MedTech: Moving from Boom-and-Bust sales to recurring revenue

To understand the challenges with the traditional model, it is necessary to first consider its inherent limitations. The traditional MedTech model relies on large, one-time sales of medical devices, often involving significant upfront costs for buyers like hospitals or healthcare providers. Several drawbacks are associated with this model:

• Unpredictable revenue: Income comes in spikes, making financial planning and forecasting more difficult.
• Slow product adoption: High upfront costs can deter potential buyers, especially as healthcare budgets tighten.
• Limited customer engagement: After the initial sale, interactions with customers often decrease, limiting opportunities for upselling or providing additional value.

This model leaves companies vulnerable to market fluctuations and slows innovation. There is a pressing need for a paradigm shift.

Having outlined the issues, the following section explores how recurring revenue can provide a viable solution.

Recurring revenue models offer a steady, predictable income stream. Instead of relying on sporadic device sales, companies can introduce subscriptions or usage-based pricing, spreading costs for customers over time while generating continuous revenue. This shift is further catalyzed by the ongoing digitization of healthcare, which necessitates flexible, scalable business models. Here’s why the model demonstrates substantial potential:

• Predictable cash flow: Subscriptions or service fees provide a stable income, simplifying financial forecasting and reducing reliance on new product launches.
• Stronger customer relationships: Recurring models encourage ongoing interaction, creating opportunities to upsell, gather feedback, and improve products.
• Faster product adoption: Lower upfront costs make advanced technologies more accessible, helping hospitals and clinics adopt new tools more quickly.

For developers working in MedTech, these models open the door to create more flexible, customer-focused solutions. This shift presents a strategic opportunity for MedTech companies to achieve long-term sustainability, thus it offers mutual benefits for both providers and patients.

Transitioning to recurring revenue requires rethinking how products and services are delivered. Here are a few ways to make it happen:

Instead of selling devices outright, companies can offer them as a service. For a monthly fee, customers can access the device along with maintenance, software updates, and support. For example, imagine a hospital renting a cutting-edge imaging device rather than purchasing it outright. This model spreads costs for the buyer while ensuring steady income for the provider.

Medical devices increasingly come with software that enhances their capabilities. For instance, a diagnostic device might include cloud-based analysis tools. By offering these tools as a subscription, companies can continue to generate revenue long after the device is sold.

Software as a Medical Device (SaMD), which we’ve written about previously, is another area ripe for recurring models. SaMD solutions that assist with diagnostics, treatment planning, or patient monitoring can be offered on a subscription basis, benefiting both healthcare providers and patients.

Medical devices produce vast amounts of data, which can be valuable for improving patient care and device performance. MedTech companies can offer analytics services that help healthcare providers interpret and act on this data. For instance, a company might analyze trends in patient monitoring data to predict potential issues, enabling providers to intervene earlier.

Connected devices that gather real-time patient data are well-suited to recurring revenue models. For example, wearable devices that track chronic conditions can be paired with subscription-based remote monitoring services. These services provide continuous value to healthcare providers and help keep patients engaged in their care.

While the benefits are clear, shifting to recurring revenue models isn’t without its challenges:

• Changing the Company Mindset: Moving from one-time sales to ongoing services requires a cultural shift. Teams need to focus on long-term customer relationships rather than just closing the next big deal.
• Building the Right Infrastructure: Recurring revenue models demand new infrastructure for managing subscriptions, tracking usage, and handling billing. Companies may need to invest in software platforms that support these processes, which can be a significant upfront cost but pays off over time.
• Ensuring Regulatory Compliance: Regulatory requirements are a key consideration in MedTech. For subscription-based models, especially those involving SaMD or remote monitoring, companies must ensure compliance with data security, patient privacy, and performance standards.
• Addressing Healthcare Provider Resistance: Some healthcare providers may be skeptical about ongoing costs or fear being locked into a single vendor. To overcome these barriers, MedTech companies can offer flexible subscription plans and clearly demonstrate the value of their services. Providing case studies, transparent pricing, and opportunities for trial periods can help build trust and reduce hesitation.

