How Medtronic Makes Money

How Medtronic Makes Money: Global Leader in Medical Technology

Medtronic (MDT) is a billion-dollar, global leader in medical technology, offering medical devices and therapies to more than 72 million people across 150+ countries. Medtronic—derived from combining terms medical electronics—was formed in a Minneapolis garage by Earl Bakken, who later created the battery-powered pacemaker, and accomplished engineer Palmer Hermundslie. As of 2022, Medtronic has a footprint extending far beyond its Fridley, Minnesota operational headquarters, with locations in Europe, Asia, Australia, Africa, and Latin America.

Boasting more than US$31.7 billion in revenues for 2021, Medtronic offers products that are aligned to its strategy: innovating meaningful therapies, resolving inequities in healthcare access, and delivering value-based healthcare. Medtronic’s four major reporting segments are cardiac and vascular, minimally invasive therapies, restorative therapies, and diabetes. Let's look at each to see how the company makes money.

Key Takeaways

  • Medtronic (MDT) is a medical device company that generates more than $31.7 billion in revenues from four business segments.
  • These segments include: cardiac and vascular, minimally invasive therapies, restorative therapies, and diabetes.
  • The cardiac and vascular segment is the largest, generating more than $11 billion in revenues, and makes devices like pacemakers and defibrillators.
  • Medtronic is a world leader in the area of implants and bone grafts.
  • In 2014, to minimize tax liabilities, Medtronic officially relocated its headquarters to Dublin, Ireland—a controversial corporate practice called corporate inversion.

Medtronic's Financials

For fiscal year (FY) 2022, Medtronic reported net sales of $31.7 billion (a 5.2% increase over 2021), and a net income of $5 billion (an impressive 40% increase over 2021).

Between Medtronic's four primary business units: the Cardiovascular (36.1% of net sales), Medical/Surgical (28.8%), Neuroscience (27.7%), and Diabetes (7.4%).

Cardiac and Vascular Segment

Medtronic's cardiac and vascular unit in FY 2022 accounted for $11.4 billion of revenue. This segment makes, among many other devices, pacemakers and defibrillators. This segment is divided further into subgroups that manage the following types of diseases: cardiac rhythm and heart failure, coronary and structural heart, and aortic and peripheral vascular.

A traditional pacemaker costs between $2,500 and $5,000, while a defibrillator can run between $1,275 and $2,875. Almost always, an insurer or medical provider pays the bill.

Another heart product in the Medtronic line is the cryoballoon, which freezes heart tissue that’s responsible for irregular beats. Such devices are prohibitively expensive for personal use, although it's highly unlikely that a patient with an irregular heartbeat would be administering their own cryoballoon anyway. Instead, the devices are sold to hospitals, enabling thousands of patients to be treated.

Medtronic makes other devices that would have been the stuff of science fiction to the eyes of the company’s nineteenth-century founders. This includes cardiac monitors inserted into the body that records electrical activity during fainting spells and palpitations, as well as surgical replacements for diseased heart valves. It’s easy to forget that modern medicine is as amazing as space travel.

Medical / Surgical

Medtronic's minimally medical / surgical division accounted for $9.1 billion of revenue in 2022.

This division's products span the entire continuum of patient care from diagnosis to recovery, with a focus on diseases of the gastrointestinal tract, lungs, pelvic region, kidneys, obesity, and preventable complications. The products include those for advanced and general surgical products, surgical stapling devices, vessel sealing instruments, wound closure, electrosurgery products, hernia mechanical devices, mesh implants, advanced ablation, interventional lung, ventilators, airway products, renal care products, and sensors and monitors for pulse oximetry, capnography, level of consciousness and cerebral oximetry. 


Neuroscience earned MDT $8.8 billion in sales in 2022.

Neuroscience's products include various spinal implants, bone graft substitutes, biologic products, image-guided surgery and intra-operative imaging systems, robotic guidance systems used in the robot-assisted spine procedures, and systems that incorporate advanced energy surgical instruments. Neuroscience's products also focus on the treatment of overactive bladder, urinary retention, fecal incontinence, as well as products to treat ear, nose, and throat (ENT), and therapies to treat the diseases of the vasculature in and around the brain, including coils, neurovascular stents and flow diversion products. Neuroscience also manufactures products related to implantable neurostimulation therapies and drug delivery systems for the treatment of chronic pain, movement disorders, and epilepsy.

