Medtronic’s Diabetes Spinoff Offers Lessons for BioElectRx
by Jeremy Koff, senior consulting editor
May 2025 issue, BioElectRx Business Report
Medtronic Inc., the Minneapolis, MN manufacturer of medical devices, has long been regarded as a powerhouse in neuromodulation and bioelectronic medicine. With sizable market share in product categories such as cardiac rhythm management, spinal cord stimulation, and bowel and bladder neuromodulation, the company has leveraged its engineering strength and market presence in multiple product categories.
And while Medtronic has raised eyebrows in the past with some of its strategic acquisitions—including some well publicized failures like obesity neuromodulation firm Transneuronix in 2005 and DBS firm Sapiens Steering in 2014—the company has also made some noteworthy divestitures in the bioelectronic medicine space. In 2022, Medtronic spun off its Enterra gastroparesis neuromodulation product line and also its BIS neurosensing line previously acquired from Aspect Medical.
Earlier this month, Medtronic announced plans to spin off its diabetes division—including the storied MiniMed insulin pump franchise—into an independent, publicly traded company. The move reflects both a broader trend of medtech portfolio consolidation and a strategic realignment toward higher-margin, business-to-business segments such as cardiovascular, neuroscience, and surgical technologies. This trend is not unique to Medtronic—similar restructuring moves have been made by firms like Johnson & Johnson (Kenvue) and others, as companies streamline operations to unlock shareholder value and enable more nimble innovation.
This editor had the privilege of leading MiniMed’s expansion across Asia, Pacific, and South America from 1998 to 2001, just before its acquisition by Medtronic—a deal that predated subsequent neurotech deals founder Alfred Mann would make. Those years were quite fulfilling—bringing insulin pump technology to new markets and building infrastructure that empowered people with diabetes worldwide. The acquisition in 2001 was valued at $3.7 billion. At the time, MiniMed was one of Nasdaq’s most successful, single product medtech companies, with $400 million in revenue and approximately $47 million in earnings. The deal represented a 9x revenue multiple and ~70x earnings multiple—a significant premium reflecting the huge potential for products within the diabetes sector and MiniMed’s leadership within the category.
Now, nearly a quarter-century later, MiniMed returns to the public markets as a mature business with roughly $2.8 billion in annual revenue (FY 2025), driven by insulin pumps, disposables, and continuous glucose monitoring systems. (As a sidenote, MiniMed lost a huge opportunity early on, as Al Mann and his team pioneered the first commercial CGM system but failed to capitalize on it—leaving an opening that Dexcom eventually exploited.) The new company, with roughly 8,000 employees, will be led by current Medtronic diabetes president Que Dallara, who has overseen 10% annual growth and recent product launches.
Strategic Lessons for the BioElectRx Device Industry
So, what can we learn from MiniMed’s journey?
For early-stage commercial companies, profitability often remains elusive due to enormous sales and marketing costs—which can approach 70% or more of revenue in some companies. Yet companies like Dexcom, Inspire, and Axonics prove that a singular product focus, when properly scaled, can achieve both clinical impact and commercial success. Inspire, for example, generated over $800 million in 2024 revenue with $54 million in profit, while Axonics—though recently acquired for $3.7 billion by Boston Scientific—still operates at a loss (not unusual given the high cost of commercialization for companies with one or just a few medical device products).
Importantly, MiniMed’s financial model relied not just on durable device revenue but also on a robust, high-margin disposable stream. The original business, engineered by visionary founder Al Mann, targeted gross margins of 82% and created a predictable recurring revenue base—an advantage that remains central to its value proposition today. That kind of financial model stands in contrast to many implantable neuromodulation systems, which lack re-occurring revenue in the short-term (replacements provide revenue in primary cell implantable devices), as well as longer sales cycles.
This spinout also offers a broader strategic lesson: major medtech firms are increasingly pruning non-core segments that lack alignment with their growth engines. For Medtronic, the diabetes business—with its complex consumer-patient dynamic and frequent regulatory hurdles—no longer fit neatly alongside its B2B-heavy cardiology and neuro portfolios. This move is likely to enable greater autonomy, quicker decision making, and investment flexibility for MiniMed—something bioelectronic medicine spinouts could emulate. Free from internal competition for capital, the new MiniMed may reinvest more aggressively in R&D, patient engagement, and AI-powered decision tools.
During the Al Mann days, decisions were made fast, products launched quickly, and innovation flourished. After the acquisition, the massive Medtronic corporate structure coupled with its broad product portfolio, created a much different environment to work within.
Implications for BioElectRx Startups and Investors
Several of the most valuable medtech companies in recent years have been single-product category leaders—Inspire in obstructive sleep apnea, Axonics in sacral neuromodulation, and Dexcom in CGM. These firms mirror MiniMed’s early playbook: focused innovation, strong IP, direct-to-consumer branding, and steady reimbursement traction. Unlike past decades when startups hoped for early acquisition, the success of these companies—and the rebirth of MiniMed—suggests that long-term independence and eventual IPO or spinout may be a better value-maximizing path.
For investors and strategics, MiniMed’s story also serves as a reminder that category dominance, even in a single disease area, can support billion-dollar valuations and market leadership. The spinout may signal a broader willingness among large strategics to divest and unlock hidden value—potentially opening the door for similar exits or carve-outs in bioelectronic medicine.
For many of us who rode the early MiniMed wave, this spinout represents a nostalgic yet strategic rebirth. We owe much to Al Mann—not just for what he built, but for how many of us he inspired. His legacy continues to inform today’s bioelectronic medicine innovators: be focused, move quickly, become the technology leader.