Prosper Junior Bakiny, The Motley Fool

Sat, May 31, 2025, 7:45 AM5 min read

• Medtronic's diabetes care unit has grown faster than the rest of its business in recent years.

• However, the company decided to spin off this segment into a stand-alone corporation.

• Still, Medtronic has several growth avenues and an impeccable dividend program.

• 10 stocks we like better than Medtronic ›

Over the past few years, Medtronic (NYSE: MDT) has faced significant challenges, including a pandemic-induced slowdown, relatively slow revenue growth, and economic issues that impacted its financial results. Throughout it all, Medtronic's diabetes care business has consistently been one of its fastest-growing segments.

However, the healthcare leader recently announced some news regarding this unit that might surprise some investors. Let's find out more about it and discuss what it means for Medtronic's prospects.

Medtronic markets several products within its diabetes care segment. Perhaps its most important line is its insulin pump franchise. One of the latest iterations of this was the MiniMed 780G, which came with several nifty features, including automatic insulin dose corrections. Medtronic also markets continuous glucose monitoring (CGM) systems that allow diabetes patients to keep track of their blood sugar levels, with constant measurements every few minutes.

Additionally, it offers insulin pens and a software that collects information from CGM devices, insulin pumps, and smart pens to create reports to inform patients' progress or share with medical professionals. There is considerable room for growth in the diabetes market. Of the half-billion adults worldwide with diabetes, only 1% had access to CGM technology as of the end of 2023.

One might think Medtronic would seize the vast untapped opportunity, especially considering its diabetes care unit's faster growth. During the company's fiscal 2025, ended April 25, Medtronic reported revenue of $33.6 billion, up 3.6% compared to the previous fiscal year.

The company's diabetes care segment generated $2.8 billion in sales, with year-over-year growth of 10.7%. True, it still makes up a small part of its business, but given the massive worldwide opportunity, it might have eventually become its biggest growth driver if it kept up its much faster growth pace for a long time.

However, Medtronic announced that it would spin off its diabetes care unit, which will become a stand-alone, publicly traded corporation within the next 18 months. Medtronic wants to simplify its portfolio and focus its resources on core, high-margin growth opportunities. That's the rationale management gave for the separation.