Medtronic will separate its diabetes device unit into a new public company led by its current division head.
Medtronic announced that it will carve out its diabetes business—home to its insulin pumps and other wearable devices—into a separate company over the next 18 months. The new entity will be led by Que Dallara, head of the diabetes division, and will be based in Northridge, California with roughly 8,000 employees on its roster.
The plan calls for a series of capital markets transactions “with a preferred path of an initial public offering and subsequent split-off.” Medtronic first flagged the move in a Wall Street Journal report. Company leaders see the spin-off as a way to let the main Medtronic group concentrate on its heart devices business, which drives its largest share of revenue.
In recent years, the diabetes unit faced setbacks after a 2021 FDA warning over its MiniMed 600 Series pumps. Regulators cautioned that the device was “susceptible to cyberattacks that could potentially disrupt insulin delivery.” A delay in clearance for the MiniMed 780G pump followed, pushing its approval into 2023.
Even as it prepares for the separation, Medtronic reported stronger-than-expected results for its quarter that ended April 25. The company posted an adjusted profit of $1.62 per share, beating estimates of $1.58, and revenue of $8.93 billion, above forecasts of $8.82 billion. Sales growth came from both its heart and diabetes units. Shares of the Ireland-based firm rose modestly in pre-market trading after the earnings release.
With the diabetes division set up as its own business, Medtronic plans to use the next year and a half to finalize the IPO and split-off. The move marks the latest in a string of restructurings aimed at sharpening the company’s focus on high-growth medical device markets.
