Medtronic, Ypsomed, and the Diabetes Device Shake-Up: Spin-Offs, Strategy, and the Future of Diabetes Tech

In a transformative moment for diabetes care and medtech strategy, two major players—Medtronic and Ypsomed—have announced spin-offs or divestments of their diabetes divisions. Do these moves  reveal a deeper shift in how companies respond to disruptive therapies, competitive pressure, and changing financial expectations.

This blog post is the summary of a conversation with ChatGPT that explores what’s driving these decisions, the financial dynamics behind them, and how these spin-offs are a strategic repositioning for the future of diabetes technology.

ChatGPT’s summary of our conversation starts here:

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The Medtronic Spin-Off: Strategic Realignment in Action


Medtronic, a global leader in medical devices, is spinning off its diabetes division, and has expressed a preference for an IPO. This business has brought in around $2.8 billion in annual revenue and has enjoyed double-digit revenue growth in recent quarters. Yet, that topline performance masks a more complicated reality:  underperformance in profitability.

Despite its growth, the diabetes division has missed internal profit targets. Medtronic’s consolidated focus on high-margin areas like cardiovascular, surgical robotics, and neurovascular devices has put pressure on segments that don’t meet its evolving financial thresholds.

Why Spin Off Now?

Margin Optimization: Medtronic can improve its financial profile by separating a lower-margin division.

Operational Agility: A standalone diabetes company can restructure freely and adapt more quickly to consumer demands and digital health trends.

Market Clarity: An IPO allows investors to independently value the diabetes unit and potentially unlock hidden value.

Strategic Flexibility: Medtronic can reduce its exposure to a segment facing disruption from both tech competitors and emerging pharmaceuticals.


In essence, the IPO is not just about shedding risk—it’s about reconfiguring for long-term competitiveness.


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Competitive Landscape: David vs Goliath in Diabetes Tech

One of the major challenges Medtronic’s diabetes business has faced is intense competition from more specialized, nimble players. Dexcom, Tandem and Insulet have raced ahead with better user interfaces, quicker regulatory approvals, and platforms that support better interoperability.

Key weaknesses for Medtronic include:

Product Delays: The MiniMed 780G faced regulatory holdups in the U.S.

Cybersecurity Issues: Past FDA warnings have damaged its credibility.

Closed Systems: For years, Medtronic resisted open device ecosystems in favor of tightly integrated platforms—an approach increasingly out of step with user expectations.


Medtronic has made moves to correct this—partnering with Abbott to introduce interoperable CGM—but progress has lagged, and even then, what’s being produced seems to be tied in to the Medtronic ecosystem rather than truly interoperable.

Spinning off the diabetes division allows the new entity to make these kinds of shifts faster, free from the constraints of a massive parent company with competing priorities.


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The Incretin Disruption: GLP-1s and the Shrinking Addressable Market

Perhaps the most disruptive development in diabetes care is the explosive growth of incretin-based therapies—particularly GLP-1 receptor agonists like Ozempic, Wegovy, and Mounjaro. These drugs have fundamentally altered the diabetes treatment landscape by reducing the need for insulin, particularly in type 2 diabetes patients.

Impacts on device makers include:

Lower Insulin Usage: Fewer patients require pumps or daily monitoring.

Consumer Preference Shifts: Many patients favor the simplicity of once-weekly injections over device management.

Slowing Growth in T2D Devices: The previously expected growth from the type 2 market is now under threat.


Medtronic’s spin-off decision reflects a recognition that its business model must evolve. By separating the diabetes division, the new entity can better position itself in a world where insulin devices may play a more niche role.


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Missed Profit Estimates: The Quiet Catalyst

While much of the narrative has centered on innovation and market strategy, the diabetes division’s missed profit targets are likely to have played a pivotal role in the spin-off. Despite growing revenue, profitability remained challenging.

Drivers of this underperformance included:

High R&D Spend: Efforts to catch up with market leaders consumed cash.

Regulatory Costs: Especially after FDA scrutiny.

Integration Inefficiencies: Operating inside a diversified conglomerate made fast pivots difficult.


The spin-off allows both Medtronic and the new company to reset expectations. Medtronic can shore up its margins, and the diabetes business can restructure, refocus, and realign its cost base.


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Ypsomed: A Parallel Narrative with Different Economics

Swiss-based Ypsomed recently made a similar announcement: it will divest its Diabetes Care division to focus on its more profitable Delivery Systems business, which includes self-injection pens and autoinjectors.

Let’s look at the financials:

Diabetes Care Revenue: CHF 98.1 million in H1 2024/25, up 51.3% YoY.

