Medtronic PLC (NYSE:MDT)

Net Operating Profit After Taxes (NOPAT)

The NOPAT figures exhibit fluctuations over the analyzed periods. Initially, there is a decline from 4408 million USD in 2020 to 4049 million USD in 2021. This is followed by a significant increase reaching 4888 million USD in 2022. Subsequently, the NOPAT declines again in 2023 and 2024 to 4151 million USD and 3736 million USD, respectively, before rising sharply to 4980 million USD in 2025.

Cost of Capital

The cost of capital percentage remains relatively stable throughout the periods, ranging narrowly between 10.79% and 11.22%. The highest cost of capital is observed in 2021 at 11.22%, with a slight decreasing trend noted in the last two periods, falling to 10.79% in 2025.

Invested Capital

The invested capital values display moderate variation without a clear consistent trend. Starting at 71,146 million USD in 2020, the invested capital increases slightly to 72,405 million USD in 2021. Afterwards, it declines to 69,629 million USD in 2022, followed by another minor increase and decrease, hovering around the 70,000 million USD mark, ending at 70,365 million USD in 2025.

Economic Profit

Economic profit remains negative for all reported periods, indicating that the company is not generating returns above its cost of capital. There is notable volatility in the amounts, with the economic loss widening from -3343 million USD in 2020 to a peak negative of -4075 million USD in 2021. Subsequently, the losses reduce to -2789 million USD in 2022 but then increase again to around -3700 million USD in 2023 and 2024. By 2025, the economic loss narrows significantly to -2612 million USD, suggesting some improvement although still negative.

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 experienced significant fluctuations over the years. Initially, there was a decline from -3343 million USD in 2020 to -4075 million USD in 2021, indicating a worsening performance. This was followed by an improvement to -2789 million USD in 2022. However, the economic profit deteriorated again in 2023 and 2024, reaching -3770 million USD. The trend shows a recovery in 2025, with economic profit improving to -2612 million USD, though it remains negative throughout the period.

Invested Capital

The invested capital demonstrated relative stability with minor fluctuations. It increased slightly from 71146 million USD in 2020 to 72405 million USD in 2021. Subsequently, it declined to 69629 million USD in 2022 before a mild recovery to 70505 million USD in 2023. The capital decreased again in 2024 to 68670 million USD but rose once more to 70365 million USD in 2025. Overall, the invested capital maintained a range between approximately 68670 and 72405 million USD.

Economic Spread Ratio

The economic spread ratio remained negative across all periods, indicating a consistent shortfall in returns relative to cost of capital. The ratio declined from -4.7% in 2020 to a low of -5.63% in 2021, reflecting deteriorating efficiency. It improved to -4.01% in 2022 but worsened again to -5.25% and -5.49% in 2023 and 2024, respectively. In 2025, the ratio showed a notable improvement, reaching -3.71%, the best figure in the analyzed timeframe, yet still indicating negative economic value added.

Summary

The financial data reveals a consistent theme of negative economic profitability throughout the years, with improvements and setbacks occurring alternately. Investing activities have remained relatively stable, with no dramatic expansions or contractions. The economic spread ratio's persistent negativity signals ongoing challenges in generating returns above the cost of capital. The partial recoveries observed in 2022 and 2025 suggest potential improvements in operational or capital efficiency but do not fully offset prior declines. Overall, the trends suggest that while there have been fluctuations, the company has yet to achieve positive economic profit, indicating room for strategic and operational enhancements.

Adjusted Net Sales

Over the six-year period, the adjusted net sales demonstrate a consistent upward trend. Starting at 28,901 million USD in 2020, sales increased steadily each year, reaching 33,530 million USD by 2025. This represents a cumulative growth, indicating expanding revenue generation capabilities.

Economic Profit

Economic profit remained negative throughout the entire period, reflecting a persistent challenge in generating returns above the cost of capital. The losses fluctuated, with the highest negative value recorded in 2021 at -4,075 million USD and the least negative in 2025 at -2,612 million USD. Despite some variability, there is a general, albeit uneven, improvement trend in economic profit, particularly from 2023 onwards.

Economic Profit Margin

The economic profit margin, expressed as a percentage, aligns with the economic profit trend, remaining in negative territory across all years. It starts at -11.57% in 2020, deteriorates further to a low of -13.5% in 2021, then shows a gradual recovery, improving to -7.79% by 2025. This margin improvement suggests better efficiency or cost management relative to sales, though profitability remains below the threshold for positive economic gain.

Overall Observations

The data reveals a scenario where sales growth is consistent and positive, yet the company continues to experience negative economic profitability. The gradual improvement in economic profit and margin indicates some progress toward financial health, but further strategic actions may be necessary to achieve economic profitability. These results underscore an ongoing need to focus on cost control, asset utilization, or investment efficiency to convert sales growth into economic value creation.