Medtronic, a global leader in healthcare technology, has announced plans to separate its Diabetes business into a new standalone entity, tentatively called “New Diabetes Company.” This decision will allow Medtronic to streamline its portfolio and focus on high-margin growth markets. It will also establish an independent leader dedicated solely to diabetes care.
Separation Timeline and Financial Impact
As per the Medtronic press release, the separation is expected to be completed within 18 months through capital markets transactions, including a preferred initial public offering (IPO) followed by a split-off. Medtronic anticipates that this move will enhance its gross margin by approximately 50 basis points, operating margin by 100 basis points, and immediately increase earnings per share (EPS). Additionally, the transaction will allow Medtronic to retire outstanding shares and reduce dividend liabilities, with no change in its dividend policy.
New Diabetes Company: A Focused Leader in Insulin Management
The New Diabetes Company will deliver the industry’s only complete ecosystem for intensive insulin management. Over 8,000 employees and global commercial operations will support its strong foundation. Integrated innovation and manufacturing systems will drive its leadership in Automated Insulin Delivery and Smart MDI. Que Dallara, currently EVP and President of Medtronic Diabetes, will become the company’s CEO.
Medtronic’s Renewed Growth Strategy
Post-separation, Medtronic will intensify its focus on innovation-driven growth areas such as pulsed field ablation, renal denervation, implantable tibial neuromodulation, and soft tissue robotics. The company aims to leverage scale and synergies across manufacturing, commercial, and technology operations to drive mid-single-digit or higher organic revenue growth.
Transaction Details and Conditions
The separation will include all Diabetes business operations, intellectual property, and global facilities. The transaction is expected to be tax-free for U.S. shareholders. It is also subject to market conditions, regulatory approvals, and final board consent. Goldman Sachs and BofA Securities are financial advisors, with legal counsel from multiple top-tier firms.
A Vision for the Future
CEO Geoff Martha emphasized that the move aligns with Medtronic’s long-term strategy of portfolio optimization. Meanwhile, Que Dallara expressed gratitude and optimism. She highlighted the team’s dedication and the company’s mission to empower people with diabetes to live freely and fully.