028 for our annual report and for interim periods starting in fiscal year 2029.

We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The table below illustrates net sales by segment and division for fiscal years 2024, 2023, and 2022:

Net Sales by Fiscal Year

The Company's revenues are principally derived from device-based medical therapies and services related to cardiac rhythm disorders, cardiovascular disease, hypertension, neurological surgery technologies, neurological disorders and diseases, spinal conditions and musculoskeletal trauma, chronic pain, ear, nose, and throat conditions, urological and digestive disorders, advanced and general surgical care products, respiratory and monitoring solutions, and diabetes conditions.

Starting in the first quarter of fiscal year 2025, the Company combined the non-U.S.

developed markets and the emerging markets into an international market geography.

Prior period net sales have been recast to conform to the new presentation.

The table below illustrates net sales by segment and division and by market geography for fiscal years 2025, 2024, and 2023.

revenue includes United States and U.S.

territories, and the international revenue includes all other non-U.S.

(in millions) 2025 2024 2023

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Other operating segment (1)

Other adjustments (2)

Total net sales $ 33,537 $ 32,364 $ 31,227

(1) Includes historical operations and ongoing transition agreements from businesses the Company has exited or divested, which primarily includes the Company's ventilator product line and the Renal Care Solutions business.

The table below illustrates net sales by market geography for each segment for fiscal years 2024, 2023, and 2022:

Developed Markets (2)

Emerging Markets (3)

(in millions) Fiscal Year 2024

Fiscal Year 2023

Fiscal Year 2022

Fiscal Year 2024

Fiscal Year 2023

Fiscal Year 2022

Fiscal Year 2024

Fiscal Year 2023

Fiscal Year 2022

International

(in millions) 2025

Cardiovascular $ 5,804 $ 5,597 $ 5,796 $ 6,677 $ 6,234 $ 5,725

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68 91 160 70 131 335

Other adjustments (2)

— — — ( 90 ) — —

Total net sales $ 17,171 $ 16,562 $ 16,373 $ 16,365 $ 15,802 $ 14,854

includes the United States and U.S.

developed markets include Japan, Australia, New Zealand, Korea, Canada, and the countries within Western Europe.

(3) Emerging markets include the countries of the Middle East, Africa, Latin America, Eastern Europe, and the countries of Asia that are not included in the non-U.S.

developed markets, as defined above.

(4) Includes historical operations and ongoing transition agreements from businesses the Company has exited or divested, which primarily includes the Company's ventilator product line and the Renal Care Solutions business.

(1) Includes operations and ongoing transition agreements from businesses the Company has exited or divested.

(2) Incremental Italian payback accruals resulting from the two July 22, 2024 rulings by the Constitutional Court of Italy relating to certain prior years since 2015.

The amount of revenue recognized is reduced by sales rebates and returns.

Adjustments to rebates and returns reserves are recorded as increases or decreases to revenue.

At April 26, 2024, $ 1.0 billion of rebates were classified as other accrued expenses, and $ 574 million of rebates were classified as a reduction of accounts receivable in the consolidated balance sheet.

At April 28, 2023, $ 1.1 billion of rebates were classified as other accrued expenses, and $ 555 million of rebates were classified as a reduction of accounts receivable in the consolidated balance sheet.

During fiscal year 2024, adjustments to rebate and return reserves recognized in revenue that were included in the rebate and return reserves at the beginning of the period were not material.

At April 25, 2025, $ 983 million of rebates were classified as other accrued expenses, and $ 680 million of reba

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

tes were classified as a reduction of accounts receivable in the consolidated balance sheet.

During fiscal year 2025, adjustments to rebate and return reserves recorded in prior periods were not material.

Deferred Revenue and Remaining Performance Obligations

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At April 25, 2025, the estimated revenue expected to be recognized in future periods related to unsatisfied performance obligations for executed contracts with an original duration of one year or more was approximately $ 0.3 billion.

The Company expects to recognize revenue on the majority of these remaining performance obligations over the next two years .

Acquisitions and Dispositions

The Company expects to recognize revenue on the majority of these remaining performance obligations over the next three years .

Acquisitions, Dispositions, and Funded Research and Development Arrangements

Acquisition Activity

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Fiscal Year 2025

The acquisition date fair value of net assets acquired during the fiscal year ended April 26, 2024 was $ 335 million.

Based on preliminary valuations, assets acquired were primarily comprised of $ 131 million of goodwill, $ 150 million of IPR&D, and $ 29 million of technology-based intangible assets with estimated useful lives of 10 years.

For tax purposes, $ 51 million of goodwill is deductible while $ 80 million is not deductible.

The Company recognized $ 30 million of non-cash contingent consideration liabilities in connection with these business combinations during the fiscal year ended April 26, 2024, which are comprised of revenue and product development milestone-based payments.

Fiscal Year 2023

Intersect ENT

On May 13, 2022, the Company acquired Intersect ENT, a global ear, nose, and throat (ENT) medical technology leader.

The acquisition expands the Neuroscience segment portfolio of products used during ENT procedures, and combined with the Company's navigation, powered instruments, and existing tissue health products, offers a broader suite of solutions to assist surgeons treating patients who suffer from chronic rhinosinusitis (CRS).

Total consideration, net of cash acquired, for the transaction, in which the Company acquired all outstanding shares of Intersect ENT for $ 28.25 per share, was $ 1.2 billion consisting of $ 1.1 billion of cash and $ 98 million previously held investments in Intersect ENT.

The Company acquired $ 615 million of goodwill, $ 635 million of technology-based intangible assets, $ 35 million of customer-related intangible assets, and $ 13 million of tradenames with estimated useful lives of 20 years.

The goodwill is not deductible for tax purposes.

Revenue and net loss attributable to Intersect ENT since the date of acquisition as well as costs incurred in connection with the acquisition included in the consolidated statements of income were not significant for fiscal year 2023.

On August 30, 2022, the Company acquired Affera, Inc.

(Affera) a privately-held company focused on the development of cardiac mapping and navigation systems and catheter-based cardiac ablation technologies.

The acquisition expands the Cardiovascular segment suite of advanced cardiac ablation products and accessories, including its first cardiac mapping and navigation platform.

Total consideration, net of cash acquired for the transaction, was $ 904 million.

The Company acquired $ 660 million of goodwill and $ 300 million of IPR&D, which was capitalized into intangible assets during the fourth quarter of fiscal year 2023.

The acquisition date fair value of net assets acquired during fiscal year 2025 was $ 128 million, consisting of $ 159 million of assets acquired and $ 31 million of liabilities assumed.

Based on preliminary valuations, assets acquired were primarily comprised of $ 108 million of goodwill and $ 50 million of IPR&D.

The goodwill is not deductible for tax purposes.

The Company recognized $ 201 million of non-cash contingent consideration liabilities in connection with the acquisition, which are comprised of product development milestone-based payments.

Revenue and net loss attributable to Affera since the date of acquisition as well as costs incurred in connection with the acquisition included in the consolidated statements of income were not significant for fiscal year 2023.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The acquisition date fair values of the assets acquired and liabilities assumed were as follows:

(in millions) Intersect ENT Affera

Cash and cash equivalents $ 39 $ 66

Inventory 32 —

Goodwill 615 660

Other intangible assets 683 300

Other assets 40 1

Total assets acquired 1,408 1,027

Current liabilities 63 2

Deferred tax liabilities 51 53

Other liabilities 18 1

Total liabilities assumed 131 56

Net assets acquired $ 1,277 $ 970

Other Acquisitions

For acquisitions, other than Intersect ENT and Affera, the acquisition date fair value of net assets acquired during fiscal year 2023 was $ 123 million.

Assets acquired were primarily comprised of $ 66 million of goodwill and $ 57 million of technology-based intangible assets with estimated useful lives of 16 years.

The goodwill is deductible for tax purposes.

The Company recognized $ 73 million of non-cash contingent consideration liabilities in connection with these acquisitions during fiscal year 2023, which are comprised of revenue and product development milestone-based payments.

The Company recognized $ 20 million of non-cash contingent consideration liabilities in connection with these business combinations during fiscal year 2025, which comprised of other milestone-based payments.

Fiscal Year 2024

The acquisition date fair value of net assets acquired during fiscal year 2024 was $ 335 million, consisting of $ 338 million of assets acquired and $ 3 million of liabilities assumed.

Assets acquired were primarily comprised of $ 131 million of goodwill, $ 150 million of IPR&D, and $ 29 million of technology-based intangible assets with estimated useful lives of 10 years.

For tax purposes, $ 51 million of goodwill is deductible while $ 80 million is not deductible.

The IPR&D was placed into service as a definite-lived intangible asset during the second quarter of fiscal year 2025.

The Company recognized $ 30 million of non-cash contingent consideration liabilities in connection with these business combinations during fiscal year 2024, which are comprised of revenue and product development milestone-based payments.

Disposal Activity

Ventilator Product Line Exit

On February 20, 2024, the Company announced the decision to exit its ventilator product line and retain and combine the remaining Patient Monitoring and Respiratory Interventions (PMRI) businesses into one business unit called Acute Care and Monitoring (ACM).

In connection with this decision, the Company recorded pre-tax charges of $ 439 million, including $ 369 million recognized within other operating expense (income), net and $ 70 million recognized in cost of products sold in the consolidated statements of income in fiscal year 2024.

The charges included $ 371 million of non-cash impairments and write-downs primarily related to $ 295 million of long-lived intangible asset impairments and $ 70 million of inventory-write downs.

In February 2024, the Company announced the decision to exit its ventilator product line and retain and combine the remaining Patient Monitoring and Respiratory Interventions (PMRI) businesses into one business unit called Acute Care and Monitoring (ACM).

In connection with this decision, the Company recorded pre-tax charges of $ 439 million, including $ 369 million recognized within other operating (income) expense, net and $ 70 million recognized in cost of products sold in the consolidated statements of income in fiscal year 2024.

