How MDT (Medtronic) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a medical device leader like MDT Income Statement Overview makes money is essential for investors and anyone interested in the business of healthcare technology. In this post, we break down MDT's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick MDT Overview

MDT Income Statement Overview operates as a global medical device company, designing and manufacturing advanced healthcare technologies for hospitals, clinics, and patients. Its portfolio spans cardiovascular devices, neuroscience solutions, surgical equipment, and diabetes management systems.
Revenue comes primarily from the sale of medical devices and related healthcare products, with business segments including Cardiovascular, Neuroscience, Medical Surgical, and Diabetes. Each segment targets specific therapeutic areas, enabling MDT to diversify its income streams and maintain leadership in multiple markets.

Revenue Breakdown

• Total Revenue (Q3 2025): $8.58B (+8.4% YoY)
  • Cardiovascular Revenue: $3.29B (38.3% of total, +9.2% YoY)
  • Neuroscience Revenue: $2.42B (28.2% of total, +4.3% YoY)
  • Medical Surgical Revenue: $2.08B (24.3% of total, +4.4% YoY)
  • Diabetes Revenue: $0.72B (8.4% of total, +11.4% YoY)
  • Other: $0.07B
• Growth is powered by strong demand for cardiovascular and diabetes devices, as well as ongoing innovation in neuroscience and surgical solutions.

Gross Profit and Margins

• Gross Profit: $4.95B (57.7% gross margin)
  • Cost of Revenue: $3.63B (+13.4% YoY)
  • MDT maintains robust margins due to its scalable product portfolio, premium pricing, and operational efficiencies in manufacturing and supply chain.
• Most costs come from manufacturing, supply chain logistics, and procurement of raw materials for device production.

Operating Income and Expenses

• Operating Income: $1.45B (+13.1% YoY, 16.8% margin)
• Operating Expenses: $3.50B (-9.9% YoY)
  • R&D: $0.73B (+7.4% YoY, 8.5% of revenue) — Focused on next-generation cardiovascular devices, neural stimulation technologies, and diabetes management systems.
  • SG&A: $2.81B (+6.9% YoY, 32.7% of revenue) — Includes global sales teams, marketing, administrative support, and regulatory compliance.
  • MDT continues to prioritize innovation and invest in growth while maintaining efficiency in its operations.

Net Income

• Pre-Tax Income: $1.30B (+2.7% YoY, 15.2% margin)
• Income Tax: $0.26B (19.6% effective tax rate)
• Net Income: $1.04B (-0.2% YoY, 12.1% net margin)
• MDT converts a moderate portion of sales into profit due to its scale, operational efficiency, and strong pricing power in key device categories.

What Drives MDT's Money Machine?

• Cardiovascular Devices: 38%+ of revenue — MDT's largest segment, driven by demand for advanced heart and vascular technologies.
• Diabetes Solutions: Fastest-growing segment (+11.4% YoY), reflecting rising global prevalence and adoption of MDT's innovative devices.
• R&D Investment: $0.73B in Q3 2025, supporting pipeline development in minimally invasive surgery, neurostimulation, and digital health.
• Future Growth Areas: Digital health platforms and AI-powered diagnostics, though not yet profitable, are strategic priorities for long-term expansion.

Visualizing MDT's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after heavy R&D and SG&A investments, 12.1% of revenue drops to the bottom line.

Key Takeaways

• MDT's money comes overwhelmingly from cardiovascular and neuroscience medical devices
• High gross and net margins illustrate the power of MDT's scalable, innovation-driven business model
• Heavy investment in R&D, balanced by efficiency in operating costs
• Ongoing growth is driven by device innovation, global expansion, and rising demand in diabetes care

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FAQ About MDT's Income Statement

1. What is the main source of MDT's revenue in 2025?

MDT generates over 38% of its revenue from cardiovascular medical devices. Other significant sources include neuroscience 28%, medical surgical 24%, and diabetes 8% segments.

2. How profitable is MDT in Q3 2025?

MDT reported net income of $1.04B in Q3 2025, with a net margin of approximately 12.1%, reflecting moderate profitability driven by scale, operational efficiency, and premium product pricing.

3. What are the largest expense categories for MDT?

The biggest expenses on MDT's income statement are operating expenses, particularly Research & Development (R&D) and Sales, General & Administrative (SG&A) costs. R&D investment reached $0.73B in Q3 2025, as MDT prioritizes device innovation and pipeline expansion.

4. Why does Diabetes operate at a loss?

Diabetes, despite generating $0.72B in revenue, posted an operating loss in Q3 2025. This is because MDT aggressively invests in next-generation diabetes management technologies and digital health platforms, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does MDT's effective tax rate compare to previous years?

MDT's effective tax rate in Q3 2025 was 19.6%, consistent with previous years. This moderate rate is primarily due to international structuring and tax benefits from share-based compensation.