Medtronic reneges on spinoffs, decides to retain all but ventilator business

Medtronic reversed course on spinning off several of its businesses, instead deciding to retain the bulk of the patient monitoring and respiratory interventions sectors it had initially announced plans to offload in October 2022.

Geoff Martha, CEO of Medtronic, said Tuesday the company made the decision after a “comprehensive review,” when it became clear the company was faring better than previously. Martha said Medtronic now had “improved competitive positioning” with its patient monitoring, thanks to data. Martha said the decision means Medtronic can bring “increased investment for acute care and monitoring.”

The remaining patient monitoring and respiratory interventions businesses will combine into a new Acute Care and Monitoring business unit.

“Overall, despite the relatively small total company impact, we think investors will likely view this favorably,” wrote Robbie Marcus, an analyst with J.P. Morgan, about the decision to retain the businesses.

When first announced in October 2022, Medtronic envisioned spinning patient monitoring and respiratory interventions into a separate, standalone company. At the time, Martha said the move was part of the company’s ongoing portfolio management. Med-tech spinoffs have become an industry trend. 3M, for example, is spinning off its health care business this year.

Throughout the 16 months since it announced the spinoff plans, Medtronic stayed mum and did not provide any updates. There was speculation Medtronic might decide to sell off, rather than spin, the businesses.

At the same time, the company is still pursuing exiting its “increasingly unprofitable ventilator product line.” Medtronic has no plans to sell off its ventilator business and expects existing manufacturers who account for the majority of the market to absorb any. The company will continue to honor existing ventilator contracts.

Medtronic did not disclose what annual revenue the ventilator business has generated while providing an update on the company’s results for the third quarter of its 2024 fiscal year, which ended Jan. 26. Overall, it reported sales of $8.1 billion, a 4.7% increase from a year ago. The company posted a net income of $1.3 billion, a gain of 8.8%. Sales in the company’s diabetes unit stood out with an overall 12.3% increase in sales.

“Diabetes led the way,” Martha said.

Medtronic’s stock closed 1.7% higher in Tuesday trading.