Why Long-Term Investors Might Keep an Eye on Medtronic
Imagine a storied old chef deciding to split his kitchen into two—each specializing in its own cuisine—hoping that one can flourish without the other dragging it down. That’s what Medtronic is doing with its diabetes care unit. This division, announced recently, is set to become a standalone, publicly traded entity. The logic? Well, while diabetes devices have been nudging forward faster than the rest of Medtronic’s platter, they’ve also held margins hostage, much like an overenthusiastic guest who hogs the last slice of cake. During 2025, this segment contributed 8% to total revenue but only 4% to operating profits—meaning it’s a good revenue source but not quite the cash cow management wants. The rest of Medtronic’s business isn’t exactly sprinting ahead either, but it’s more profitable. So, by shedding the slower-growing, more expensive-to-manufacture bits, and focusing on higher-margin opportunities, the company hopes to better navigate the tightrope of tariffs and macroeconomic upheavals. Plus, it’s relaxing the grip on its consumer-facing side, perhaps acknowledging that the healthcare world is more complicated than simply selling to hospitals—think of it as moving from a busy train station to a more manageable boutique.