Medtronic to Spin Off Diabetes Division as Independent $2.8B Company

Medtronic, the global medtech giant, has announced plans to separate its diabetes business and launch it as an independent company. This strategic move, aimed at sharpening the focus on high-margin growth drivers, is expected to create a new player in the diabetes care market with a portfolio valued at nearly $3 billion.

Spin-off Details and Market Impact

The spinoff, slated for completion within the next 18 months, will result in a new public company through an initial public offering (IPO). Que Dallara, Medtronic's current diabetes president, is set to lead the new entity, which will employ over 8,000 people globally.

Medtronic CEO Geoff Martha emphasized the move as part of the company's active portfolio management strategy, stating, "This decision shifts the Medtronic portfolio to have intense focus on our highest margin growth drivers where we have our strongest core competencies."

The diabetes division, representing approximately 8% of Medtronic's total revenue, has been growing at an impressive 10% annual rate. The global diabetes device market is currently estimated at $16 billion, with Medtronic's diabetes sales reaching $2.75 billion in fiscal year 2025. Notably, about 80% of these sales came from recurring sources, such as disposable equipment for continuous glucose monitor (CGM) systems and smart insulin pens.

Recent Innovations and Regulatory Approvals

Medtronic's diabetes division has seen significant advancements in recent months. In April, the FDA approved the combination of the company's flagship automated insulin pump with its newest CGM, the Simplera Sync. This approval follows a European green light for the system last year, with a U.S. commercial rollout enabling its use with the MiniMed 780G pump planned for this fall.

Additionally, Medtronic secured clearance for its smart insulin pen app last November, designed for people managing their diabetes with multiple daily injections. The InPen app links with the Simplera sensor and provides alerts for potentially missed or inaccurate doses.

Looking ahead, Medtronic has submitted 510(k) clearance applications to the FDA for an interoperable pump and algorithm that would work with an exclusive CGM based on Abbott's FreeStyle Libre sensor platform, a project first announced in August 2024.

Medtronic's Financial Performance and Future Outlook

Alongside the spinoff announcement, Medtronic released its annual earnings report for fiscal year 2025. The company posted strong results, with fourth-quarter revenue totaling $8.92 billion, a 3.9% increase, and full-year revenue growing 3.6% to $33.53 billion. Annual operating profit saw a significant 16% increase to $5.95 billion, with a margin of 17.8%.

Martha expressed optimism about the company's future, stating, "We are now at an inflection point as we accelerate our speed of travel to higher, more profitable growth." Medtronic will continue to focus on its core business-to-business units, including cardiovascular devices, neuroscience tech, and medical-surgical tools.

The spinoff of the diabetes division is the latest in a series of strategic moves by Medtronic to streamline its operations, following the divestment of its kidney care catalog through the Mozarc Medical joint venture with DaVita in 2023 and its exit from the hospital ventilator market in 2024.