Medical device giant Medtronic PLC has announced plans to separate its diabetes business into an independent, publicly traded company within the next 18 months.
Medtronic said the move will allow it to concentrate on its core segments — cardiovascular, neuroscience and surgical devices — while enabling the diabetes unit to pursue growth opportunities more effectively.
The unit brought in nearly $2.8 billion in revenue during Medtronic’s most recent fiscal year ending in April, marking a 10.7% increase from the previous year. Overall, Medtronic reported more than $34 billion in total sales for the year.
While Medtronic’s overall model is more business-to-business, the new diabetes company will be mainly business-to-consumer, offering “a complete intensive insulin management ecosystem,” according to Medtronic.
Medtronic’s diabetes business accounted for 8% of Medtronic revenue and 4% of Medtronic segment operating profit in fiscal year 2025.
“Upon completion, the separation is expected to improve Medtronic adjusted gross margin by approximately 50 basis points, adjusted operating margins by approximately 100 basis points and be immediately accretive to adjusted [earnings per share] EPS,” the company said in the announcement.
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Medtronic explained that the split is expected to allow the company to retire outstanding shares without using cash, leading to EPS growth and lowering dividend liabilities. This will enable greater investment in growth opportunities. Medtronic plans to maintain its current dividend per share and dividend policy both before and after the transaction.
“The separation is expected to unlock value for Medtronic and its shareholders, as it creates a new diabetes company shareholder base more aligned with its financial profile and is expected to be accretive to Medtronic gross margin, operating margin and EPS,” the company said.
“This marks a significant milestone in driving both Medtronic and the Diabetes business to achieve lasting value for Medtronic, our shareholders, customers and patients,” said Geoff Martha, chairman and CEO of Medtronic.
“Active portfolio management is an important lever to delivering on our ongoing growth and success, and this decision shifts the Medtronic portfolio to have intense focus on our highest margin growth drivers where we have our strongest core competencies.”
The new diabetes-focused entity will be headquartered in Northridge, California, and led by Que Dallara, who currently heads Medtronic’s diabetes division.
Employing approximately 8,000 people, the company will focus on delivering a comprehensive insulin management ecosystem, including insulin pumps and continuous glucose monitoring (CGM) systems.
Related: Medtronic’s MiniMed Insulin Pumps Get Class I FDA Recall
Medtronic’s diabetes division has faced challenges in recent years, including regulatory hurdles such as a 2021 FDA warning letter concerning the MiniMed insulin pump.
And last year, the FDA issued a Class I label for the recall of the pumps.
However, the unit has shown signs of recovery, with the FDA lifting the warning letter in 2023 and approving the MiniMed 780G system, which features automated insulin delivery with real-time meal detection technology.
Last November, Medtronic received FDA clearance for its smart insulin pen app, designed to help people managing diabetes with multiple daily injections by tracking doses and integrating with the Simplera sensor for real-time alerts.
Financially, the diabetes segment has demonstrated growth, reporting $728 million in revenue for the fiscal quarter ending April 25, marking a 10.4% year-over-year increase and the sixth consecutive quarter of double-digit growth. The growth was driven by strong pump sales and increased use of the Simplera Sync CGM system.
The performance contributes to Medtronic’s overall net income of $1.06 billion for the quarter, a 61.6% increase compared to the previous year.
Alongside announcing its spinoff plans, Medtronic reported its fiscal year 2025 earnings, which ended April 25. Fourth-quarter revenue reached $8.92 billion, up 3.9%, while full-year sales grew 3.6% to $33.53 billion. Annual operating profit rose 16% to $5.95 billion, with a margin of 17.8%.
Medtronic’s cardiovascular division saw 5.5% growth to $12.48 billion, fueled by new products like the Affera and PulseSelect ablation systems and gains in the Micra pacemaker and Evolut FX+ valve. Neuroscience revenue rose 4.7% to $9.49 billion.
Medical-surgical revenue slipped 0.1% to $8.41 billion, with the company submitting its Hugo soft tissue robot to the FDA for approval in urologic procedures.
Last year, Abbott and Medtronic struck a global partnership to integrate Abbott’s FreeStyle Libre CGM technology with Medtronic’s automated insulin delivery (AID) and smart insulin pen systems.
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