Medtronic PLC (NYSE:MDT)

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibits considerable fluctuation over the observed periods. Starting at 4,408 million US dollars in 2020, it declined to 4,049 million in 2021, rebounded notably to 4,888 million in 2022, but then decreased again to 4,151 million in 2023 and further to 3,736 million in 2024. In 2025, there is a significant recovery, with NOPAT rising to 4,980 million. This pattern indicates volatility in operational profitability, with periods of both recovery and decline.

Cost of Capital

The cost of capital remains relatively stable across the years, fluctuating slightly between 10.66% and 11.08%. It peaked at 11.08% in 2021 and reached its lowest point at 10.66% in 2025. This narrow range suggests a consistent cost of financing invested capital, with no significant shifts impacting the overall cost over time.

Invested Capital

Invested capital shows some variability but remains within a relatively narrow band. It started at 71,146 million US dollars in 2020 and increased slightly to 72,405 million in 2021. Following this, it decreased to 69,629 million in 2022, experienced a slight increase and then decrease in subsequent years, ultimately settling at 70,365 million in 2025. This suggests a stable level of capital investment with minor adjustments rather than large expansions or contractions.

Economic Profit

The economic profit consistently remains negative throughout the analyzed periods, indicating that the returns generated do not cover the cost of capital. The losses peak at -3,975 million in 2021, improve to -2,695 million in 2022, but then worsen again in subsequent years, reaching -3,679 million in 2024 before improving to -2,521 million in 2025. Despite fluctuations, the persistent negative values signify an ongoing challenge in creating value above the capital costs.

Net Income Attributable to Medtronic

The net income figures demonstrated variability over the reported periods. Starting at 4,789 million US dollars in April 2020, the net income decreased significantly to 3,606 million by April 2021. It rebounded to 5,039 million in April 2022, indicating a strong recovery. However, a subsequent decline occurred, with net income falling to 3,758 million in April 2023 and slightly decreasing again to 3,676 million in April 2024. The latest period, April 2025, shows an improvement to 4,662 million, suggesting a positive turnaround in profitability.

Net Operating Profit After Taxes (NOPAT)

NOPAT followed a somewhat similar pattern to net income, but with slightly less fluctuation. It decreased from 4,408 million in April 2020 to 4,049 million in April 2021. Then, it increased again to 4,888 million by April 2022. Thereafter, it declined to 4,151 million in April 2023 and further down to 3,736 million in April 2024. The most recent figure in April 2025 reached 4,980 million, representing the highest value among the periods analyzed and indicating improved operational profitability.

Overall Trend Analysis

Both net income and NOPAT exhibited cyclical patterns with notable decreases in 2021 and 2023-2024, followed by recoveries in 2022 and 2025. The volatility suggests the company faced varying operational and market challenges throughout the periods. The recent rise in both metrics in 2025 points towards an enhanced financial performance and operational efficiency. Furthermore, the highest NOPAT value in the final period underscores an improvement in profitability after taxes on operating income, which is a positive indicator for core business performance.

The financial data reveals notable trends in the tax-related expenses over the observed period.

Income Tax Provision (Benefit)

The income tax provision shows significant fluctuations from 2020 to 2025. Initially, in 2020, there was a tax benefit of -$751 million, indicating a negative tax provision. However, from 2021 onwards, there is a reversal to positive tax provisions, increasing from $265 million in 2021 to a peak of $1,580 million in 2023. Thereafter, the provision decreases to $1,133 million in 2024 and further to $936 million in 2025. This pattern suggests an initial tax advantage followed by growing tax liabilities that begin to moderate in the final years of the period.

Cash Operating Taxes

Cash operating taxes demonstrate a consistent upward trend throughout the period from 2020 to 2023, increasing from $761 million to $1,979 million. In 2024, there is a slight decline to $1,820 million, followed by a further decrease to $1,436 million in 2025. This rise and subsequent decline in cash taxes could reflect operational performance fluctuations or changes in tax strategies and cash management.

Overall, the data indicates evolving tax expenses with an initial tax benefit turning into substantial tax provisions and an increasing trend in cash operating taxes until 2023, followed by a moderate decline in the last two reporting periods.

The financial data shows several notable trends over the six-year period under review.

