Medtronic to spin off 2 business units to streamline operations

USA — Medtronic Plc will spin off its patient-monitoring and respiratory-intervention businesses to a new company, dubbed NewCo, marking yet another move by a major healthcare manufacturer to have a more streamlined portfolio.

The separation is expected to strengthen the strategic and operational focus, portfolio management and capital allocation strategies, and long-term value creation for both Medtronic and NewCo.

The separation, which is expected to be completed within the next 12 to 18 months, will help the company unlock value from the two divested businesses, according to Medtronic.

In the fiscal year 2022, the patient monitoring and respiratory interventions businesses generated global revenue of approximately $2.2 billion. 

That accounted for about 7% of Medtronic’s $31.7 billion in annual sales that fiscal year.

According to Medtronic, NewCo will provide a complete suite of connected patient monitoring and respiratory care solutions, with advanced brands.

Its portfolio will include Nellcor pulse oximetry, Microstream capnography, BIS brain monitoring, INVOS perfusion monitoring, and HealthCast solutions for patient monitoring.

Also, it will include Puritan Bennett ventilators, Shiley airway portfolio, McGrath MAC video laryngoscopy, DAR breathing systems, as well as PAV+, NIV+ and IE Sync ventilation software solutions, for respiratory interventions.

This is the second time this year that Medtronic has announced a portfolio separation.

Medtronic announced plans in May to spin off its renal care business to form a new independent company with DaVita Inc. Each company will own half of the new venture.

Aside from separating businesses, Medtronic has spent the last year acquiring smaller medical equipment companies.

In January, the company announced a nearly US$1 billion acquisition of Boston-based cardiac technology firm Affera Inc.

This transaction is not expected to be completed until 2023. This year, Medtronic also completed the US$1.1 billion acquisition of healthcare equipment company Intersect ENT.

Companies in the United States such as Johnson & Johnson, General Electric, and 3M Co have been splitting their businesses in response to a growing consensus that streamlined focus performs best, as well as increasing pressure from activist investors to increase shareholder returns.

Medtronic, like many other medical device manufacturers, has been dealing with supply chain shortages and rising costs, which have been exacerbated by the Ukraine conflict and China’s strict COVID-19 lockdowns.

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