Medtronic Spinoff Notes

February 22, 2024 Update

Medtronic has decided not to spin-off its patient monitoring and respiratory business:

  • “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.

June 23, 2023 Update

November 22, 2022 Update

Some comments on the Medtronic spinoff from CEO of Masimo from their meeting:

October 28, 2022 Update

Medtronic PLC ( MDT) announced on October 24th that it will be spinning off its combined Patient Monitoring and Respiratory Interventions businesses into a new public company. The separation is expected to be tax-free and to close within 12 to 18 months (Q4 2023 / Q1 2024). Here is Medtronic’s spin-off slide deck.

The spin-off is consistent with Medtronic’s strategy to slim down and focus on its core segments in medical device therapies (Cardiovascular, Neuroscience, Medical Surgical, and Diabetes). RemainCo generated $29.4BN of FY22 revenue while the businesses that will be spun off generated $2.2BN of FY22 revenue.

The spin-off is the “badco” and will have higher margins than RemainCo but a lower growth outlook.

MDT looks reasonably valued at 13.3x NTM EBITDA and 15x NTM EPS. This transaction isn’t actionable right now, but the spin-off could be attractive if it sells off indiscriminately. We will have to wait until at least the end of 2023 to see if that will happen.