Operating Loss: CHF -20.4 million, improving from CHF -27.5 million the year prior.

User Base: The mylife YpsoPump reached ~60,000 active users.


Despite impressive growth, the division has been a loss-maker. Ypsomed forecast breaking even in Q4 of the last fiscal year but has opted to exit now.

In contrast, the Delivery Systems division posted CHF 220.3 million in revenue in the same period, growing 24.8% and showing strong profitability. With a CHF 1.5 billion capex plan over the next five years, Ypsomed is betting big on injectables, not pumps.

Strategic Lessons from Ypsomed’s Exit

Focus Wins: Profitable growth in injectables is more scalable than fighting for margin in the diabetes tech arms race.

Divestment Isn’t Failure: Even as the diabetes business grows, the opportunity cost of staying in it was too high.

Spin-Outs as Accelerators: Like Medtronic, Ypsomed recognizes that diabetes care is evolving too fast to manage as one product line within a broader company.



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Why an IPO Instead of a Private Sale?

For Medtronic, the choice of an IPO (rather than a sale or private equity divestment) suggests confidence in the long-term potential of the diabetes business. Here’s why:

Market Valuation Opportunity: The IPO allows the market to assign a valuation independent of Medtronic’s overall multiples.

Capital Access: A public listing gives the new company direct funding pathways for R&D and market expansion.

Strategic Agility: Public companies can restructure more transparently and rapidly.

Optionality for Medtronic: Retaining a stake allows phased disinvestment depending on performance.


This path mirrors spin-offs seen at GE (GE HealthCare) and Siemens (Healthineers), where large conglomerates carved out focused entities to unlock value and drive independent execution.


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The Future Diabetes Company: A New Model Emerges

So what will the standalone Medtronic diabetes business (and its Ypsomed counterpart) look like?

Lean and Digital-First: Emphasizing user experience, mobile engagement, and cloud data.

Open Systems: Partnering with third parties to enable device interoperability.

AI-Enabled Algorithms: Better personalization for closed-loop systems.

GLP-1 Compatible: Positioning CGMs and decision tools as adjuncts to pharmaceutical therapies.


This model is less like a traditional device maker and more like a healthtech platform company. In this context, spin-offs become strategic enablers—not retreats, but reboots.


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Conclusion: Spin-Offs as Strategy, Not Surrender

Both Medtronic and Ypsomed are reacting to the same set of challenges: margin pressure, disruption from GLP-1s, and a highly competitive device ecosystem. Their spin-offs reflect different corporate strategies—but a shared vision: that diabetes care needs a new kind of company to meet the moment.

For Medtronic, it’s a way to preserve growth while improving corporate margins. For Ypsomed, it’s a path to double down on what it does best.

And for investors and patients alike, it’s a signal that the next chapter of diabetes care will be written by leaner, nimbler, and more focused companies—designed from the ground up for a post-incretin, patient-centered world.

Thoughts on the conversation – here endeth ChatGPT’s contribution

Having prompted ChatGPT to generate feedback, a lot of what it came up with seems to make sense.

But it does appear to have missed a key point in the Medtronic story. A few years back, the diabetes division wasn’t looking great. The management team was changed and as ChatGPT describes, the growth improved a lot. But that initial reinvigoration of management probably indicates the start of a longer term strategy to spin it out.

The question that a spin-off and IPO raises for me relates to Medtronic’s existing CGM and future pump plans. Without the umbrella of the greater Medtronic, and with more focused investment cash, are we looking at the end of the line for Medtronic CGM?

From a strategic perspective, does it make sense to compete in a market dominated by Abbott and Dexcom with sensor technology that is widely regarded as inferior? Especially with a newly minted relationship with Abbott undergoing FDA review at the moment.

It also raises a question on their new pump plans. The existing model is very much pump centric while the rest of the market has been moving into what feels like a phone driven, app-centric world, and a major part of their plans appeared to be for something similar. Is ChatGPT right when it argues that this allows investment cash to focus specifically on what the Medtronic Diabetes entity needs to do?

Finally, with both Medtronic and Ypsomed spinning out growing but underperforming business lines into separate entities, are we looking at the start of a new type of diabetes company?

Will a freshly spun out MDT Diabetes be able to pivot to what seems to be a much more consumer focused market than it ever has been, or will the Medtronic DNA remain strong?

Whilst it raises as many questions as it answers, the idea of an IPO at least suggests confidence in the brand. There’s nothing like a group of shareholders to whom you’re beholden to perform, and Medtronic management must believe that it will.