By Jared S. Hopkins

Medical-device maker Medtronic plans to separate its diabetes business into a stand-alone company, the company said, in a move that hives off a division that had struggled but recently returned to growth.

The decision

Under Medtronic's plan, the new unnamed company will also be publicly traded, Medtronic said. The diabetes business generated nearly $2.8 billion in sales in its most recent fiscal year, ending in April, up 10.7% from the prior year. Medtronic reported more than $34 billion in sales last year.

Galway, Ireland-based Medtronic, which operates out of Minneapolis, will complete the process of separation within 18 months. The transaction will allow the diabetes business to grow faster, and for Medtronic to accelerate growth of its remaining divisions, Medtronic Chief Executive Geoff Martha said in an interview.

"To realize the full potential of what we're sitting on here, it's going to need more focus than we can provide, and more investment," he said.

The key point

By getting out of diabetes, Medtronic, one of the world's largest makers of medical devices, will be free to focus on its more-profitable segments making devices for cardiovascular, neuroscience and medical surgery.

"These are higher-margin markets than the diabetes space and they better leverage our core strengths as a company," Martha said.

That includes its new PulseSelect and Affera products, which use one of the hottest technologies in the industry, that administers bursts of electricity or pulsed-field ablation, to treat irregular heartbeats in patients. It also sells Symplicity Spyral, a device to treat hypertension.

Medtronic's diabetes products are sold directly to patients and consist of wearable and disposable devices. The rest of Medtronic sells more complex devices such as surgical instruments and implants commercially to physicians and hospitals.

The context

The separation caps a yearslong campaign by Medtronic to turn around its diabetes franchise since it got a warning letter from the Food and Drug Administration in 2021 regarding product safety issues for its MiniMed insulin pumps. The letter delayed the FDA's clearance of the MiniMed 780G insulin pump until 2023.

The company has rolled out other new products, and this year reported the fifth consecutive quarter of double-digit growth in its diabetes division. Diabetes products include its MiniMed insulin pump, which is part of a system that automatically delivers insulin to patients based on real-time monitoring of their blood sugar levels, and pens that connect with smartphones to help patients take timely insulin injections.

Among the division's devices in the works are next-generation insulin pumps and smart pens. The company also joined with Abbott in 2024 to develop a glucose sensor that will work with Medtronic's products.

The new company will have 8,000 employees and be based in Northridge, Calif., where the diabetes business is located, Medtronic said. It will be led by Que Dallara, head of Medtronic's diabetes business since joining in 2022.

The market reaction

Medtronic's shares are up more than 7% this year. Company stock has risen more than 2% in the past year.

Shares were up slightly in premarket trading Wednesday.

Write to Jared S. Hopkins at jared.hopkins@wsj.com

(END) Dow Jones Newswires

May 21, 2025 07:39 ET (11:39 GMT)

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