Medtronic to Spin Off Diabetes Business, Creating Standalone Company

Medtronic, a leading medical device manufacturer, has announced plans to spin off its diabetes business within the next 18 months. The move is set to create a new, independent publicly traded company focused on diabetes technology, offering both insulin pumps and continuous glucose monitors (CGMs).

Strategic Realignment and Market Positioning

Medtronic CEO Geoff Martha described the decision as a "win for both companies," stating that it will simplify Medtronic's portfolio while allowing for focused funding and strategy for the new diabetes firm. The spinoff is part of Medtronic's ongoing strategy to streamline its businesses and focus on higher-growth markets.

The diabetes group represented 8% of Medtronic's revenue and 4% of segment operating profit in fiscal year 2025, bringing in $2.76 billion with a year-over-year growth of 10.7%. Despite this growth, Martha suggested that the diabetes business might be "worth more outside the company than in."

Que Dallara, current president of Medtronic's diabetes group, will become CEO of the new company, which will have approximately 8,000 employees and two global manufacturing facilities.

Industry Impact and Competition

The spinoff comes amid rapid growth in the diabetes tech space, with patients increasingly adopting wearable glucose sensors and smaller insulin patch-pumps. The new company will compete with established market leaders such as Abbott and Dexcom in glucose sensors, and Insulet and Tandem Diabetes Care in insulin pumps. It will also face competition from emerging players like Senseonics, Roche, and Sequel.

Recently, Medtronic partnered with rival Abbott to create a specialized CGM compatible with Medtronic's insulin delivery devices. This move, announced just months before the spinoff decision, highlights the dynamic nature of the diabetes technology market.

Mixed Analyst Reactions

The spinoff announcement has elicited mixed reactions from industry analysts. J.P. Morgan analysts questioned the decision to separate a growth business in one of the best end markets in the medtech space. They expressed concern that either Medtronic's diabetes business won't sustain its current growth rate or that the move is not a value-creating option for the company.

In contrast, RBC Capital Market analysts viewed the planned spinoff more positively, noting that it will create a more focused Medtronic with potentially higher organic revenue growth. They highlighted the diabetes division's recent performance, delivering double-digit revenue growth in the last six quarters.

As Medtronic moves forward with this significant restructuring, the pharmaceutical and medical device industries will be watching closely to see how both Medtronic and its soon-to-be-independent diabetes technology company navigate the competitive and rapidly evolving healthcare landscape.