Episode Details

MiniMed Group (MMED) Q1 FY2027 — MMED closed the reaction session at $22.42, +10.7% - the highest close it has ever had, on 6.07m shares, 5.1x the twenty-day median and 21.7% of the entire public float. MiniMed Flex - the insulin pump behind a U.S. growth acceleration to 13.1% and a +10.7% session - was developed on $324m of funding from Blackstone Life Sciences. For the first two years after U.S. approval and commercial launch, Blackstone earns the greater of a mid-to-high single-digit royalty on net sales or a minimum payment: $157m on Flex and $162m on the MiniMed Fit patch pump. Flex launched in the quarter just reported and Fit was filed with the FDA on the morning of this print, so both clocks are now running. The earnings release does not contain the word Blackstone. THE CALL: HOLD (3/5, MODERATE) — base-case value ~$23.97 vs ~$22.42 today. KEY METRICS: - PERIOD: Q1 of fiscal 2027, ended 31 July 2026, in a year ending 30 April 2027. The SEC submissions metadata says December - it is wrong - NET SALES $843m (+16.6% reported, +15.8% organic) - CGM $431m (+19.9%, now 51% of revenue) - CONSUMABLES $261m (+13.8%) - PUMPS $144m (+21.5%) - U.S. $240m (+13.1%) - INTERNATIONAL $603m (+18.1%) - THIS WAS A 14-WEEK QUARTER: 25 April to 31 July 2026, 98 days against 91. The calendar moved off Medtronic's 52/53-week year to month-end; the company puts the benefit at 4-6% - THE GUIDANCE RAISE IS CLEAN: the June guide said ~10% organic 'includes a 1.0 to 1.5% expected benefit from the extra week'; today's says ~10.5% on identical treatment. 50bp of genuine upgrade - OPERATING INCOME $5m on $843m - a 0.59% margin. Gross profit +$56m, other operating expense -$38m, SG&A -$29m, litigation +$19m, R&D +$10m. Every one of those moved more than the entire result - GAAP EPS $0.00 vs -$0.08. $4m of pre-tax income against a $4m tax provision - a 100% effective rate. MiniMed publishes NO adjusted EPS; any $0.12 you see has no counterpart in the filing - GROSS MARGIN 55.2% vs 56.6%, down 141bp - in a quarter carrying an extra week, which should have helped. Incremental gross margin 46.7%, ten points below the book it was added to - BLACKSTONE (10-K Note 11): $324m of development funding recognised, $212m tied to Flex and Fit. Minimums $157m and $162m; then royalties until a low single-digit multiple of the funding is repaid, then five more years - BALANCE SHEET at 24 April 2026: $298m cash, no borrowings, $500m revolver undrawn, $455m still due from Medtronic. FY2026 operating cash flow -$197m, capex $223m, free cash flow -$420m - OWNERSHIP: Medtronic holds 252,813,348 shares, approximately 90%, and has announced its intention to divest. The float is 28.0m shares and 21.7% of it traded on the day of this print - VALUATION: enterprise $6.00bn, 1.93x FY2026 sales, 1.75x the guided FY2027 - against Insulet at 3.50x on almost identical revenue. DCF $19.57, peers on profit $17.01, peers on revenue $39.73, weighted $23.97 - STREET, by firm and date: BTIG $28 (1 Sep, raised), Wells Fargo $26 (1 Sep, raised from $22), UBS $25 (28 Jul, initiated Buy), Piper Sandler $16 (4 Jun). Average $23.75, a 75% spread What to watch: Gross margin rising year on year in any single quarter, or operating expense held within 2% of the prior year in dollars for two consecutive quarters - which is what a 16% adjusted margin actually requires. Against that: a second straight quarter of falling gross margin, or cash below $200m once the royalty starts settling. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.