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

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Understanding how a medical technology leader like MDT Income Statement Overview (MDT) makes money is essential for investors and anyone interested in the business of healthcare innovation. 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 leader in medical technology, developing and manufacturing devices and therapies for cardiovascular, neuroscience, surgical, and diabetes care. Revenue comes primarily from the sale of advanced medical devices and related healthcare solutions to hospitals, clinics, and healthcare providers. The company is organized into four main business segments: Cardiovascular, Neuroscience, Medical Surgical, and Diabetes, each contributing distinct product lines and innovations.

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 solutions, as well as ongoing innovation in neuroscience and surgical technologies.

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 digital business model, high-value product portfolio, and operational efficiencies in manufacturing and supply chain.
• Most costs come from manufacturing, supply chain logistics, and procurement of advanced 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 medical devices, minimally invasive therapies, and digital health platforms.
  • SG&A: $2.81B (+6.9% YoY, 32.7% of revenue) — Includes sales force, marketing, administrative support, and global operations.
  • MDT continues to prioritize innovation and invest in growth while maintaining efficiency across its global 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 significant portion of sales into profit due to its scalable product portfolio, operational discipline, and pricing power in key markets.

What Drives MDT's Money Machine?

• Cardiovascular Devices: 38%+ of revenue — Includes stents, heart valves, and cardiac rhythm management devices.
• Procedure Volume: Growth in minimally invasive and robotic-assisted surgeries boosts device sales and recurring revenue.
• R&D Investment: $0.73B in Q3 2025, targeting breakthrough therapies and digital health integration.
• Future Growth Areas: Diabetes management and AI-powered healthcare solutions, 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 large investments in R&D and global sales infrastructure, 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 procedure volume, new product launches, and expansion 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 devices, including stents, heart valves, and cardiac rhythm management solutions. Neuroscience, medical surgical, and diabetes segments also contribute significantly.

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 strong profitability driven by high-value product lines and operational efficiency.

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) at $0.73B and Sales, General & Administrative (SG&A) at $2.81B in Q3 2025. R&D investment focuses on next-generation devices and digital health.

4. Why does Diabetes segment operate at a loss?

Diabetes, despite generating $721M in revenue, posted an operating loss in Q3 2025. This is because MDT aggressively invests in next-generation diabetes management technologies and digital 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.