The charges included $ 371 million of non-cash impairments and write-downs primarily related to $ 295 million of long-lived asset impairments to write-down the value of related intangible assets to zero and $ 70 million of inventory-write downs.

The other charges primarily related to contract cancellation costs and severance.

The Company will continue to honor existing ventilator contracts to serve the needs of its customers and their patients.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Renal Care Solutions (RCS) Disposition

On May 25, 2022, the Company and DaVita Inc.

In May 2022, the Company and DaVita Inc.

(DaVita) entered into a definitive agreement for the Company to sell half of its RCS business, and on April 1, 2023, completed the transaction.

This sale is part of an agreement between Medtronic and DaVita to form a new, independent kidney care-focused medical device company (“Mozarc Medical” or "Mozarc") with equal equity ownership.

This sale was part of an agreement between Medtronic and DaVita to form a new, independent kidney care-focused medical device company (“Mozarc Medical” or "Mozarc") with equal equity ownership.

At closing, the Company received $ 45 million cash consideration, recorded non-cash contingent consideration receivables valued at $ 195 million, made an additional cash investment of $ 224 million, and retained a 50 % non-controlling equity interest in Mozarc valued at $ 307 million.

For the contingent consideration receivables, the maximum consideration the Company could receive in the future is $ 300 million based on the achievement of certain milestones, as further described below.

The Company recorded non-cash pre-tax charges of $ 136 million in fiscal year 2023, primarily related to impairment of goodwill and changes in the carrying amount of the disposal group, recognized in other operating expense (income), net in the consolidated statements of income.

The Company recorded non-cash pre-tax charges of $ 136 million in fiscal year 2023, primarily related to impairment of goodwill and changes in the carrying amount of the disposal group, recognized in other operating (income) expense, net in the consolidated statements of income.

Refer to Note 9 to the consolidated financial statements for additional information on the goodwill impairment.

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The Company determined that the sale of the RCS business did not meet the criteria to be classified as discontinued operations.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Mechanical Circulatory Support (MCS) Business Exit

In June 2021, the Company announced the decision to stop the distribution and sale of the Medtronic HVAD System.

In connection with this decision, the Company recorded pre-tax charges of $ 881 million, including $ 58 million recognized in costs of products sold and $ 823 million recognized within other operating expense (income), net in the consolidated statement of income in fiscal year 2022 .

The charges included $ 515 million of non-cash impairments and write-downs primarily related to $ 409 million of intangible asset impairments and $ 58 million of inventory write-downs.

The Company also recorded charges of $ 366 million for commitments and obligations associated with the decision, which included charges for patient support obligations, restructuring, and other associated costs.

Contingent Consideration

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A liability is recorded for the estimated fair value of the contingent consideration on the acquisition date.

The fair value of the contingent consideration is remeasured at each reporting period, and the change in fair value is recognized within other operating expense (income), net in the consolidated statements of income.

The fair value of the contingent consideration is remeasured at each reporting period, and the change in fair value is recognized within other operating (income) expense, net in the consolidated statements of income.

The fair value of contingent consideration liabilities at April 25, 2025 and April 26, 2024 was $ 81 million and $ 149 million, respectively.

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Change in fair value ( 2 ) 18

Divestiture-related and other — ( 8 )

Ending Balance $ 81 $ 149

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Beginning balance $ 58 $ 195

Purchase price contingent consideration — 195

Change in fair value ( 45 ) ( 138 )

Ending balance $ 13 $ 58

Funded Research and Development Arrangements

The Company has entered into various arrangements with affiliates of Blackstone Life Sciences Advisors L.L.C.

(collectively, "Blackstone") to receive funding related to the development of certain products within the Cardiovascular Portfolio and Diabetes Operating Unit.

As there is substantive and genuine transfer of risk to Blackstone, the development funding is recognized by Medtronic as an obligation to perform contractual services.

The Company recognizes the funding as income within other operating (income) expense, net as the research and development costs are incurred and funding payments become due.

Under these arrangements, the Company recognized income of $ 181 million, $ 174 million, and $ 202 million in fiscal years 2025, 2024, and 2023, respectively.

As of April 25, 2025, the Company is eligible to receive additional funding of $ 391 million under these arrangements.

Following potential U.S.

regulatory approval and commercial launch of each product covered by the Blackstone agreements, Blackstone will be eligible to receive a combination of fixed regulatory and commercial milestone payments up to $ 1.2 billion and royalties based on percent of sales of such products.

Under certain termination provisions, the Company's payment obligation will survive, and in certain termination circumstances, a payment to Blackstone of a multiple of the funded amounts may be required.

At the time of executing these contracts, the occurrence of such circumstances was deemed to be remote.

Restructuring Charges

In fiscal year 2024, the Company incurred $ 389 million of restructuring and associated costs primarily related to employee termination benefits and facility consolidations to support cost reduction initiatives.

In fiscal years 2023 and 2022, restructuring costs primarily related to Enterprise Excellence and Simplification restructuring programs, both of which were substantially completed as of the end fiscal year 2023.

In fiscal years 2025 and 2024, the Company incurred $ 303 million and $ 389 million, respectively, of restructuring and associated costs primarily related to cost reduction initiatives, which predominantly included employee termination benefits, facility consolidations, and asset write-downs, and specifically for fiscal year 2025, contract terminations.

In fiscal year 2023, restructuring costs primarily related to Enterprise Excellence and Simplification restructuring programs, both of which were substantially completed as of the end fiscal year 2023.

Enterprise Excellence was designed to leverage the Company’s global size and scale to focus on global operations, and functional and commercial optimization, and had total cumulative pre-tax charges of $ 1.8 billion.

2 unchanged sentences

These charges were incremental to charges incurred under our Enterprise Excellence and Simplification programs noted above.

Employee-related costs primarily consist of termination benefits provided to employees who have been involuntarily terminated and voluntary early retirement benefits in fiscal year 2023.

Associated costs primarily include salaries and wages of employees that are fully-dedicated to restructuring programs, consulting fees, and asset write-offs.

Employee-related costs primarily consist of termination benefits provided to employees who have been involuntarily terminated and, specifically for fiscal year 2023, voluntary early retirement benefits.

Associated and other costs primarily include salaries and wages of employees that are fully-dedicated to restructuring activities, consulting fees, asset write-offs, and contract terminations.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The following table presents the classification of restructuring costs in the consolidated statements of income:

5 unchanged sentences

(1) In fiscal year 2023, restructuring charges, net included $ 94 million of incremental defined benefit, defined contribution, and post-retirement related expenses for employees that accepted voluntary early retirement packages.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The following table summarizes the activity related to restructuring programs for fiscal years 2025 and 2024:

(in millions) Employee Termination Benefits (1)

Associated and Other Costs Total

(in millions) Employee Termination Benefits Associated and Other Costs Total

April 28, 2023 $ 204 $ 25 $ 230

1 unchanged sentence

Cash payments ( 292 ) ( 161 ) ( 453 )

Settled non-cash — ( 16 ) ( 16 )

Accrual adjustments (1)

7 unchanged sentences

April 25, 2025 $ 132 $ 18 $ 150

These costs are not included in the table summarizing restructuring charges above, as they are associated with costs that are accounted for under the pension and post-retirement rules.

(2) Accrual adjustments relate to certain employees identified for termination finding other positions within the Company or contract terminations being settled for less than originally estimated.

(1) Accrual adjustments relate to certain employees identified for termination finding other positions within the Company.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Financial Instruments

16 unchanged sentences

Total available-for-sale debt securities $ 6,826 $ 26 $ ( 100 ) $ 6,752 $ 6,719 $ 33

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

April 26, 2024

8 unchanged sentences

government and agency securities 5 — — 5 5 —

Certificates of deposit 10 — — 10 10

Other asset-backed securities 941 2 ( 9 ) 934 934 —

3 unchanged sentences

The amortized cost of debt securities excludes accrued interest, which is reported in other current assets in the consolidated balance sheets.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The following tables present the gross unrealized losses and fair values of the Company’s available-for-sale debt securities that have been in a continuous unrealized loss position deemed to be temporary, aggregated by investment category at April 25, 2025 and April 26, 2024:

23 unchanged sentences

When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Activity related to the Company’s available-for-sale debt securities portfolio is as follows:

(in millions) April 26, 2024 April 28, 2023 April 29, 2022

The table below includes activity related to the Company’s available-for-sale debt securities portfolio.

Gains and losses on available-for-sale debt securities are recognized in other non-operating income , net in the consolidated statements of income.

(in millions) 2025 2024 2023

Proceeds from sales $ 8,213 $ 7,359 $ 7,321

10 unchanged sentences

Total $ 6,826 $ 6,752

Interest income is recognized in other non-operating income, net , in the consolidated statements of income.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Interest income, which includes income on marketable debt securities and the global liquidity structures, is recognized in other non-operating income, net , in the consolidated statements of income.

For fiscal years 2025, 2024, and 2023 there was $ 511 million, $ 597 million, and $ 386 million of interest income, respectively.

Equity Securities, Equity Method Investments, and Other Investments

The Company holds investments in equity securities with readily determinable fair values, equity method investments for which the Company has elected the fair value option, equity investments without readily determinable fair values, investments accounted for under the equity method, and other investments.

Equity securities with readily determinable fair values are included in Level 1 of the fair value hierarchy, as they are measured using quoted market prices.

Equity method investments for which the Company has elected the fair value option are included within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine fair value.

To determine the fair value of these investments, the Company uses a discounted cash flow methodology, taking into consideration various assumptions including discount rate, and all pertinent financial information available related to the investees, including the timing of anticipated product launches, historical financial results, and projections of future cash flows.

Equity investments that do not have readily determinable fair values, and that are not accounted for via the fair value option, are included within Level 3 of the fair value hierarchy, as they are measured using the measurement alternative at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer.

