How Medical Device Companies Charge: What Seven FY2025 Filings Show

1. Reports

By Saroj Jha · 8 min read

Seven public medical device and clinical technology companies, read from their fiscal 2025 annual reports and earnings releases, show five ways to charge for a device and what each one needs to work.

A medical device is rarely sold the way a laptop is sold. This report reads the fiscal 2025 annual reports and earnings releases of seven public medical device and clinical technology companies to see how each one charges, what share of its revenue comes from what repeats, and what each approach needs in order to work. It is written for founders deciding what to price, not as a ranking of the companies.

In these filings the repeating item is where the money is. Intuitive Surgical earned 59.8% of its 2025 revenue from instruments and accessories used in each procedure, against 24.6% from the robotic systems themselves, and half of its new systems went out under operating leases. Each way of charging depends on something a seed-stage company may not have: a balance sheet to carry equipment, a payer to cover a service, or software people keep paying for.

The repeating item carries the revenue

At Intuitive Surgical, instruments and accessories were $6,018.9 million of $10,064.7 million in revenue in 2025 (59.8%), systems $2,473.7 million (24.6%) and service $1,572.1 million (15.6%). The company writes that “Our customers place orders to replenish their supplies of instruments and accessories on a regular basis”^[1]. PROCEPT BioRobotics shows the same shape at a smaller scale: handpieces and other consumables brought in $181.4 million of $308.1 million (58.9%), and “Each of our robotic systems employs a single-use disposable handpiece”^[2],[3]. Outset Medical reports “recurring revenue consisting of Tablo consumables and services” of $88.7 million of $119.5 million in 2025 (74.2%)^[4].

QuidelOrtho describes the model in its own words: “Certain of our revenue is driven by a ‘razor/razor blade’ business model.” It generally sells or places instruments under long-term contracts, which support the ongoing sale of assays, reagents and consumables that customers are required to buy from it^[5]. The filing does not say what share of revenue this is, so the report does not give one.

Half of Intuitive’s new systems were leased

Many buyers no longer buy the equipment outright. Of the 1,721 da Vinci surgical systems Intuitive placed in 2025, 872 (50.7%) went out under operating lease arrangements, and 496 of those (28.8% of all placements) under usage-based arrangements^[8]. Intuitive’s Form 10-K lists the usage-based offering as a risk: the company is “exposed to an increased risk of losses of revenue and increased credit risk”^[1]. That is the trade a placement model makes: an easier first sale in exchange for carrying the equipment and the risk.

Five ways to charge, and what each needs

The companies fall into five patterns. The last two columns of the table below are AAJ’s reading of what each model depends on, not statements from the filings.

Who pays changes the model

Two companies built their models around the payer rather than the user. iRhythm sells a monitoring service, not a patch: “The Zio patch monitors are not available for sale outside of use with our iRhythm Services.” In 2025 it received about 83% of its $747.1 million in revenue through third-party payors, including about 24% from Medicare^[10]. Beta Bionics sells its insulin pump through durable medical equipment suppliers and through a pharmacy benefit channel that “follows a ‘pay-as-you-go’ model.” The company says this “removes large upfront costs and allows more rapid adoption”^[9]. The pharmacy channel was $24.4 million of $100.3 million in net sales (24.3%), up from $6.3 million a year earlier^[7].

Software is the fifth pattern, and the evidence is thinner. Butterfly Network’s “software and other services” were $34.2 million of $97.6 million in 2025 (35.0%), up 1.1 percentage points, and its base software membership is “priced at approximately $300 per year”^[6]. One company is not a trend, but it shows what a subscription can be next to a device that still brings in most of the revenue on its own.

Why total cost wins inside a hospital

For an inpatient stay, Medicare pays hospitals “at predetermined, specific rates for each hospital discharge”^[11]. A new-technology add-on payment can cover part of the extra cost, no more than the lesser of 65% of the technology’s cost or 65% of the amount by which the case’s cost exceeds the standard payment. So a device’s price usually comes out of a payment that does not change, which is one reason these models shift cost from a one-off purchase to use, and why a value analysis pack leads with cost per patient.

What this means for a startup

1. Price the unit that repeats. Every model above earns most of its revenue from something used again and again: a procedure, a test, a cartridge, a month. Decide that unit before you set a number.
2. Only fund placements you can carry. Leasing and placement make the sale easier and move the risk to you. Work out payback for your worst likely site before you offer them.
3. Follow the payment, not the user. iRhythm and Beta Bionics built their models around who pays, payers and pharmacy benefits, not around who uses the device.
4. Have counsel check free or discounted equipment. The federal Anti-Kickback Statute makes it a felony to knowingly and willfully offer any remuneration to induce a person to purchase, lease or order an item payable under a federal health care program, with a penalty of up to $100,000 and up to 10 years in prison. The statute has exceptions, including for properly disclosed discounts, and the line between a discount and an inducement is a legal question^[12].

Method and limits

AAJ read each company’s fiscal 2025 annual report on Form 10-K for how it describes charging, and its fiscal 2025 earnings release for revenue figures. Shares are AAJ’s arithmetic from the figures filed, except where a filing states one (iRhythm’s payer shares). Companies define revenue lines differently: Outset’s “recurring revenue” is its own definition, PROCEPT’s line is handpieces and other consumables, Beta Bionics’ line is a sales channel, and Butterfly’s combines software with other services. Read each line as an illustration of a model, not as a like-for-like comparison. These companies are large or public; a seed-stage company will not have their balance sheets, which is the main reason placement models are harder for startups. Dexcom, whose results AAJ also read, is left out because its disclosed split (84.9% of revenue through distributors) describes a sales channel, not a way of charging. This report is general information, not legal or financial advice.