MW Medtronic to split off its fast-growing diabetes business to unlock its value

By Tomi Kilgore

Diabetes business will become an independent publicly traded company, and is expected to add to Medtronic earnings and margins post separation

Medtronic PLC announced Wednesday plans to separate its diabetes business into a new public company, just as the medical-device company reported quarterly results showing that the business was its fastest grower.

The company said the reason for the separation is so it can focus on a more streamlined portfolio, which also includes cardiovascular, neuroscience and medical surgical businesses.

The new diabetes company will be predominantly business-to-consumer, while Medtronic's model was more business-to-business, which will provide "a complete intensive insulin management ecosystem."

The announcement also comes as demand for diabetes and weight-loss drugs such as Ozempic and Wegovy from Novo Nordisk A/S $(NVO)$, and Mounjaro and Zepbound from Eli Lilly and Co. $(LLY)$ continue to grow.

Medtronic said it expects the separation to be completed within 18 months, with a preferred path of an initial public offering.

"The separation is expected to unlock value for Medtronic and its shareholders, as it creates a new diabetes company shareholder base more aligned with its financial profile and is expected to be accretive to Medtronic gross margin, operating margin, and earnings per share (EPS)," the company said.

The stock rose 0.5% in morning trading. It has rallied 8.7% in 2025, while the Health Care Select Sector SPDR ETF XLV has lost 3.1% and the S&P 500 index SPX has tacked on 0.5%.

The company also reported fiscal fourth-quarter results on Wednesday, which showed that the diabetes business was the fastest-growing, but also the smallest of Medtronic's businesses.

Diabetes revenue for the quarter to April 25 jumped 10.4% from a year ago to $728 million, the sixth straight quarter of double-digit percentage growth. The results beat the average analyst estimate compiled by FactSet of $709.7 million.

Among Medtronic's other businesses, cardiovascular revenue increased 6.6% to $3.34 billion, neuroscience revenue rose 2.9% to $2.62 billion and medical surgical revenue edged up 0.6% to $2.21 billion.

The company also reported net income that rose 61.6% to $1.06 billion, while adjusted earnings per share rose to $1.62 from $1.46 to beat the average analyst EPS estimate compiled by FactSet of $1.58.

Net sales were up 3.9% to $8.93 billion, above the FactSet consensus of $8.81 billion.

Separately, the company raised its quarterly dividend by a penny to 71 cents a share. At the current stock price, the new annual dividend rate implies a dividend yield of 3.27%, which compares with the implied yield on the S&P 500 index of 1.31%.

-Tomi Kilgore

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May 21, 2025 10:00 ET (14:00 GMT)

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