The following table summarizes the Company's equity and other investments at April 25, 2025 and April 26, 2024, which are classified as primarily other assets in the consolidated balance sheets:

5 unchanged sentences

Total equity and other investments $ 951 $ 1,282

Gains and losses on the Company's portfolio of equity and other investments are recognized in other non-operating income , net in the consolidated statements of income.

During the fiscal year ended April 26, 2024, there were $ 291 million of net unrealized losses on equity securities and other investments still held at April 26, 2024.

During the fiscal year ended April 28, 2023, there were $ 56 million of net unrealized gains on equity securities and other investments still held at April 28, 2023.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The table below includes activity related to the Company's portfolio of equity and other investments.

The activity for fiscal years 2024 and 2023 was not significant.

Gains and losses on equity and other investments are recognized in other non-operating income , net in the consolidated statements of income.

(in millions) 2025

Proceeds from sales $ 308

Gross gains 108

Gross losses ( 204 )

Impairment losses recognized ( 135 )

During fiscal year 2025, there were $ 181 million of net unrealized losses on equity securities and other investments still held at April 25, 2025.

During fiscal year 2024, there were $ 291 million of net unrealized losses on equity securities and other investments still held at April 26, 2024.

Mozarc Medical Investment

3 unchanged sentences

Under the fair value option, changes in the fair value of the investment are recognized through earnings each reporting period in other non-operating income, net in the consolidated statements of income.

During the fiscal year ended April 26, 2024, the Company recognized a loss of $ 220 million, primarily driven by the timing of anticipated product launches, historical financial results, and projections of future cash flows.

During fiscal year 2025 and 2024, the Company recognized a loss of $ 171 million and $ 220 million, respectively, primarily driven by the timing of anticipated product launches, historical financial results, and projections of future cash flows.

The following table provides a reconciliation of the beginning and ending balances of the Mozarc investment for which the fair value option has been elected:

1 unchanged sentence

Beginning Balance $ 311 $ 531

Initial valuation — 307

Additional cash investment — 224

Change in fair value ( 171 ) ( 220 )

Ending Balance $ 140 $ 311

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Financing Arrangements

2 unchanged sentences

Bank borrowings $ 13 $ 13

0.250 percent six -year 2019 senior notes

0.000 percent five -year 2020 senior notes

2.625 percent three -year 2022 senior notes

Finance lease obligations 6 6

1 unchanged sentence

Current debt obligations $ 2,874 $ 1,092

Commercial Paper On January 26, 2015, Medtronic Global Holdings S.C.A.

(Medtronic Luxco), an entity organized under the laws of Luxembourg, entered into various agreements pursuant to which Medtronic Luxco may issue United States Dollar-denominated unsecured commercial paper notes (the 2015 CP Program) on a private placement basis, and on January 31, 2020 Medtronic Luxco entered into various agreements pursuant to which Medtronic Luxco may issue Euro-denominated unsecured commercial paper notes (the 2020 CP Program) on a private placement basis.

Commercial Paper In January 2015, Medtronic Global Holdings S.C.A.

(Medtronic Luxco), an entity organized under the laws of Luxembourg, entered into various agreements pursuant to which Medtronic Luxco may issue United States Dollar-denominated unsecured commercial paper notes (the 2015 CP Program) on a private placement basis, and in January 2020, Medtronic Luxco entered into various agreements pursuant to which Medtronic Luxco may issue Euro-denominated unsecured commercial paper notes (the 2020 CP Program) on a private placement basis.

The maximum aggregate amount outstanding at any time under the 2015 CP Program and the 2020 CP Program together may not exceed the equivalent of $ 3.5 billion.

1 unchanged sentence

have guaranteed the obligations of Medtronic Luxco under the 2015 CP Program and the 2020 CP Program.

There was $ 1.1 billion commercial paper outstanding at April 26, 2024.

During fiscal year 2024, the weighted average original maturity of the commercial paper outstanding was approximately 20 days and the weighted average interest rate was 5.45 percent.

There was no commercial paper outstanding at April 25, 2025.

During fiscal year 2025, the weighted average original maturity of the commercial paper outstanding was approximately 13 days and the weighted average interest rate was 5.02 percent.

There was $ 1.1 billion commercial paper outstanding at April 26, 2024.

During fiscal year 2024, the weighted average original maturity of the commercial paper outstanding was approximately 20 days and the weighted average interest rate was 5.45 percent.

The issuance of commercial paper reduces the amount of credit available under the Company's existing credit facility, defined below.

Line of Credit On December 12, 2023, Medtronic Luxco, as borrower, entered into an amendment to its amended and restated credit agreement (Credit Facility), by and among Medtronic, Medtronic, Inc., Medtronic Luxco, the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent and issuing bank, extending the maturity date of the Credit Facility to December 2028.

Line of Credit In October 2024, Medtronic Luxco, as borrower, entered into an amendment to its amended and restated credit agreement (Credit Facility), by and among Medtronic, Medtronic, Inc., Medtronic Luxco, the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent and issuing bank, extending the maturity date of the Credit Facility to December 2029.

The Credit Facility provides for a $ 3.5 billion five-year unsecured revolving credit facility (Credit Facility).

5 unchanged sentences

At April 25, 2025 and April 26, 2024, no amounts were outstanding under the Credit Facility.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Interest rates on advances on the Credit Facility are determined by a pricing matrix based on the Company’s long-term debt ratings, assigned by Standard & Poor’s Ratings Services and Moody’s Investors Service.

1 unchanged sentence

The Company is in compliance with all covenants related to the Credit Facility.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The Company's long-term debt obligations consisted of the following:

3 unchanged sentences

2026 $ — — % $ 1,070 0.44 %

2.625 percent three -year 2022 senior notes

2026 535 2.86 549 2.86

0.000 percent five -year 2020 senior notes

2026 — — 1,070 0.23

2.625 percent three -year 2022 senior notes

2026 — — 535 2.86

1.125 percent eight -year 2019 senior notes

6 unchanged sentences

2029 1,142 0.51 1,070 0.51

3.650 percent five -year 2024 senior notes

2030 971 3.74 — —

1.625 percent twelve -year 2019 senior notes

12 unchanged sentences

2035 1,932 4.47 1,932 4.47

3.875 percent twelve -year 2024 senior notes

2037 971 3.93 — —

6.550 percent thirty -year 2007 CIFSA senior notes

14 unchanged sentences

2043 305 4.10 305 4.09

4.150 percent nineteen -year 2024 senior notes

2044 685 4.20 — —

4.625 percent thirty -year 2014 senior notes

6 unchanged sentences

2051 1,142 1.75 1,070 1.75

4.150 percent twenty-nine -year 2024 senior notes

2054 800 4.19 — —

Finance lease obligations 2027-2040 52 10.00 55 10.17

5 unchanged sentences

The Company is in compliance with all covenants related to the Senior Notes.

In September 2022, Medtronic Luxco issued four tranches of Euro-denominated Senior Notes with an aggregate principal of € 3.5 billion, with maturities ranging from fiscal year 2026 to 2035, resulting in cash proceeds of approximately $ 3.4 billion, net of discounts and issuance costs.

The Company used the net proceeds to repay at maturity € 750 million of Medtronic Luxco Senior Notes for $ 772 million of total consideration in December 2022 and € 2.8 billion of Medtronic Luxco Senior Notes for $ 2.9 billion of total consideration in March 2023.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

In March 2023, Medtronic Luxco issued two tranches of USD-denominated Senior Notes with an aggregate principal of $ 2.0 billion, with maturities ranging from fiscal year 2028 to 2033, resulting in cash proceeds of approximately $ 2.0 billion, net of discounts and issuance costs.

The Company used the net proceeds supplemented by additional cash to repay the ¥ 297 billion Fiscal 2023 Loan Agreement discussed below for $ 2.3 billion of total consideration.

Subsequent to year-end, on June 3, 2024, Medtronic Inc.

In June 2024, Medtronic Inc.

issued four tranches of EUR-denominated Senior Notes with an aggregate principal of € 3.0 billion, with maturities ranging from fiscal year 2030 to 2054, resulting in cash proceeds of approximately $ 3.2 billion, net of discounts and issuance costs.

1 unchanged sentence

These contracts were settled in conjunction with the issuance of the June 2024 Notes.

The Euro-denominated debt issued in September 2022 is designated as a net investment hedge of certain of the Company's European operations.

Refer to Note 7 for additional information regarding the net investment hedge.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Term Loan Agreements In May 2022, Medtronic Luxco entered into a term loan agreement (Fiscal 2023 Loan Agreement) by and among Medtronic Luxco, Medtronic plc, Medtronic, Inc., and Mizuho Bank, Ltd.

12 unchanged sentences

Total $ 28,691

For fiscal years 2024, 2023, and 2022, there was $ 916 million, $ 743 million, and $ 553 million of interest expense on outstanding borrowings, including amortization of debt issuance costs and debt discounts and premiums, and charges recognized in connection with the early redemption of senior notes, recognized in interest expense, net in the consolidated statements of income.

Interest expense on outstanding borrowings, including amortization of debt issuance costs and debt discounts and premiums, and the global liquidity structures is recognized in interest expense, net in the consolidated statements of income.

For fiscal years 2025, 2024, and 2023, there was $ 913 million, $ 916 million, and $ 743 million, respectively, of interest expense on outstanding borrowings, including amortization of debt issuance costs and debt discounts and premiums, and the global liquidity structures.

Financial Instruments Not Measured at Fair Value

3 unchanged sentences

The fair values and principal values consider the terms of the related debt and exclude the impacts of debt discounts and hedging activity.

Supplier Financing Program

The Company participates in a supplier financing program that provides participating suppliers the ability to finance payment obligations from the Company with third-party financial institutions in order to receive earlier payment.

The Company’s standard payment term is 90 days.

The Company’s outstanding payables to its suppliers, including amounts due and payment terms, are not affected by a supplier’s participation in the program.

At April 25, 2025 and April 26, 2024, the Company had $ 100 million and $ 96 million of outstanding payables, respectively, associated with the supplier financing program recorded in accounts payable in the consolidated balance sheets.

