Medtronic plans to spin off its patient monitoring and respiratory interventions units as one company called NewCo.

Medtronic to spin off patient monitoring, respiratory interventions as one company

October 27, 2022
by John R. Fischer, Senior Reporter
Medtronic plans to spin off its patient monitoring and respiratory interventions business into a new company in the next 12 to 18 months.

Separating the two from its medical surgical portfolio will enable Medtronic to streamline its operations and speed up revenue growth by allowing it to focus on investing in priority areas for boosting long-term growth, said Geoff Martha, chairman and CEO of Medtronic.

The spun off business will be called NewCo. “Independently, NewCo will be a leading connected care company with a compelling leadership position, attractive margins, and potential for growth acceleration with increased investment and dedicated capital allocation," said Martha in a statement.

Company shares rose 1.8% in premarket trading following the announcement of the split on October 24.

Medtronic will continue adding to its portfolio, but will have modestly faster organic revenue growth, an increased weighted average market growth rate, and a strong balance sheet, according to Martha.

The patient monitoring technology that will be managed under NewCo includes Nellcor pulse oximetry, Microstream capnography, BIS brain monitoring, INVOS perfusion monitoring, and HealthCast connected care solutions.

The respiratory interventions technology is Puritan Bennett ventilators, Shiley airway portfolio, McGrath MAC video laryngoscopy, DAR breathing systems; and PAV+, NIV+ and IE Sync ventilation software solutions for workflow and care delivery.

NewCo will extend commercial reach in core strategic markets and use connected care solutions to increase shares within existing customer accounts worldwide.

Its investments will drive technology leadership, expand parameters, and increase the number of market segments where Medtronic can facilitate care needs, says Martha. Additionally, the company is expected to have durable growth with an attractive margin and cash flow.

Medtronic previously announced a restructuring plan in 2018. At the time, it said that the plan would save it $500 million to $700 million annually over five years, according to Reuters.

Currently, the complete Medtronic Medical Surgical Portfolio has approximately $2.2 billion in global revenue and employs more than 8,000 workers worldwide.

It does not expect the separation to affect its dividend policy, and will deploy any net proceeds consistent with its stated capital allocation priorities.

Financial details were not disclosed.