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Medtronic reverses course to spin off several businesses, instead deciding to retain most of its patient monitoring and respiratory intervention sector, which it had originally announced plans to offload in October 2022 did.
Medtronic CEO Jeff Murtha said Tuesday that the company made the decision after a “comprehensive review” after it became clear that the company was performing better than before. Murtha said Medtronic has “improved its competitive position” in patient monitoring because of the data. Murtha said the decision means Medtronic can bring in “increased investments in critical care and monitoring.”
The remaining Patient Monitoring and Respiratory Interventions businesses will be integrated into the new Emergency Medicine and Monitoring business unit.
“Overall, investors will likely view the decision to retain the business favorably, even though the overall impact on the company will be relatively small,” said JPMorgan analyst Robbie Marcus. Stated.
When first announced in October 2022, Medtronic envisioned spinning off patient monitoring and respiratory interventions into a separate, independent company. Murtha said at the time that the move was part of the company’s ongoing portfolio management efforts. Medical technology spin-offs are an industry trend. For example, 3M will spin off its health care business this year.
In the 16 months since announcing its spinoff plans, Medtronic has remained silent and provided no updates. There was also speculation that Medtronic might decide to sell the business rather than spin it off.
At the same time, the company is still pursuing exit from its “increasingly unprofitable ventilator product line.” Medtronic has no plans to sell its ventilator business and expects it to be absorbed by existing manufacturers that control a large portion of the market. The company will continue to honor its existing ventilator contracts.
While providing an update on its financial results for the third quarter of fiscal 2024, which ended Jan. 26, Medtronic did not disclose the annual revenue generated by its ventilator business. Overall, sales were reported at $8.1 billion, an increase of 4.7% from the prior year. one year ago. Net income increased 8.8% to $1.3 billion. Sales of the company’s diabetes division stood out, overall he increased by 12.3%.
“Diabetes led the way,” Martha says.
Medtronic stock rose 1.7% in early trading.
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