The following table presents a roll-forward of outstanding payables confirmed as valid associated with the program during fiscal year 2025:

(in millions) 2025

Beginning Balance $ 96

Invoices confirmed during the year 522

Confirmed invoices paid during the year ( 517 )

Ending Balance $ 100

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Derivatives and Currency Exchange Risk Management

1 unchanged sentence

The Company does not enter into derivative contracts for speculative purposes.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Fair Value Hedges

In fiscal year 2025, the Company began using foreign currency forward contracts designated as fair value hedges to manage its exposure to changes in the fair value of a fixed-rate debt obligation.

At inception, foreign currency forward contracts are designated as fair value hedges.

Changes in the fair value of these derivatives are reported as a component of other operating (income) expense, net .

Amounts excluded from the assessment of effectiveness are recognized in interest expense, net on a straight-line basis over the term of the hedge and were not significant for the fiscal year ended April 25, 2025.

Cash flows related to the Company's derivative instruments designated as fair value hedges are reported as financing activities in the consolidated statements of cash flows.

Cash flows attributed to amounts excluded from the assessment of effectiveness are reported as operating activities in the consolidated statements of cash flows.

Cash Flow Hedges

5 unchanged sentences

Cash flows are reported as operating activities in the consolidated statements of cash flows.

The Company's cash flow hedges will mature within the subsequent three-year period.

At April 26, 2024 and April 28, 2023, the Company had $ 229 million and $ 93 million in after-tax unrealized gains, respectively, associated with cash flow hedging instruments recorded in accumulated other comprehensive loss .

The Company expects that $ 158 million of after-tax net unrealized gains at April 26, 2024 will be recognized in the consolidated statements of income over the next 12 months.

The Company's cash flow hedges will mature within the subsequent two-year period.

At April 25, 2025 and April 26, 2024, the Company had $ 149 million in after-tax unrealized losses and $ 229 million in after-tax unrealized gains, respectively, associated with cash flow hedging instruments recorded in accumulated other comprehensive loss .

The Company expects that $ 62 million of after-tax net unrealized losses at April 25, 2025 will be recognized in the consolidated statements of income over the next 12 months.

Net Investment Hedges

3 unchanged sentences

The gains or losses are reclassified into earnings upon a liquidation event or deconsolidation of the foreign subsidiary.

Amounts excluded from the assessment of effectiveness are recognized in interest expense, net on a straight-line basis over the term of the hedge.

During the twelve months ended April 26, 2024 and April 28, 2023, the Company recognized $ 197 million and $ 107 million, respectively, of after-tax unrealized gains related to excluded components in interest expense , net .

Amounts excluded from the assessment of effectiveness are recognized in interest expense, net on a straight-line basis over the term of the instrument.

For fiscal years 2025, 2024, and 2023, the Company recognized $ 198 million, $ 197 million, and $ 107 million, respectively, of after-tax unrealized gains related to excluded components in interest expense , net .

The cash flows related to the Company's derivative instruments designated as net investment hedges are reported as investing activities in the consolidated statements of cash flows.

4 unchanged sentences

Cash flows related to the Company’s undesignated derivative contracts are reported in the consolidated statements of cash flows based on the nature of the derivative instrument.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Outstanding Instruments

1 unchanged sentence

(in billions) Designation April 25, 2025 April 26, 2024

Currency exchange rate contracts (1)

Fair value hedge $ 1.1 $ —

Currency exchange rate contracts Cash flow hedge 10.6 10.4

4 unchanged sentences

Currency exchange rate contracts Undesignated 3.9 5.9

(1) At April 25, 2025, includes derivative contracts with a notional value of € 1.0 billion, or $ 1.1 billion, designated as hedges of a portion of our fixed-rate debt obligations.

(2) At April 25, 2025, includes derivative contracts with a notional value of € 5.0 billion, or $ 5.7 billion, designated as hedges of a portion of our net investment in certain European operations and derivative contracts with a notional value of ¥ 322 billion, or $ 2.3 billion, designated as hedges of a portion of our net investment in certain Japanese operations.

2 unchanged sentences

This debt matures in fiscal years 2026 through 2054.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Gains and Losses on Hedging Instruments and Derivatives not Designated as Hedging Instruments

3 unchanged sentences

(in millions) 2025 2024 2023 2025 2024 2023

Fair value hedges

Currency exchange rate contracts $ ( 1 ) $ — $ — $ ( 59 ) $ — $ — Other operating (income) expense, net

Cash flow hedges

Currency exchange rate contracts $ ( 416 ) $ ( 161 ) $ ( 953 ) $ ( 312 ) $ ( 703 ) $ ( 144 ) Other operating expense (income), net

Currency exchange rate contracts 308 ( 416 ) ( 161 ) ( 156 ) ( 312 ) ( 703 ) Other operating (income) expense, net

Currency exchange rate contracts ( 71 ) ( 124 ) ( 79 ) ( 74 ) ( 57 ) ( 3 ) Cost of products sold

7 unchanged sentences

(in millions) 2025 2024 2023

Currency exchange rate contracts $ 136 $ 31 $ ( 54 ) Other operating expense (income), net

Currency exchange rate contracts $ ( 91 ) $ 136 $ 31 Other operating (income) expense, net

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Balance Sheet Presentation

9 unchanged sentences

Currency exchange rate contracts 7 15 Other current assets 5 12 Other accrued expenses

Total return swaps — — Other current assets 16 — Other accrued expenses

Total derivatives not designated as hedging instruments 7 15 21 12

Total derivatives $ 334 $ 659 $ 417 $ 66

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The following table provides information by level for the derivative assets and liabilities that are measured at fair value on a recurring basis:

2 unchanged sentences

Level 1 $ 334 $ 401 $ 659 $ 66

Level 2 — 16 — —

Total $ 334 $ 417 $ 659 $ 66

The Company has elected to present the fair value of derivative assets and liabilities within the consolidated balance sheets on a gross basis, even when derivative transactions are subject to master netting arrangements and may otherwise qualify for net presentation.

The cash flows related to collateral posted and received are reported gross as investing and financing activities, respectively, in the consolidated statements of cash flows.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The following tables provide information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria as stipulated by the terms of the master netting arrangements with each of the counterparties.

7 unchanged sentences

Currency exchange rate contracts ( 401 ) 195 125 ( 82 )

Total return swaps ( 16 ) — — ( 16 )

( 417 ) 195 125 ( 97 )

Total $ ( 84 ) $ — $ 125 $ 42

15 unchanged sentences

Under these agreements, either party is required to post eligible collateral when the market value of transactions covered by the agreement exceeds specific thresholds, thus limiting credit exposure for both parties.

As of April 26, 2024 and April 28, 2023, the Company received net cash collateral of $ 101 million and $ 11 million, respectively,

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

from its counterparties.

As of April 25, 2025 the Company posted net cash collateral of $ 125 million to its counterparties.

Cash collateral posted is recorded as a reduction in cash and cash equivalents , with the offset recorded as an increase in other current assets in the consolidated balance sheets.

As of April 26, 2024, the Company received net cash collateral of $ 101 million from its counterparties.

Cash collateral received is recorded as an increase in cash and cash equivalents with the offset recorded in other accrued expenses in the consolidated balance sheets.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Inventory balances were as follows:

10 unchanged sentences

Purchase accounting adjustments ( 5 ) — — — ( 5 )

Sale of RCS business — — ( 208 ) — ( 208 )

Currency translation and other ( 33 ) ( 74 ) ( 458 ) — ( 565 )

4 unchanged sentences

April 25, 2025 $ 8,017 $ 11,716 $ 19,748 $ 2,255 $ 41,737

As further described in Note 19, the Company had changes to the operating segments during fiscal year 2024.

As of the beginning of fiscal year 2024, the Medical Surgical portfolio was separated into two operating segments, and each new operating segment was considered a standalone reporting unit as of the beginning of fiscal year 2024.

As a result of this change, the Company allocated all goodwill that was previously assigned to the Medical Surgical reporting unit to the Surgical/Endoscopy reporting unit and the Patient Monitoring/Respiratory Interventions (PMRI) reporting unit using a relative fair value allocation approach.

The effected reporting units were tested for impairment before and after the alignment.

No goodwill impairment was identified in either test as of the beginning of the fiscal year 2024.

Additionally, during the fourth quarter of fiscal year 2024, the Company's operating segments changed again resulting in the two reporting units created in the first quarter to be combined into the Medical Surgical reporting unit.

All goodwill that was previously assigned to the two reporting units was combined into the Medical Surgical reporting unit.

The Company did no t recognize any goodwill impairment charges during fiscal years 2025 or 2024.

1 unchanged sentence

Upon allocation, a goodwill impairment test was performed for the RCS business, and the Company recognized $ 61 million of goodwill impairment charges during fiscal year 2023.

The goodwill impairment charges are recognized in other operating expense (income), net in the consolidated statements of income.

The goodwill impairment charges are recognized in other operating (income) expense, net in the consolidated statements of income.

Medtronic plc

12 unchanged sentences

IPR&D $ 289 $ — $ 385 $ —

The Company did no t recognize any definite-lived intangible asset impairment charges during fiscal years 2025 and 2023.

During fiscal year 2024, the Company recognized $ 295 million of definite-lived intangible asset impairment charges in connection with the decision to exit its ventilator product line.

The intangible asset impairment charges primarily related to purchased technology, customer-related intangibles, and trade names.

During fiscal year 2022, the Company recognized $ 409 million of definite-lived intangible asset impairment charges in connection with the Company's decision to stop the distribution and sale of the Medtronic HVAD System.

The intangible asset impairment charge primarily related to purchased technology and patents.

The intangible asset impairment charges are recognized in other operating expense (income), net in the consolidated statements of income.

Refer to Note 3 for additional information on what led to the impairments in fiscal year 2024 and 2022.

