Medtronic, one of the world’s largest medical device manufacturers, plans to separate its diabetes division into an independent, publicly traded company, according to people familiar with the matter.
The move marks a significant step in the company’s efforts to streamline operations and focus on more profitable segments.
The planned separation, expected to be completed within the next 18 months, will allow the diabetes unit — which generated $2.5 billion in revenue for the fiscal year ending April 2024 — to operate as a stand-alone entity based in Northridge, California. The division accounted for roughly 8% of Medtronic’s total $33.5 billion in revenue over the same period. Que Dallara, who has led the diabetes business since 2022, will serve as CEO of the new company.
Medtronic’s diabetes division includes products such as the MiniMed insulin pump and smart insulin pens, which are sold directly to patients. These products have recently seen a return to growth after several years of performance challenges, including regulatory setbacks. The FDA issued a warning letter in 2021 over product safety concerns, delaying the approval of the MiniMed 780G system until 2023. Since then, the division has reported five consecutive quarters of double-digit growth.
The planned spin-off is part of a broader strategic realignment for Medtronic. By separating the diabetes business, the company aims to sharpen its focus on areas such as cardiovascular, neuroscience, and surgical devices — segments that typically yield higher profit margins. Notably, Medtronic has recently introduced innovative technologies including the PulseSelect and Affera systems for treating irregular heartbeats and the Symplicity Spyral device for hypertension.
The decision comes at a time when Medtronic faces broader headwinds, including tariff-related pressures stemming from US-China trade tensions. The company expects a $200 to $350 million impact from tariffs in fiscal 2026, depending on whether recently paused tariffs are reinstated. To mitigate the effects, Medtronic has implemented a range of measures, including price adjustments.
Looking ahead, Medtronic forecast fiscal 2026 adjusted earnings per share (EPS) of $5.50 to $5.60 — below the $5.83 expected by analysts — and anticipates approximately 5% organic revenue growth, slightly ahead of consensus estimates. CEO Geoffrey Martha has expressed confidence in achieving high single-digit EPS growth by 2027, driven by strong performance in its core heart and hypertension segments.
The new diabetes company, which will house around 8,000 employees, is expected to pursue an initial public offering as the preferred route to independence. While some analysts, including those at J.P. Morgan, have questioned whether the spin-off will create value, Medtronic maintains that the move will enhance profitability and operational agility across both entities.
With input from the Wall Street Journal, Bloomberg, and Reuters.
