- Enhances both Medtronic and NewCo's strategic and operational focus on meeting the needs of their respective patients, physicians, customers, and other stakeholders
- Advances the Medtronic portfolio management and capital allocation strategies focused on higher growth markets and revenue acceleration
- Pursuing NewCo separation via a distribution that is expected to be tax-free to Medtronic shareholders for U.S. federal income tax purposes or other alternatives
Medtronic plc (NYSE:MDT), a global leader in healthcare technology, today announced its intention to pursue a separation of the company’s combined Patient Monitoring and Respiratory Interventions businesses (“NewCo”), which are part of the company’s Medical Surgical Portfolio.
“We are executing on our portfolio management strategy, taking action to create value for Medtronic and our shareholders. This separation will allow Medtronic to focus our company and our capital on opportunities better aligned with our long-term strategies to accelerate innovation-driven growth, and will position NewCo to unlock value. 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 Geoff Martha, chairman and CEO of Medtronic. “Looking ahead, we remain focused on active portfolio management with an ongoing process of evaluating potential additions and subtractions to further accelerate Medtronic’s growth over the long-term.”
Medtronic – The leading global healthcare technology company
The decision to pursue a separation represents an important next step in ongoing portfolio assessment by Medtronic that demonstrates its commitment to creating value for all of its stakeholders. The separation will enable greater investment focus in the areas of highest strategic priority across the company, and will facilitate the execution of its leadership strategy in attractive medtech markets that leverage the company’s strengths. Following the separation of NewCo, Medtronic will have:
- A more streamlined portfolio with sharpened focus on deploying capital into opportunities most aligned with its long-term growth strategies;
- Modestly faster organic revenue growth and an increased weighted average market growth rate (WAMGR); and
- A strong balance sheet and continued commitment to its strategy of driving durable growth.
NewCo is uniquely positioned to offer the full suite of connected patient monitoring and respiratory care solutions
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NewCo is expected to be a premier partner for connected care solutions with best-in-class brands and leading positions in patient monitoring and critical care:
- The Patient Monitoring technology portfolio includes Nellcor™ pulse oximetry, Microstream™ capnography, BIS™ brain monitoring, INVOS™ perfusion monitoring, and HealthCast™ connected care solutions.
- The Respiratory Interventions technology portfolio includes Puritan Bennett™ ventilators, Shiley™ airway portfolio, McGrath™ MAC video laryngoscopy, DAR™ breathing systems, as well as PAV+, NIV+ and IE Sync ventilation software solutions designed to improve workflow and care delivery.
Patient Monitoring and Respiratory Interventions reside in the Respiratory, Gastrointestinal & Renal division within the Medtronic Medical Surgical Portfolio. In fiscal year 2022, the combined business generated global revenue of approximately $2.2 billion. The combined business has a constant currency revenue growth profile and gross margin profile slightly below overall Medtronic and an operating margin profile slightly higher than overall Medtronic. The combined business has a global commercial footprint and a team of more than 8,000 employees worldwide.
NewCo is expected to be ideally positioned to deliver expanded value creation through:
- Global scale and commercial reach to drive increased penetration in core strategic markets;
- Connected care solutions to drive increased share within existing customer accounts globally;
- Investments in innovation to drive technology leadership, new parameter expansion, and expand its addressable market segments; and
- Durable growth with an attractive margin and cash flow profile.
Medtronic plans to redeploy any net proceeds consistent with its stated capital allocation priorities. Medtronic does not expect this separation to impact its dividend policy.
Medtronic expects the separation to be completed in the next 12 to 18 months subject to the satisfaction of closing conditions, including obtaining final approval from the Medtronic Board of Directors, receipt of tax opinions and receipt of other regulatory approvals. Medtronic plans to provide additional details on the potential transaction in due course. There can be no assurance regarding the ultimate timing or structure of the potential separation or that a separation will be completed at all, or if completed, what form the separation would take.
Medtronic’s financial advisors on the transaction are Perella Weinberg Partners LP and Goldman Sachs & Co. LLC. Its legal advisors on the transaction are Wachtell, Lipton, Rosen & Katz; Skadden, Arps, Slate, Meagher & Flom LLP; and Baker McKenzie.
Source: Biospace