The Company did no t recognize any definite-lived intangible asset impairment charges during fiscal year 2023.

Indefinite-lived intangible asset impairment charges were not significant for fiscal year 2024, 2023, or 2022.

The intangible asset impairment charges are recognized in other operating (income) expense, net in the consolidated statements of income.

Refer to Note 3 for additional information on what led to the impairments in fiscal year 2024.

There were no indefinite-lived intangible asset impairment charges during fiscal year 2025.

Indefinite-lived intangible asset impairment charges were not significant for fiscal year 2024 and 2023.

Due to the nature of IPR&D projects, the Company may experience future delays or failures to obtain regulatory approvals to conduct clinical trials, failures of such clinical trials, delays or failures to obtain required market clearances, other failures to achieve a commercially viable product, or the discontinuation of certain projects, and as a result, may recognize impairment losses in the future.

Amortization Expense

Intangible asset amortization expense was $ 1.8 billion for fiscal year 2025, including $ 151 million of accelerated amortization on certain intangible assets related to product line exits within the Cardiovascular Portfolio.

Intangible asset amortization expense was $ 1.7 billion for fiscal years 2024 and 2023.

14 unchanged sentences

Property, plant, and equipment, net $ 6,837 $ 6,131

Depreciation expense of $ 954 million, $ 999 million, and $ 974 million was recognized in fiscal years 2024, 2023, and 2022, respectively.

Depreciation expense of $ 1.1 billion, $ 954 million, and $ 999 million was recognized in fiscal years 2025, 2024, and 2023, respectively.

Shareholders’ Equity

13 unchanged sentences

In March 2019, the Company's Board of Directors authorized $ 6.0 billion for repurchase of the Company's ordinary shares.

In March 2024, the Company's Board of Directors authorized an incremental $ 5.0 billion for share repurchases.

In March 2024, the Company's Board of Directors authorized an additional $ 5.0 billion for repurchase of the Company's ordinary shares.

There is no specific time-period associated with these repurchase authorizations.

At April 26, 2024, the Company had used $ 5.7 billion of the $ 11.0 billion authorized under the repurchase program, leaving approximately $ 5.3 billion available for future repurchases.

At April 25, 2025, the Company had used the $ 6.0 billion authorized in March 2019 and $ 2.9 billion of the $ 5.0 billion authorized in March 2024, leaving approximately $ 2.1 billion available for future repurchases.

The Company accounts for repurchases of ordinary shares using the par value method and shares repurchased are cancelled.

75 unchanged sentences

The awards include three metrics:

relative total shareholder return (rTSR), revenue growth, and return on investor capital (ROIC).

relative total shareholder return (rTSR), revenue growth, and return on invested capital (ROIC).

rTSR is considered a market condition metric, and the expense is determined at the grant date and will not be adjusted even if the market condition is not met.

26 unchanged sentences

Unrecognized compensation expense related to performance share units as of April 25, 2025 was $ 90 million and is expected to be recognized over a weighted average period of 1.6 years.

Employees Stock Purchase Plan (ESPP) The Company's shareholders approved the Medtronic plc 2024 Employee Stock Purchase Plan (2024 Plan) on October 19, 2023, which provides for a maximum of 30 million ordinary shares to be purchased by participating employees.

The 2024 Plan replaced the Medtronic plc Amended and Restated 2014 Employees Stock Purchase Plan (2014 Plan) starting January 1, 2024.

The 2024 Plan allows participating employees to purchase the Company's ordinary shares at a discount through payroll deductions.

The expense recognized for shares purchased under the Company’s 2014 Plan and 2024 Plan is equal to the 15 percent discount the employee receives.

Employees Stock Purchase Plan (ESPP) The Medtronic plc 2024 Employee Stock Purchase Plan allows participating employees to purchase the Company's ordinary shares at a discount through payroll deductions.

The expense recognized for shares purchased under the Company’s ESPP is equal to the 15 percent discount the employee receives.

Employees purchased 3 million shares at an average price of $ 72.27 per share in fiscal year 2025.

At April 26, 2024, approximately 29 million ordinary shares were available for future purchase under the 2024 Plan.

At April 25, 2025, approximately 26 million ordinary shares were available for future purchase under the ESPP.

Medtronic plc

28 unchanged sentences

Accrued compensation 363 374

Pension and post-retirement benefits — 66

Stock-based compensation 149 147

30 unchanged sentences

jurisdictions, of which $ 4.8 billion have no expiration, and the remaining $ 6.0 billion will expire during fiscal years 2026 through 2045.

Included in these net operating loss carryforwards are $ 3.9 billion of tax effected net operating losses generated in fiscal year 2008 as a result

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Included in these net operating loss carryforwards are $ 4.0 billion of tax effected net operating losses generated in fiscal year 2008 as a result of the receipt of a favorable tax ruling from certain non-U.S.

of the receipt of a favorable tax ruling from certain non-U.S.

taxing authorities;

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The Company has established valuation allowances of $ 12.7 billion and $ 13.3 billion at April 25, 2025 and April 26, 2024, respectively, primarily related to the uncertainty of the utilization of certain deferred tax assets which are primarily comprised of tax loss and credit carryforwards in various jurisdictions.

The increase in the valuation allowance during fiscal year 2024 is primarily related to the finalization of certain tax returns as well as an increase in the Swiss Cantonal tax rate applied to previously recorded deferred tax assets and associated valuation allowances.

The decrease in the valuation allowance during fiscal year 2025 is primarily related to a decrease in the Luxembourg tax rate applied to previously recorded deferred tax assets and associated valuation allowances and current year utilization of attributes with a full valuation allowance due to certain intercompany transactions.

These valuation allowances would result in a reduction to the income tax provision in the consolidated statements of income if they are ultimately not required.

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Effective tax rate 16.6 % 23.4 % 29.5 %

The Organization for Economic Co-operation and Development (OECD) published Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large multinational corporations at a minimum rate of 15% in each jurisdiction in which the group operates.

The OECD has since issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two Global Minimum Tax.

A number of countries, including Ireland, have enacted legislation to implement the core elements of Pillar Two, which were effective for Medtronic in fiscal year 2025.

The Israeli Central-Lod District Court issued its decision in Medtronic Ventor Technologies Ltd (Ventor) v.

2 unchanged sentences

As a result, the Company recorded a $ 187 million income tax charge during fiscal year 2024 and filed an appeal with the Supreme Court of Israel.

During fiscal year 2024, the net cost from certain tax adjustments of $ 299 million, recognized in income tax provision in the consolidated statement of income, included the following:

During fiscal year 2025, the cost from certain tax adjustments of $ 62 million, recognized in income tax provision in the consolidated statements of income, relates to amortization of the previously established deferred tax assets from intercompany intellectual property transactions.

During fiscal year 2024, the net cost from certain tax adjustments of $ 299 million, recognized in income tax provision in the consolidated statements of income, included the following:

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

• A cost of $ 187 million associated with a reserve adjustment related to the Israeli Central-Lod District Court decision with respect to a deemed taxable transfer of intellectual property.

1 unchanged sentence

• A benefit of $ 95 million related to a Swiss Cantonal tax rate change on previously recorded deferred tax assets.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

• A cost of $ 50 million associated with the amortization of the previously established deferred tax assets from intercompany intellectual property transactions.

• A cost of $ 33 million associated with a change in the Company’s permanent reinvestment assertion on certain historical earnings.

During fiscal year 2023, the net benefit from certain tax adjustments of $ 910 million, recognized in income tax provision in the consolidated statement of income, included the following:

During fiscal year 2023, the net benefit from certain tax adjustments of $ 910 million, recognized in income tax provision in the consolidated statements of income, included the following:

• A net cost of $ 764 million associated with the August 2022 U.S.

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• A net cost of $ 33 million primarily associated with the sale of half of the Company’s RCS business.

During fiscal year 2022, the net benefit from certain tax adjustments of $ 50 million, recognized in income tax provision in the consolidated statement of income, included the following:

• A benefit of $ 82 million associated with a step up in tax basis for Swiss Cantonal purposes.

• A benefit of $ 82 million related to a change in tax rates on intangible assets.

• A cost of $ 47 million associated with the amortization of the previously established deferred tax assets from intercompany intellectual property transactions.

• A cost of $ 41 million associated with a change in the Company’s permanent reinvestment assertion on certain historical earnings.

• A net cost of $ 26 million primarily associated with an intercompany sale of assets.

Currently, the Company’s operations in Puerto Rico, Singapore, Dominican Republic, Costa Rica, and China have various tax holidays and tax incentive grants.

The tax reductions as compared to the local statutory rate favorably impacted earnings by $ 229 million, $ 115 million, and $ 248 million in fiscal years 2024, 2023, and 2022, respectively, and diluted earnings per share by $ 0.17 , $ 0.09 , and $ 0.18 , in fiscal years 2024, 2023, and 2022, respectively.

The tax reductions, inclusive of Pillar Two global minimum tax impacts, as compared to the local statutory rate favorably impacted earnings by $ 294 million, $ 229 million, and $ 115 million in fiscal years 2025, 2024, and 2023, respectively, and diluted earnings per share by $ 0.23 , $ 0.17 , and $ 0.09 , in fiscal years 2025, 2024, and 2023, respectively.

The tax holidays are conditional upon the Company meeting certain thresholds required under statutory law.

1 unchanged sentence

The tax incentive grants which expired during fiscal year 2025 did not have a material impact on the Company's consolidated financial statements.

A number of countries, including Ireland, have enacted legislation to implement the core elements of Pillar Two, which will be effective for the Company in fiscal year 2025.

The Company is continuing to evaluate the potential impacts of proposed and enacted legislative changes as new guidance becomes available.

There are no impacts of this global minimum tax in the consolidated financial statements for the fiscal year ended April 26, 2024.

