Medtronic reverses patient monitoring spinoff plan, discontinues ventilator sales

More than a year after laying out a plan to divest its patient monitoring and respiratory interventions businesses—sparking months of speculation over potential buyers—Medtronic is reworking the reorganization.

Rather than hiving off the two segments for either an acquisition or a new life as a standalone combined company, Medtronic has decided to keep hold of them. According to the company’s Tuesday announcement, the businesses will now merge into a single unit, dubbed acute care and monitoring, or ACM.

Noticeably absent from the newly created segment will be the line of ventilators housed within what was formerly known as the respiratory interventions business. Medtronic is exiting the product line, which it categorized as “increasingly unprofitable.”

Despite that exit, the announcement said, “Medtronic will continue to honor existing ventilator contracts to serve the needs of its customers and their patients, and expects that existing manufacturers, who today account for the majority of the market, can meet customer demand for new ventilators moving forward.”

Medtronic unveiled its plan to separate out the patient monitoring and respiratory businesses in the fall of 2022. At the time, the company planned to set up the divested segments as a standalone company, touting their combined $2.2 billion in annual sales of ventilators, bedside monitors, pulse oximetry sensors, anesthesia hardware, telehealth platforms and other technologies.

The devicemaker said at the time that it would complete the separation within the next 12 to 18 months.

In that time, however, the segments on the chopping block caught the eyes of several potential buyers. In the months after Medtronic’s announcement, a handful of reports claimed that other major medtech companies and private equity firms were interested in picking up the soon-to-be-shelved businesses.

Among those reported to be circling at one time or another included Siemens Healthineers, GE HealthCare and ICU Medical. As of last spring, the latter two were said to be progressing in the bidding process for an acquisition deal that could reach as high as $9 billion.

Most recently, in late September, the Carlyle Group was said to have taken the lead in the proposed buyout. Neither Medtronic nor the private equity firm confirmed the speculation, and both of their stock prices took a dip after the report surfaced.

The news that Medtronic will in fact retain the two segments came alongside its latest earnings report. The company tallied up global revenues of $532 million for the third quarter of fiscal year 2024 within the patient monitoring and respiratory interventions group, representing year-over-year growth of about 2%.

That increase came even as the now-discontinued ventilator product line saw third-quarter sales decline in the mid-twenties, per Medtronic, offset in part by the high-twenties growth of pulse oximeter sales.

Overall, Medtronic saw third-quarter total global revenues increase 4.7% to reach $8.1 billion, leading the company to bump up forecasts for the rest of the year: While fiscal year 2024 growth was previously expected to top out at 4.75%, the year-over-year increase is now expected to stretch to 5%.