Diabetes Segment

Lastly, there's Medtronic's diabetes group, which generated $2.3 billion in revenue for 2022.

Spurred by the spread of one of the world's fastest-growing diseases, Medtronic is betting big on helping to manage diabetes and has become known for its insulin pump that continually monitors the levels of glucose in a patient's blood.

A generation ago, the average diabetics injected themselves with a hypodermic needle and could only hope that the insulin would do its job—let alone track and save data. Today, a tiny integrated system not only administers insulin but suspends its delivery when glucose levels stabilize. The system costs a few hundred dollars, but for conscientious diabetics, that’s a bargain.

37.3 Million

The number of adults in the U.S. with diabetes, or roughly 11.3% of the population, according to the CDC.

Recent Developments

Medtronic continues to expand its portfolio with new medical therapies and devices to those who need them. In 2020, Medtronic acquired London-based Digital Surgery for an undisclosed amount to enhance its robotic-assisted surgery business. This platform joined the Surgical Robotics sector of the Minimally Invasive Group Therapies segment.

Also, to advance research and development in diabetes solutions and therapies, Medtronic received over $337 million in funding from Blackstone Life Sciences, a Blackstone Group company. The funds will be allocated to four diabetes programs at Medtronic over several years.

< 3%

In 2021, just under three percent of surgeries done robotically around the world.

Overseas Tax Advantages 

Facing a 10-digit tax liability if Medtronic remained based in Minnesota, the company relocated its legal headquarters to Dublin in 2014 after it bought Irish medical devices company Covidien. After the acquisition, Medtronic became Medtronic plc, splitting its headquarters into two, with the operational side remaining in Minnesota and its legal side registered in Dublin, Ireland.

Ostensibly, the move was the inevitable result of purchasing, but it also allowed Medtronic to take advantage of friendlier tax laws, a practice known as corporate inversion, which many multinational firms choose to exploit.

Such maneuvering of headquarters to keep profits outside the U.S. to avoid taxes has ignited lots of recent debate in Congress over the country's corporate tax code—and it played a big role in the 2016 election. Consequently, by becoming an Irish firm, Medtronic can now put far more of its cash flow to work—an extra quarter of every dollar.

What Is Medtronic Known For?

Medtronic is a global producer of medical devices and therapies, such as insulin pumps, pacemakers, and diabetes therapies. Perhaps best known for its revolutionary cardiac devices, such as battery-powered and miniature pacemakers, it also has introduced cutting-edge products into the industry. For instance, in 2016, Medtronic created the first hybrid closed-loop insulin delivery system, and in 2017, it created the world's smallest spinal cord stimulator implant.

Is Medtronic the Largest Medical Device Company?

Medtronic is one of the largest medical device companies in the world, serving over 72 million people annually across 150 countries. With its operational headquarters located in Minnesota, it has more than 350 locations around the world. Medtronic employs more than 90,000 people, including more than 11,600 scientists and engineers, and over 2,000 clinicians.

What Companies Does Medtronic Own?

Since its inception in the 1940s, Medtronic has acquired dozens of companies and formed many subsidiaries across the globe. In 1999, it acquired Sofamor Danek Group, one of the world's leaders in spinal care and implants, to expand and support its spine and biologics sector.

A decade later, Medtronic acquired CoreValue LLC to enhance its offerings to patients with severe aortic stenosis. In 2015, it completed its largest acquisition, purchasing Covidien—an Irish-based, global producer of medical devices and supplies. To further advance its robotic-assisted surgery program, it acquired AI pioneer Digital Surgery in 2020. Other notable companies within its framework include AVE, Surgical Navigation Technologies, Synectics Medical Limited, and Vitatron.

Where Are Medtronic Products Made?

Medtronic operates more than 350 locations, of which 74 are dedicated to manufacturing its products. Most of its production occurs in the United States, in places like Tempe, Arizona, and Puerto Rico, home to four major manufacturing sites.

The Bottom Line

Check the logo the next time you’re lying prone in a surgical imaging machine. First, it will take your mind off whatever analysis the technicians are conducting on your body, and second, you’ll have first-hand evidence of Medtronic’s importance in a modern, advanced economy. As one of the most technologically adept companies in its industry and also a serial acquirer—it has averaged one acquisition every five months in this decade—Medtronic only gets larger. 

Article Sources
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