Medtronic plc

56 unchanged sentences

Diluted earnings per share $ 3.61 $ 2.76 $ 2.82

The calculation of weighted average diluted shares outstanding excludes options to purchase approximately 28 million , 23 million, and 5 million ordinary shares in fiscal year 2024, 2023, and 2022, respectively because their effect would have been anti-dilutive on the Company’s earnings per share.

The calculation of weighted average diluted shares outstanding excludes stock awards of approximately 26 million, 28 million, and 23 million ordinary shares in fiscal year 2025, 2024, and 2023, respectively because their effect would have been anti-dilutive on the Company’s earnings per share.

Retirement Benefit Plans

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Plan curtailments, settlements, and amendments — — ( 2 ) ( 10 )

Actuarial (gain) loss (2)

Actuarial loss (gain) (2)

22 ( 245 ) 21 116

Benefits paid ( 173 ) ( 234 ) ( 59 ) ( 65 )

Special termination benefits (3)

Currency exchange rate changes and other — — 129 ( 41 )

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Benefit obligations 3,269 3,194 1,797 1,604

Over (under) funded status of the plans 357 ( 53 ) 54 115

Recognized asset (liability) $ 357 $ ( 53 ) $ 54 $ 115

Over funded status of the plans 341 357 27 54

Recognized asset $ 341 $ 357 $ 27 $ 54

Amounts recognized on the consolidated

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Non-current liabilities ( 221 ) ( 230 ) ( 289 ) ( 235 )

Recognized asset (liability) $ 357 $ ( 53 ) $ 54 $ 115

Recognized asset $ 341 $ 357 $ 27 $ 54

Amounts recognized in accumulated other

comprehensive loss:

Prior service (credit) cost $ ( 16 ) $ ( 19 ) $ ( 3 ) $ ( 3 )

Prior service credit $ ( 14 ) $ ( 16 ) $ ( 3 ) $ ( 3 )

Net actuarial loss 602 534 230 161

Ending balance $ 588 $ 517 $ 226 $ 158

(1) As of April 24, 2020, the Company announced the freezing of the U.S.

(1) In April 2020, the Company announced the freezing of the U.S.

pension benefits beginning Plan year 2028.

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The actuarial gains and losses were primarily driven by increases and decreases in discount rates, respectively.

(3) This represents a portion of the total voluntary early retirement package charges for fiscal year 2023 .

Medtronic plc

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Components of net periodic benefit cost other than the service component are recognized in other non-operating income, net in the consolidated statements of income.

The other changes in plan assets and projected benefit obligations recognized in other comprehensive income for fiscal year 2024 are as follows:

The other changes in plan assets and projected benefit obligations recognized in other comprehensive (loss) income for fiscal year 2025 are as follows:

(in millions) U.S.

Benefits Non-U.S.

Net actuarial (gain) loss $ ( 339 ) $ 86

Prior service cost — ( 1 )

Net actuarial loss $ 85 $ 54

Amortization of prior service cost 2 —

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Effect of exchange rates — 16

Total recognized in other comprehensive income ( 355 ) 85

Total recognized in net periodic benefit cost and other comprehensive income $ ( 378 ) $ 103

Total recognized in other comprehensive loss 71 69

Total recognized in net periodic benefit cost and other comprehensive loss $ 47 $ 97

Medtronic plc

40 unchanged sentences

Rate of compensation increase 3.90 % 3.90 % 3.90 % 2.85 % 2.75 % 2.70 %

2.75 % 2.70 % 2.90 %

The Company utilizes a full yield curve approach methodology to estimate the service and interest cost components of net periodic pension cost and net periodic post-retirement benefit cost for the Company’s pension and other post-retirement benefits.

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$ 3,551 $ 186 $ — $ — $ 3,366

The following tables provide a reconciliation of the beginning and ending balances of U.S.

pension benefit assets measured at fair value that used significant unobservable inputs (Level 3):

(in millions) Partnership Units

April 29, 2022

Total realized gains, net 67

Total unrealized gains, net 151

Purchases and sales, net ( 238 )

April 28, 2023

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Pension Benefits

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The Company reviews the fair value hierarchy classification on an annual basis.

During the year, the Company reclassified certain investments in the U.S.

pension plan from Level 3 to investments measured using net asset value as a practical expedient.

Outside of the reclassification, there were no transfers into or out of Level 3 for both the U.S.

There were no transfers into or out of Level 3 for both the U.S.

pension plans during the fiscal years ended April 25, 2025 and April 26, 2024.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Retirement Benefit Plan Funding It is the Company’s policy to fund retirement costs within the limits of allowable tax deductions.

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The general purpose of these plans is to provide additional financial security during retirement by providing employees with an incentive to make regular savings.

Company contributions to the plans are based on employee contributions

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

and Company performance.

Company contributions to the plans are based on employee contributions and Company performance.

Expense recognized under these plans was $ 478 million, $ 471 million, and $ 390 million in fiscal years 2025, 2024, and 2023, respectively.

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As the Company’s leases typically do not provide an implicit rate, the Company’s lease liabilities are measured on a discounted basis using the Company's incremental borrowing rate.

Lease terms used in the recognition of right-of-use assets and lease liabilities include only options to extend the lease that are reasonably certain to be exercised.

Lease terms used in the recognition of right-of-use assets and lease liabilities include only options to extend the leases that are reasonably certain to be exercised.

Additionally, lease terms underlying the right-of-use assets and lease liabilities consider terminations that are reasonably certain to be executed.

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The right-of-use assets, lease liabilities, lease costs, cash flows, and lease maturities associated with the Company's finance leases were not material to the consolidated financial statements at April 25, 2025 or April 26, 2024 or for fiscal year 2025, 2024 and 2023.

Finance lease right-of-use assets are included in property, plant, and equipment, net , and finance lease liabilities are included in current debt obligations and long-term debt on the consolidated balance sheets.

Finance lease right-of-use assets are included in propert

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

y, plant, and equipment, net , and finance lease liabilities are included in current debt obligations and long-term debt on the consolidated balance sheets.

The following table summarizes the balance sheet classification of the Company's operating leases and amounts of the right-of-use assets and lease liabilities at April 25, 2025 and April 26, 2024:

12 unchanged sentences

Total operating lease cost $ 298 $ 273 $ 273

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The following table summarizes the cash paid for amounts included in the measurement of operating lease liabilities and right-of-use assets obtained in exchange for operating lease liabilities for fiscal year 2025, 2024, and 2023:

2 unchanged sentences

Right-of-use assets obtained in exchange for operating lease liabilities 281 220 417

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The following table summarizes the maturities of the Company's operating leases at April 25, 2025:

7 unchanged sentences

Income arising from arrangements where the Company is the lessor is recognized within net sales in the consolidated statements of income and the Company's net investments in sales-type leases are included in other current assets and other assets in the consolidated balance sheets.

Lessor income and the related assets and lease maturities were not material to the consolidated financial statements at or for the fiscal year ended April 26, 2024 and April 28, 2023.

Lessor income for fiscal year 2025, 2024, and 2023 and the related assets and lease maturities at April 25, 2025 and April 26, 2024 were not material to the consolidated financial statements.

Medtronic plc

16 unchanged sentences

April 25, 2025 $ ( 63 ) $ ( 2,835 ) $ ( 597 ) $ ( 640 ) $ ( 149 ) $ ( 4,284 )

The income tax on gains and losses on investment securities in other comprehensive income before reclassifications during fiscal years 2024, 2023, and 2022 was an expense of $ 4 million, a benefit of $ 21 million, and a benefit of $ 51 million, respectively.

The income tax on gains and losses on investment securities in other comprehensive income before reclassifications during fiscal years 2025, 2024, and 2023 was an expense of $ 25 million, an expense of $ 4 million, and a benefit of $ 21 million, respectively.

During fiscal years 2025, 2024, and 2023, realized gains and losses on investment securities reclassified from AOCI were reduced by income taxes of $ 3 million, $ 5 million and $ 9 million, respectively.

1 unchanged sentence

Refer to Note 5 for additional information.

During fiscal years 2024, 2023, and 2022, the income tax on cumulative translation adjustment was an expense of $ 3 million, a benefit of $ 5 million, and a benefit of $ 8 million, respectively.

During fiscal years 2025, 2024, and 2023, the income tax on cumulative translation adjustment was an expense of $ 4 million, an expense of $ 3 million, and a benefit of $ 5 million, respectively.

During fiscal year 2025, the income tax on net investment hedges was a benefit of $ 47 million.

During fiscal years 2024 and 2023, there were no tax impacts on net investment hedges.

1 unchanged sentence

The net change in retirement obligations in other comprehensive income includes amortization of net actuarial losses included in net periodic benefit cost.

The income tax on the net change in retirement obligations in other comprehensive income before reclassifications during fiscal years 2024, 2023, and 2022 resulted in an expense of $ 79 million, $ 6 million, and $ 134 million, respectively.

The income tax on the net change in retirement obligations in other comprehensive income before reclassifications during fiscal years 2025, 2024, and 2023 resulted in a benefit of $ 32 million, an expense of $ 79 million, and an expense of $ 6 million, respectively.

During fiscal years 2025, 2024, and 2023, the gains and losses on defined benefit and pension items reclassified from AOCI were reduced by income taxes of $ 3 million, $ 2 million, and $ 9 million, respectively.

1 unchanged sentence

Refer to Note 15 for additional information.

The income tax on unrealized gains and losses on cash flow hedges in other comprehensive income before reclassifications during fiscal years 2024, 2023, and 2022 was an expense of $ 103 million, $ 56 million, and $ 152 million, respectively.

The income tax on unrealized gains and losses on cash flow hedges in other comprehensive income before reclassifications during fiscal years 2025, 2024, and 2023 was a benefit of $ 33 million, an expense $ 103 million, and an expense of $ 56 million, respectively.

Amounts reclassified from AOCI related to cash flow hedges included income taxes of $ 52 million, $ 66 million, and $ 133 million for fiscal years 2025, 2024, and 2023, respectively.