Total reported debt & leases

The total reported debt and leases have generally increased, growing from 25,742 million US dollars in April 2020 to 29,626 million US dollars in April 2025. Despite some fluctuations, such as a decrease in 2022, the overall trend is upward, indicating a gradual rise in leverage or financing through debt and leases.

Shareholders’ equity

Shareholders’ equity experienced a slight increase from 50,737 million US dollars in April 2020 to a peak of 52,551 million US dollars in April 2022. However, from that peak, equity declined steadily to 48,024 million US dollars by April 2025. This downward trajectory in equity may reflect distributions to shareholders, asset impairments, or other factors reducing net asset value.

Invested capital

Invested capital saw a modest increase from 71,146 million US dollars in April 2020 to a peak near 72,405 million US dollars in April 2021. Subsequently, it declined to a low of 68,670 million US dollars in April 2024 before rising again to 70,365 million US dollars in April 2025. This pattern suggests some variability in the company's capital investment or asset base, with a general trend of moderate fluctuation rather than sustained growth or contraction.

Economic Profit

The economic profit shows a fluctuating but predominantly negative trend throughout the period. It started at -3249 million US dollars in 2020 and declined further to reach its lowest point at -3975 million US dollars in 2021. Subsequently, there was some improvement in 2022, with the loss reducing to -2695 million US dollars. However, the figures worsened again in 2023 and 2024, maintaining substantial negative values near -3600 to -3700 million US dollars, before improving significantly in 2025 to -2521 million US dollars. Overall, the economic profit remains in deficit without returning to positive territory, although notable recovery is observed in the most recent year.

Invested Capital

Invested capital demonstrates relative stability with moderate fluctuations over the examined years. Starting at 71146 million US dollars in 2020, it increased slightly in 2021 to 72405 million before declining somewhat in the following years to around the 68670 to 70500 million range. The capital in 2025 registers at 70365 million US dollars, close to the initial levels. The pattern suggests consistent capital investment with minor adjustments, maintaining a substantial asset base throughout the period.

Economic Spread Ratio

The economic spread ratio persistently remains negative in all measured periods, indicating that the returns on invested capital have consistently underperformed relative to the cost of capital. The ratio fluctuated between approximately -3.58% and -5.49%. The worst spread was recorded in 2021 at -5.49%, followed by some improvement in 2022 to -3.87%, but again deteriorated in 2023 and 2024 to around -5.11% and -5.36% respectively. By 2025, the spread ratio improved to -3.58%, the best observed value in the series yet still negative. This pattern aligns with the economic profit trend, confirming ongoing value destruction, albeit with signs of gradual amelioration in the latest year.

Adjusted Net Sales

Adjusted net sales demonstrated an overall upward trend over the period analyzed. Starting at approximately 28.9 billion US dollars in April 2020, sales increased steadily each year, reaching around 33.5 billion US dollars by April 2025. This reflects a growth rate of approximately 16% over five years, indicating consistent revenue expansion despite minor fluctuations in individual years.

Economic Profit

The economic profit figures were consistently negative throughout the period, indicating that the company did not generate economic profits in these years. The losses fluctuated, with the largest loss recorded in April 2021 at about -3.975 billion US dollars. Subsequently, there was a general improvement trend, with the economic loss narrowing to approximately -2.521 billion US dollars by April 2025. This improvement suggests efforts toward better profitability, although the company remained economically unprofitable.

Economic Profit Margin

The economic profit margin followed a pattern similar to economic profit, remaining negative across all years. The margin started at -11.24% in April 2020 and worsened slightly to -13.17% in April 2021, which corresponds with the peak in economic losses. After this low point, the margin improved progressively, reaching -7.52% by April 2025. Despite this positive movement, the margins indicate the company continued to operate below the threshold where economic profit would be realized.

Overall Insights

The data reveals that while adjusted net sales consistently grew, suggesting expanding market presence or increased sales volume, the company struggled to translate this revenue growth into positive economic profit. However, the narrowing losses and improving economic profit margins over time imply enhanced operational efficiency or reduced costs relative to sales. The persistent negative economic profit suggests potential issues with capital cost management or pricing strategies that might require strategic focus to achieve sustained economic profitability in the future.