Pre-revenue MedTech: regulatory milestone valuation
Before FDA clearance (510k) or approval (PMA), MedTech is valued on the probability-weighted value of reaching commercialisation — similar to early biotech, but with shorter timelines and lower regulatory risk. A 510k clearance path (substantial equivalence to an existing device) typically takes 6–12 months with 80%+ clearance rates. A PMA path (novel, high-risk device) takes 3–7 years with significantly higher regulatory risk. The valuation premium for a device that has cleared the FDA vs one still in trials is substantial — often 3–5x.
Reimbursement status as value catalyst
In the US, a CMS reimbursement code (CPT or HCPCS code) determines whether hospitals and physicians can be paid for using a device or digital health tool. A MedTech company with FDA clearance but no reimbursement code is limited to out-of-pocket or direct-pay markets. The moment a company receives a new CPT code — especially a Category I code indicating clinical validity — the addressable market expands dramatically. Investors track reimbursement applications as closely as clinical milestones. A reimbursement decision can be a more significant valuation event than FDA clearance itself.
Revenue multiples for commercial MedTech
Post-clearance, commercial MedTech is valued on revenue multiples — but at lower levels than pure software due to hardware margins and capital-intensive sales cycles. Typical ranges: 3–8x revenue for hardware-dominant medical devices. 5–12x revenue for software-heavy digital health (similar to SaaS but discounted for regulatory and reimbursement risk). 8–15x revenue for high-growth digital health SaaS with strong clinical evidence and reimbursement. The presence of recurring revenue (consumables, subscriptions, service contracts) significantly improves multiples compared to one-time device sales.
Per-procedure economics
For devices used in surgical or clinical procedures, per-procedure value is the fundamental unit. Revenue per procedure × procedure volume = TAM. Investors model: how many procedures are performed annually in the target indication, what fraction can be captured, and what the device charges per procedure. For high-volume, low-cost-per-procedure devices (e.g. disposable components in minimally invasive surgery), volume is the story. For low-volume, high-value procedures (e.g. robotic surgery components), ASP and market penetration are the primary drivers.