When realized, gains and losses on currency exchange rate contracts reclassified from AOCI are recognized within other operating expense (income), net or cost of products sold.

When realized, gains and losses on currency exchange rate contracts reclassified from AOCI are recognized within other operating (income) expense, net or cost of products sold.

Refer to Note 7 for additional information.

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The Company’s standard practice is to cooperate with regulators and investigators in responding to inquiries.

With respect to intellectual property disputes, the Company is involved in litigation relating to patents, trademarks, copyrights, trade secrets, and other intellectual property (IP) rights, and licenses, acquisitions or other agreements relating to such rights.

This litigation includes, but is not limited to, alleged infringement or misappropriation of IP rights, or breach of obligations related to IP rights, or other claims asserted by competitors, individuals, or, consistent with a growing trend across technology-intensive industries, other entities created specifically to fund IP litigation.

With respect to commercial disputes, antitrust and competition issues have gained increased prominence, enforcement and private litigation have increased globally, and the Company is involved in or at risk for antitrust litigation, investigations or enforcement actions regarding a range of commercial activities, including challenges to mergers and acquisition transactions, joint ventures, co-development or co-marketing arrangements, contracting practices, distribution agreements and employment agreements.

The outcomes of legal actions are not within the Company’s complete control and may not be known for prolonged periods of time.

In some actions, the enforcement agencies or private claimants seek 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.

In some actions, the enforcement agencies or private claimants seek significant monetary damages and/or royalty payments, as well as other civil or criminal remedies (including injunctions barring or restricting the sale of products that are the subject of the proceeding, placing restrictions on competitive strategies or practices, or unwinding consummated transactions), any or all of which could have a material adverse impact on the Company’s consolidated earnings, financial position, and/or cash flows.

The Company records a liability in the consolidated financial statements on an undiscounted basis for loss contingencies related to legal actions when a loss is known or considered probable and the amount may be reasonably estimated.

3 unchanged sentences

Estimates of probable losses resulting from litigation and governmental proceedings involving the Company are inherently difficult to predict, particularly when the matters are in early procedural stages with incomplete scientific facts or legal discovery, involve unsubstantiated or indeterminate claims for damages, potentially involve penalties, fines or punitive damages, or could result in a change in business practice.

The Company classifies certain specified litigation charges and gains related to significant legal matters as certain litigation charges in the consolidated statements of income.

During fiscal years 2024, 2023, and 2022, the Company recognized $ 149 million of certain litigation charges, $ 30 million of certain litigation income, and $ 95 million of certain litigation charges, respectively.

The Company classifies certain specified litigation charges and gains related to significant legal matters as certain litigation charges, net in the consolidated statements of income.

During fiscal years 2025, 2024, and 2023, the Company recognized $ 317 million of certain litigation charges, net, $ 149 million of certain litigation charges, net, and $ 30 million of certain litigation income, net, respectively.

At April 25, 2025 and April 26, 2024, accrued litigation was approximately $ 0.4 billion and $ 0.2 billion, respectively.

3 unchanged sentences

Intellectual Property Matters

At any given time, the Company is involved in litigation relating to patents, trademarks, copyrights, trade secrets, and other intellectual property (IP) rights, and licenses, acquisitions or other agreements relating to such rights.

While the outcome of these litigation matters is inherently uncertain, it is possible that the results of such litigation could require the Company to pay significant monetary damages and/or royalty payments, and negatively impact the Company's ability to sell current or future products, which could have a material adverse impact on the Company's business, results of operations, financial condition, and cash flows.

The Company is a defendant in patent litigation brought by Colibri Heart Valve LLC (Colibri) in the U.S.

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state and federal courts that allege personal injury from hernia mesh products sold by those subsidiaries.

As of May 15, 2024, the Company and certain of its subsidiaries have been named as defendants in lawsuits filed on behalf of approximately 8,350 individual plaintiffs, and certain plaintiffs’

As of June 11, 2025, the Company and certain of its subsidiaries have been named as defendants in lawsuits filed on behalf of approximately 9,325 individual plaintiffs, and certain plaintiffs’ law firm

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

law firms have advised the Company that they may file additional cases in the future.

s have advised the Company that they may file additional cases in the future.

Approximately 6,950 plaintiffs have pending lawsuits in a coordinated proceeding in Massachusetts state court, where they have been consolidated before a single judge.

Approximately 500 plaintiffs have pending lawsuits in a coordinated action in Minnesota state court, and there are approximately 1,875 actions coordinated in a federal Multidistrict Litigation in the U.S.

District Court for the District of Massachusetts plus six one-off cases filed in other courts.

District Court for the District of Massachusetts plus fewer than ten one-off cases filed in other courts.

The pending lawsuits relate almost entirely to hernia mesh products that have not been subject to recalls, withdrawals, or other adverse regulatory action.

4 unchanged sentences

state and federal courts alleging personal injury from Series 600 insulin pumps with allegedly defective clear retainer rings that were subject to field corrective actions in 2019 and 2021.

As of May 14, 2024, 27 lawsuits have been filed on behalf of a total of 107 individual plaintiffs, and certain plaintiffs’ law firms have notified the Company that they may file additional lawsuits in the future on behalf of thousands of additional claimants.

As of May 28, 2025, after a number of recent dismissals, there are nine lawsuits filed on behalf of 20 individuals.

Plaintiffs’ firms previously notified the Company that they may file additional lawsuits in the future on behalf of several thousand additional claimants.

Most of the filed suits are coordinated in California state court.

1 unchanged sentence

Additionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from these matters.

Antitrust Matters

Applied Medical

The Company is a defendant in civil antitrust litigation brought by Applied Medical Resources Corporation in the U.S.

District Court for the Central District of California, alleging that the Company has engaged in anticompetitive and monopolistic conduct relating to its sales of advanced bipolar devices, including under contracts with group purchasing organizations.

The Company has substantial legal and factual defenses and intends to defend itself vigorously.

The court recently deferred trial from June 2025 until after it rules on the parties' summary judgment motions.

The Company has not recorded an expense related to damages in connection with this matter because any potential loss is not currently probable and reasonably estimable.

Additionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from this matter.

Environmental Proceedings

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District Court for the District of Maine in the early 2000's by the Natural Resources Defense Council and the Maine People's Alliance relating to mercury contamination of the Penobscot River and Bay and options for remediating such contamination.

In March 2021, the parties notified the court that they had agreed on a settlement in principle of all issues in this matter, and in September 2022 the parties filed a joint motion for final approval by the court.

In October 2022, the court issued a final order approving the settlement and the parties are working with consultants on implementation of remedial activities.

6 unchanged sentences

Securities and Exchange Commission, U.S.

Department of Justice, and various authorities in China regarding certain activities, including in China.

Department of Justice, and various authorities in other countries regarding certain activities in different global markets.

The Company is committed to regularly evaluating and, as appropriate, strengthening its anti-corruption compliance programs and practices.

2 unchanged sentences

Additionally, the Company is unable to reasonably estimate the range of loss, if any, that may result from these matters.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Other Matters

Italian Payback

In 2015, “payback” legislation was enacted in Italy requiring companies selling medical devices to make payments to the Italian state if Italy’s medical device expenditures exceed annual regional maximum ceilings.

The payment amounts are calculated based upon the amount by which the regional ceilings were exceeded for any given year.

There has been significant scrutiny on the legality and enforceability of the payback law since its inception, and litigation challenging the law has been proceeding through the Italian Courts.

Since the law was enacted, the Company has recognized an estimate for the amount of variable consideration but has not made any payments under the payback law.

In July 2024, two rulings by the Constitutional Court of Italy found that the medical device payback law is constitutional.

Therefore, the Company increased its liability pertaining primarily to certain prior years since 2015 by $ 90 million during the three months ended July 26, 2024, as a reduction to net sales in the consolidated statements of income.

As litigation before Italian Courts is still pending, final resolution is unknown at this time, and it is possible that the amount of the Company’s liability could differ from the amount currently accrued.

Contract Termination with Blackstone

As described in Note 3, the Company is party to various research and development funding arrangements with Blackstone, which are subject to certain termination provisions.

During fiscal year 2025, the parties negotiated a contractual dispute resolution under one of the funding arrangements.

As a result, the Company recognized certain litigation charges in connection with the resolution.

The Company included this accrued litigation charge in other accrued expenses on the consolidated balance sheets.

In March 2009, the IRS issued its audit report on Medtronic, Inc.

4 unchanged sentences

and its wholly-owned subsidiary operating in Puerto Rico, which is one of the Company's key manufacturing sites.

Tax Court (Tax Court) reviewed this dispute, and in June 2016, issued an opinion with respect to the allocation of income between the parties for fiscal years 2005 and 2006 whereby it generally rejected the IRS’s position, but also made certain modifications to the Medtronic, Inc.

The Tax Court reviewed this dispute, and in June 2016, issued an opinion with respect to the allocation of income between the parties for fiscal years 2005 and 2006 whereby it generally rejected the IRS’s position, but also made certain modifications to the Medtronic, Inc.

tax returns as filed.

2 unchanged sentences

Court of Appeals issued its opinion in August 2018 and remanded the case back to the Tax Court for additional factual findings.

The Tax Court issued its second opinion in August 2022, the IRS filed a Notice of

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Appeal to the U.S.

The Tax Court issued its second opinion in August 2022, the IRS filed a Notice of Appeal to the U.S.

Court of Appeals for the Eighth Circuit in September 2023, and Medtronic subsequently filed a cross-appeal in October 2023.

Oral argument for the Appeal occurred in May 2025.

The IRS has issued its audit reports on Medtronic, Inc.

4 unchanged sentences

Tax Court matter for fiscal years 2005 and 2006.

Medtronic, Inc.’s fiscal years 2017, 2018, and 2019 U.S.

Medtronic, Inc.’s fiscal years 2017 through 2023 U.S.

federal income tax returns are currently being audited by the IRS.

1 unchanged sentence

federal income tax returns through fiscal year 2021.

