Medtronic makes medical devices that go inside or alongside the human body to fix problems that medicine alone cannot solve. The company sells pacemakers that regulate heartbeats, spinal implants that stabilize broken vertebrae, brain stimulators that calm Parkinson's tremors, surgical staplers used in operating rooms every day, and pulse oximetry sensors that measure blood oxygen in hospital wards worldwide. It serves healthcare systems in more than 150 countries and organizes its business into three main segments: Cardiovascular, Neuroscience, and Medical Surgical. Revenue comes from two places at once. Hospitals pay for the implanted device itself, and then they keep buying the consumable parts that go with it, such as infusion sets, sensor patches, catheter leads, and stapler reloads, on a recurring basis. That combination of a one-time implant sale and a steady stream of replacement parts is what makes Medtronic's revenue relatively predictable year after year. The diagram below traces where the money goes.
Five years of financial data tell a story of a large, stable business that is growing again after a flat stretch. Revenue was $31.7 billion in fiscal year 2022, dipped slightly to $31.2 billion in 2023, then climbed steadily to $32.4 billion, $33.5 billion, and $36.4 billion by fiscal year 2026. That last jump was the biggest, driven largely by a 17 percent surge in Cardiac Rhythm and Heart Failure sales, fueled by the Micra leadless pacemaker, the Aurora extravascular defibrillator, and strong growth in cardiac ablation products. The Cardiovascular segment alone reached $14.0 billion in fiscal year 2026.
Gross margin tells a different story, and it is worth paying attention to. In fiscal year 2022, Medtronic kept about 67.9 cents of every revenue dollar after paying to make its products. By fiscal year 2026, that figure had slipped to about 65.0 cents. The direction is consistently downward across all five years. The company itself points to tariffs and duties on imported goods, including $185 million of additional tariff costs in fiscal year 2026 alone, plus asset write-offs, as contributing factors. That pressure on margins is happening even as revenue grows, which means the top line is expanding but the profitability of each dollar is quietly narrowing.
Free cash flow, the money left after the company pays for its factories and equipment, has been meaningful but uneven. It ran at $6.0 billion in fiscal year 2022, dropped to $4.6 billion in 2023, recovered to $5.2 billion in both 2024 and 2025, and reached $5.4 billion in 2026. The company generated $7.3 billion in operating cash in fiscal year 2026, which shows the core business produces real money. The complication is debt. Net debt has climbed from $20.4 billion in 2022 to $26.0 billion in 2026, a rise of $5.6 billion over five years. Medtronic is generating cash and also carrying a growing debt load at the same time.
One structural move stands out in the recent period. In May 2025, Medtronic announced it would separate its Diabetes Business, which makes insulin pumps and continuous glucose monitoring systems, into an independent publicly traded company called MiniMed Group, Inc. MiniMed completed its initial public offering in March 2026. The Diabetes segment had generated $3.1 billion in revenue in fiscal year 2026, growing 13 percent, so this was not a struggling unit being discarded. The decision reflects a deliberate choice to let Medtronic focus on its three core segments while MiniMed pursues its own path.
Several specific risks are documented in Medtronic's filings and deserve direct attention. The most immediate is tariffs. Based on rates as of June 3, 2026, the company estimates a pre-tax tariff impact of $250 million in fiscal year 2027. That is not a vague warning. It is a number sitting on the books before the year has even started. The second risk is supply chain concentration. Some components come from a single supplier, including certain semiconductors and specialty chemicals. A disruption at one of those suppliers could halt production of entire product lines, and FDA manufacturing rules make it difficult to switch quickly to alternatives.
Intellectual property is another documented threat. Medtronic's filings describe an industry with extensive patent litigation. Competitors can challenge patents in court or design around them entirely, and patent lawsuits can result in large payments or injunctions that stop product sales. The filings specifically note that protection is weaker in countries like China, where volume-based procurement tenders already put downward pressure on prices. A third risk is the IRS tax dispute. Medtronic is currently appealing a case about how it allocated income between its main operations and a Puerto Rico subsidiary. An unfavorable ruling could result in substantial additional tax payments that would materially affect the company's financial condition. That outcome remains unresolved.
Regulatory risk is woven through everything Medtronic does. The company's devices must satisfy the FDA in the United States, the CE Mark process in Europe, the China National Medical Products Administration, and regulators in dozens of other countries. A product recall does not just cost money to fix. It can damage the Medtronic brand across every product line at once. The filings describe this as a specific, high-severity risk. The company also points to the integration challenges from its long history of acquisitions, noting that complex transactions require significant management attention and that hidden legal problems can surface after a deal closes.