Adopting recurring revenue models doesn’t just stabilize income—it also opens up exciting growth opportunities:

• Personalized healthcare: Continuous data collection enables tailored treatment plans, remote monitoring, and AI-driven insights that adapt to patients’ needs over time.
• Value-based care: Subscription models align with the healthcare industry’s shift toward value-based care, where providers are rewarded for better patient outcomes. MedTech companies can position their solutions as tools for achieving these outcomes.
• Global expansion: Lower upfront costs make recurring models more attractive in regions with limited healthcare budgets, helping companies reach new markets.
• Financial metrics and ROI benefits: Recurring revenue models improve key financial metrics like customer lifetime value (CLV), reduced churn, and better forecasting accuracy. For healthcare providers, these models lower capital expenditures (CapEx) and can lead to improved patient outcomes, demonstrating a strong return on investment (ROI).
• Alignment with healthcare IT ecosystems: Recurring revenue models naturally integrate with existing healthcare IT systems, including electronic health records (EHRs) and telemedicine platforms. By designing interoperable solutions, MedTech companies can ensure seamless data exchange and create a more cohesive care experience.

Several MedTech companies have successfully transitioned to subscription-based models, showcasing the versatility and impact of this approach in different specialties.

Siemens Healthineers has embraced a subscription-based model for its digital health platform, which offers healthcare providers access to advanced imaging software and analytics. Instead of requiring significant upfront investments, providers pay a recurring fee for ongoing use of the platform, including software updates and maintenance.

This model allows providers to leverage cutting-edge diagnostic capabilities without the financial burden of purchasing expensive equipment outright. By bundling software, analytics, and support into a subscription, Siemens ensures a steady revenue stream while enabling hospitals and clinics to keep up with technological advancements.

Dexcom, a leader in diabetes management, offers subscription options for its Continuous Glucose Monitoring (CGM) systems. Patients subscribe to receive monthly shipments of sensors and access to Dexcom’s cloud-based tracking tools, which provide real-time glucose monitoring via a mobile app.

This subscription model addresses two critical barriers: affordability and adherence. By spreading costs over time, Dexcom makes its devices accessible to a broader range of patients. Additionally, the app’s real-time analytics and personalized insights encourage consistent use, empowering patients to manage their condition effectively. Healthcare providers also benefit from access to patient data, enabling better clinical decisions.

Medtronic adopted a subscription-based approach for its diabetes devices including InPen Smart Insulin Pen, a device that integrates with mobile apps to provide personalized insulin dose recommendations. Patients subscribe to a package that includes the pen, ongoing access to the app, and consumables like insulin cartridges.

This model ensures patients have consistent access to the tools and insights needed for effective diabetes management. For Medtronic, the subscription generates predictable recurring revenue and enhances user engagement by continuously delivering value through data-driven insights and 24/7 support.

Withings, known for its smart health devices, introduced a subscription service called Withings+ at CES 2025. This service allows users to pair their wearable health devices with advanced analytics and personalized health plans, including access to a cardiologist for professional heart health evaluations.

The subscription provides users with regular feedback on their heart health, helping them proactively manage cardiovascular risks. By bundling device insights with telehealth services, Withings+ not only generates recurring revenue but also enhances user engagement and long-term loyalty.

The shift from boom-and-bust sales to recurring revenue offers MedTech companies a chance to achieve sustainable growth while delivering more consistent value to their customers. By embracing models like Device-as-a-Service, subscription-based software, and data analytics services, companies can build stronger, longer-lasting relationships with healthcare providers and patients.

For developers, this transition is an exciting opportunity to create innovative, user-focused solutions that address real-world needs. As MedTech continues to evolve, those who adapt to recurring revenue will lead the way in shaping the future of healthcare. It’s time for the industry to take this step forward.

In conclusion, the transition to recurring revenue models in MedTech presents a compelling opportunity for financial stability and long-term growth, aligning with broader healthcare trends toward patient-centered care. Navigating the shift requires not just the right strategy but also the right technical expertise. At HTD, we specialize in designing software, connected devices, and platforms that support subscription-based models, seamless user experiences, and robust data analytics.

Whether you’re developing a Device-as-a-Service offering, a SaMD solution, or a connected device with remote monitoring, HTD can help you bring it to life. We focus on creating reliable, user-friendly, and scalable solutions that align with your business goals and meet the needs of healthcare providers and patients alike. We can also help you incorporate emerging trends like AI-driven insights, IoT integration, and remote diagnostics to enhance the value of recurring revenue models.

Let’s collaborate to build the future of MedTech together. Reach out to HTD today to see how we can support your journey toward recurring revenue success.