Medtronic spins off two businesses to have leaner portfolio

Oct 24 (Reuters) – Medtronic Plc (MDT.N) said on Monday it would spin off its patient monitoring and respiratory intervention businesses into a new company as it seeks a leaner portfolio and Faster revenue growth.

Medtronic said it expects to complete the spin-off within the next 12 to 18 months, which will also help the company unlock value from the two divested businesses.

The patient monitoring technology portfolio includes Nellcor pulse oximeters and BIS brain monitoring, while the respiratory intervention business includes ventilators and respiratory systems.

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The two companies generated about $2.2 billion in revenue in the fiscal year ended April 29 and employ more than 8,000 people worldwide.

Medtronic, the world’s largest independent medical device maker, has been restructuring its business over the past few years. In 2018, the company announced a restructuring plan that is expected to help them save between $500 million and $700 million a year over five years.

U.S. companies such as Johnson & Johnson (JNJ.N), General Electric (GE.N) and 3M Co (MMM.N) have been breaking up their businesses amid a growing consensus that they do best with a leaner focus , while increasing pressure from activist investors to boost shareholder returns.

Like many medical device makers, Medtronic has been facing supply chain shortages and rising costs, exacerbated by the conflict in Ukraine and China’s strict COVID-19 lockdown.

Medtronic shares rose 1.2% in premarket trading.

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Reporting by Leroy Leo and Raghav Mahobe in Bengaluru; Editing by Krishna Chandra Eluri and Maju Samuel

Our Standard: The Thomson Reuters Trust Principles.

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