Medtronic to separate diabetes business into standalone company
insulin pumps
and other wearable devices, into a stand-alone company.
The new company will be headed by Que Dallara, the current chief of Medtronic's
diabetes division
, and will house about 8,000 employees and be headquartered in Northridge, California.
The diabetes unit has recently struggled after a 2021 warning by regulators about the company's MiniMed 600 insulin pumps. The spin off would allow Medtronic to focus on more profitable businesses such as
heart devices
, its biggest revenue driver.
The spin off is expected to be complete within the next 18 months through a series of capital markets deals, with a preferred path of an
initial public offering
and subsequent split-off.
The separation was first reported by the Wall Street Journal earlier on Wednesday.
In 2022, the U.S. Food and Drug Administration flagged a cybersecurity risk for the MiniMed 600 Series insulin pump system, cautioning that the device was susceptible to cyberattacks that could potentially disrupt insulin delivery.
The decision to separate the diabetes business follows years of restructuring efforts, which included a delay in the FDA clearance for the MiniMed 780G insulin pump until 2023.
Separately, the company posted an adjusted profit of $1.62 per share for the fourth quarter ended April 25, ahead of Wall Street estimates of $1.58 per share, according to LSEG data. Its revenue of $8.93 billion also beat estimates of $8.82 billion, driven by sales of both heart devices and diabetes devices.
Shares in the Ireland-based company were up marginally in pre-market trading.
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