Investors consistently reward companies with strong fundamentals—namely sustainable revenue growth, meaningful margin expansion, and efficient use of capital, according to a McKinsey survey. In recent years, medtech has lagged behind on these measures and fallen to the bottom of the S&P 500. From 2018 to 2025, the sector delivered roughly 3 percent annual TSR compared with 12 percent for the broader index. In the near term, margin recovery may deliver incremental TSR gains. Over the longer term, however, closing the gap with other sectors will hinge on broader adoption of top-decile fundamentals: innovation-led growth, sharper portfolio choices, and disciplined capital allocation, note McKinsey’s Gerti Pellumbi, Tommy Reid, and coauthors.
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A bar chart compares medtech against nine other industries and the S&P 500 across seven key metrics. Medtech ranks last (10th) in TSR CAGR from 2017-25 at just 3%, far behind technology’s 23% and matching energy’s bottom-tier performance. The sector shows middling consensus revenue growth projections for 2025-27E at 7% (ranking 4th, tied with S&P 500), and moderate improvement of 70 basis points versus 2017-19 growth (6th place). While medtech maintains a respectable 25% EBITDA margin for 2025 (5th place), its margin expansion has been weak at only 10 basis points since 2017 (8th place), dramatically lagging behind technology’s 460-point improvement. Similarly, medtech’s 6% ROIC for 2025 ranks 6th, with a modest 90 basis point improvement since 2017 (7th place), far below technology’s 1,700-point gain.
Note: This image description was completed with the assistance of Writer, a gen AI tool.
Source: S&P Capital IQ as of October 1, 2025.
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