Covidien LP’s fiscal year 2023 federal income tax return is currently being audited by the IRS.

Although it is not possible to predict the outcome for most of the income tax matters discussed above, the Company believes it is possible that charges associated with these matters could have a material adverse impact on the Company’s consolidated earnings, financial position, and/or cash flows.

4 unchanged sentences

Historically, the Company has not experienced significant losses on these types of guarantees.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

We also enter into standby letters of credit agreements, bank guarantees, and surety bonds with financial institutions to support various performance and other obligations, as well as ongoing tax matters.

As of April 25, 2025, the aggregated amount outstanding under these instruments was approximately $ 0.9 billion.

The Company believes the ultimate resolution of the above guarantees is not expected to have a material effect on the Company’s consolidated earnings, financial position, and/or cash flows.

Segment and Geographic Information

There were no changes to the reportable segments during the fiscal year ended April 26, 2024.

We continue to have four reportable segments:

The Company has four reportable segments:

Cardiovascular Portfolio, Neuroscience Portfolio, Medical Surgical Portfolio, and Diabetes Operating Unit.

However, there were changes to the operating segments during fiscal year 2024 as a result of how the Chief Operating Decision Maker (CODM) assesses business performance.

During the first quarter of fiscal year 2024, the Medical Surgical Portfolio was separated into two operating segments as a result of the previously contemplated separation of the PMRI businesses, which were previously aggregated based upon similar economic and operating characteristics.

In addition, during the first quarter of fiscal year 2024, there were certain Medical Surgical businesses that were moved to the Other line, which primarily related to wind-down activity of the Company's Renal Care Solutions business that was contributed to Mozarc Medical in April 2023.

Subsequently, as a result of the February 2024 decision to exit the Company's ventilator product line and retain and combine the remaining PMRI businesses into one business unit as further discussed in Note 3, the two operating segments within the Medical Surgical Portfolio were combined into one operating segment, and the Company's ventilator product line, which was in the Medical Surgical Portfolio, was moved to the Other line during the fourth quarter of fiscal year 2024.

Prior period amounts have been recast to reflect the new reporting structure.

The Company's management has chosen to organize the entity based upon therapy solutions provided by each segment.

The four principal segments are strategic businesses that are managed separately, as each one develops and manufactures products and provides services oriented toward targeted therapy solutions.

The chief operating decision maker (CODM) is our Chief Executive Officer (CEO) and has chosen to organize the entity based upon therapy solutions provided by each segment.

The four reportable segments are strategic businesses that are managed separately, as each one develops and manufactures products and provides services oriented toward targeted therapy solutions.

The primary products and services from which the Cardiovascular Portfolio segment derives its revenues include products for the diagnosis, treatment, and management of cardiac rhythm disorders and cardiovascular disease, as well as services to diagnose, treat, and manage heart and vascular-related disorders and diseases.

1 unchanged sentence

The primary products and services from which the Medical Surgical Portfolio segment derives its revenues include those focused on diseases of the respiratory system, gastrointestinal tract, lungs, pelvic region, obesity, and other preventable complications.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

The primary products from which the Diabetes Operating Unit segment derives its revenues include those focused on diabetes management, including insulin pumps, continuous glucose monitoring systems and sensors, and smart insulin pens.

Segment disclosures are on a performance basis, consistent with internal management reporting.

Net sales of the Company's segments include end-customer revenues from the sale of products the segment develops, manufactures, and distributes.

Refer to Note 2 for discussion on net sales by segment.

There are certain corporate and centralized expenses that are not allocated to the segments.

The Company's management evaluates the performance of the segments and allocates resources based on net sales and segment operating profit.

Segment operating profit represents income before income taxes, excluding interest income or expense, amortization of intangible assets, centralized distribution costs, currency impact of remeasurement and hedging, non-operating income or expense items, certain corporate charges, stock-based compensation, and other items not allocated to the segments.

Prior period amounts have been recast to reallocate certain expenses from segment operating profit to centralized distribution costs to conform to classifications used in the current year as a result in a change to the segment operating profit metric used by the CODM to assess business performance and allocate resources.

The CODM measures and evaluates segment performance and allocates resources based on net sales and segment operating profit.

Net sales include end-customer revenues from products developed, manufactured, and distributed by the segments.

Significant expense categories include cost of products sold excluding amortization of intangible assets, research and development expense, and selling, general, and administrative expenses.

Segment operating profit excludes certain corporate and centralized expenses not allocated to the segments, including interest income and expense, amortization of intangible assets, centralized distribution costs, currency impact of remeasurement and hedging recorded in other operating (income) expense, net , non-operating income or expense items, certain corporate charges, stock-based compensation, and other items not allocated to the segments.

The CODM uses segment operating profit in the budget and forecasting process and to monitor budget and forecast variances versus actual when assessing segment performance and allocating capital resources to each segment.

The accounting policies of the segments are the same as those described in Note 1.

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The allocation of depreciation expense is based on the proportion of the assets used by each segment.

The CODM is not regularly provided with expenditures for additions to long-lived assets.

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Segment Operating Profit

(in millions) 2024 2023 2022

Cardiovascular $ 4,474 $ 4,522 $ 4,596

Neuroscience 3,940 3,712 3,858

Medical Surgical 3,170 3,048 3,698

Diabetes 394 383 588

Fiscal Year 2025

(in millions) Cardiovascular Neuroscience Medical Surgical Diabetes Total

Net sales $ 12,481 $ 9,846 $ 8,407 $ 2,755 $ 33,489

Reconciliation of revenues

Other operating segment net sales (1)

Other adjustments (2)

Total consolidated net sales $ 33,537

Cost of products sold, excluding amortization of intangible assets 3,967 2,762 3,142 1,117 10,987

Research and development expense 931 542 606 400 2,478

Selling, general, and administrative expense 2,824 2,327 1,600 791 7,541

Other segment items (3)

( 41 ) 31 18 ( 43 ) ( 36 )

Reportable segment operating profit $ 4,801 $ 4,183 $ 3,042 $ 491 $ 12,518

Other operating segment (1)

Reconciliation of segment profit / (loss)

Other operating segment profit (1)

Corporate ( 1,837 )

Interest expense, net ( 729 )

Other non-operating income, net 402

Amortization of intangible assets ( 1,807 )

Stock-based compensation ( 429 )

Centralized distribution costs ( 1,650 )

Currency ( 3 )

Restructuring and associated costs ( 303 )

Acquisition and divestiture-related items ( 124 )

Certain litigation charges, net ( 317 )

Medical device regulations ( 52 )

Other adjustments (2)

Income before income taxes $ 5,628

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Fiscal Year 2024

(in millions) Cardiovascular Neuroscience Medical Surgical Diabetes Total

Net sales $ 11,831 $ 9,406 $ 8,417 $ 2,488 $ 32,142

Reconciliation of revenues

Other operating segment net sales (1)

Total consolidated net sales $ 32,364

Cost of products sold, excluding amortization of intangible assets 3,731 2,634 3,057 963 10,385

Research and development expense 906 556 587 402 2,452

Selling, general, and administrative expense 2,748 2,245 1,594 778 7,365

Other segment items (3)

( 28 ) 30 9 ( 49 ) ( 39 )

Reportable segment operating profit $ 4,474 $ 3,940 $ 3,170 $ 394 $ 11,979

Reconciliation of segment profit / (loss)

Other operating segment profit (1)

Corporate ( 1,784 )

Interest expense ( 719 ) ( 636 ) ( 553 )

Interest expense, net ( 719 )

Other non-operating income, net 412

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Certain litigation charges, net ( 149 )

IPR&D charges — — ( 101 )

Medical device regulations ( 119 )

Income before income taxes $ 4,837

Medtronic plc

Notes to Consolidated Financial Statements (Continued)

Fiscal Year 2023

(in millions) Cardiovascular Neuroscience Medical Surgical Diabetes Total

Net sales $ 11,522 $ 8,959 $ 7,989 $ 2,262 $ 30,731

Reconciliation of revenues

Other operating segment net sales (1)

Total consolidated net sales $ 31,227

Cost of products sold, excluding amortization of intangible assets 3,562 2,411 2,859 871 9,704

Research and development expense 815 573 543 392 2,323

Selling, general, and administrative expense 2,653 2,189 1,549 705 7,096

Other segment items (3)

( 31 ) 74 ( 10 ) ( 90 ) ( 57 )

Reportable segment operating profit $ 4,522 $ 3,712 $ 3,048 $ 383 $ 11,664

Reconciliation of segment profit / (loss)

Other operating segment loss (1)

Corporate ( 1,763 )

Interest expense, net ( 636 )

Other non-operating income, net 515

Amortization of intangible assets ( 1,698 )

Stock-based compensation ( 355 )

Centralized distribution costs ( 1,558 )

Restructuring and associated costs ( 647 )

Acquisition and divestiture-related items ( 345 )

Certain litigation charges, net 30

Medical device regulations ( 150 )

Commitments to the Medtronic Foundation and Medtronic LABS ( 70 )

Income before income taxes $ 5,364

(1) Includes the historical operations and ongoing transition agreements from businesses the Company has exited or divested, which primarily includes the Company's ventilator product line and the Renal Care Solutions business.

(2) Includes the net impact of remeasurement and the Company's hedging programs recorded in other operating expense (income), net.

(1) Includes the operations and ongoing transition agreements from businesses the Company has exited or divested.

(2) Includes incremental Italian payback accruals resulting from the two July 22, 2024 rulings by the Constitutional Court of Italy relating to certain prior years since 2015.

(3) Other segment items for each reportable segment primarily includes royalty expense.

The Cardiovascular and Diabetes segments also include income from funded research and development arrangements.

Medtronic plc

12 unchanged sentences

Total $ 91,680 $ 89,981 $ 1,054 $ 954 $ 999

(1) Includes the operations and ongoing transition agreements from businesses the Company has exited or divested.

Geographic Information

13 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data