The Rise of Medtech Divestitures & Spinoffs (2025-2026): Why Giants Are Breaking Up

The Great Medtech Unbundling

The medical device industry is in the midst of its most aggressive wave of corporate restructuring in a generation. Across 2025 and 2026, four of the world's largest medtech conglomerates — BD, Johnson & Johnson, Siemens, and Medtronic — have announced major divestitures or spinoffs, collectively involving well over $50 billion in enterprise value.

This is not a coincidence. The simultaneous breakups reflect a fundamental shift in how medtech leaders think about portfolio strategy: the era of the diversified healthcare conglomerate is giving way to an era of focused, high-growth pure-play companies.

An EY analysis of medtech M&A from July 2024 through June 2025 found that while overall deal volume declined 41% to 61 transactions, the average deal size ballooned to $636 million — confirming that capital is concentrating around fewer, larger, higher-conviction bets (MedTech Dive). According to Bain & Company's 2026 M&A report, spin-offs and divestitures accounted for more than one-third of strategic medtech deal value in the first 11 months of 2025 — "a noticeable increase from the previous five-year average" (Bain & Company). The same report concluded that "building carve-out muscle is no longer optional" for medtech companies, as divestitures are likely to remain a substantial part of M&A for the foreseeable future.

Why Medtech Giants Are Breaking Up

Three converging forces are driving the divestiture wave:

1. Activist Investor and Shareholder Pressure

Investors increasingly demand that medtech companies justify why disparate business units belong under one roof. The "conglomerate discount" — where diversified companies trade at lower valuations than the sum of their parts — has become a powerful catalyst. BD's stock traded at approximately 12.5x EV/EBITDA before announcing its Waters deal, well below the 20x+ multiples commanded by pure-play life science peers (CNBC).

2. Capital Allocation Focus

Separating slow-growth divisions allows parent companies to redirect capital into higher-growth, higher-margin segments. J&J CEO Joaquin Duato explicitly stated that the orthopedics spinoff would allow J&J to "focus on faster-growing medtech markets such as cardiovascular and robotic surgery" (MedTech Dive). Siemens CEO Roland Busch framed the Healthineers deconsolidation as enabling focus on "a highly synergistic Siemens portfolio" (Siemens Press Release).

3. Private Equity as an Exit Channel

With PE firms sitting on record dry powder, divestitures have a ready buyer pool. Carlyle's acquisition of Vantive (Baxter's renal care business) in early 2025 demonstrated that PE firms are willing to absorb multi-billion-dollar medtech carve-outs. Philips also divested its Emergency Care business to Bridgefield Capital in 2025, continuing a pattern of PE firms absorbing spun-off medtech units (MPO Magazine).

The Major Medtech Divestitures & Spinoffs Tracker

Deep Dives: The Six Biggest Deals

1. BD → Waters: The $17.5 Billion Reverse Morris Trust

In July 2025, Becton, Dickinson and Company (BD) announced it would combine its Biosciences and Diagnostic Solutions business with Waters Corporation in a $17.5 billion Reverse Morris Trust (RMT) transaction — one of the largest medtech restructurings in recent memory (BD Press Release; CNBC).

The structure: BD will spin off its biosciences and diagnostics division ("SpinCo"), which will then merge with Waters. The combined company will retain the Waters name and trade under the NYSE ticker "WAT." Waters shareholders will own approximately 60.8% of the combined entity, with BD shareholders receiving 39.2% (Stock Spinoffs).

The numbers: BD's Biosciences and Diagnostic Solutions business is expected to generate approximately $3.4 billion in revenue and $925 million in adjusted EBITDA for calendar year 2025. The combined company will have pro forma revenues of approximately $6.5 billion and $2.0 billion in EBITDA, doubling Waters' total addressable market to roughly $40 billion with a 5-7% annual growth rate (BD Investor Relations; CNBC).

Why an RMT? The Reverse Morris Trust structure allows BD to divest its biosciences and diagnostics units tax-free by ensuring BD shareholders own more than 50% of the voting stock and economic value of the combined company immediately after the merger. A direct sale at this scale would have triggered billions in taxable gains (Fierce Biotech; Stock Spinoffs).

What's left: Post-deal, "New BD" will be a pure-play medical technology company focused on medication delivery, medication management, and health systems solutions. BD President and CEO Tom Polen stated the separation will create a company "poised for strong growth, continued margin expansion, and enhanced capital allocation strategy" (MD+DI).

2. J&J: The DePuy Synthes Separation — Spinoff or $20B+ Sale?

In October 2025, Johnson & Johnson announced plans to separate its orthopedics business, DePuy Synthes, into a standalone company within 18-24 months (MedTech Dive; Ortho Spine News).

Scale of the business: DePuy Synthes produced hip, knee, and shoulder implants, surgical instruments, and related products, generating approximately $9.3 billion in revenue in 2025 — roughly 10% of J&J's total revenue (Reuters via MassDevice; Ortho Spine News).

Leadership: J&J named Namal Nawana as worldwide president of DePuy Synthes to lead the business during and after the separation. Nawana is a former CEO of Smith & Nephew and previously led J&J's spine business (MedTech Dive).

The plot twist — a $20B+ sale? In early 2026, Bloomberg reported that J&J was exploring a potential sale of DePuy Synthes for more than $20 billion, rather than a tax-free spinoff. J&J CFO Joe Wolk confirmed the company was evaluating "multiple separation paths, with a tax-free spin-off as the primary focus while remaining open to alternatives" (MassDevice; SPINEMarketGroup).

Strategic rationale: J&J CEO Joaquin Duato told investors the separation would "further strengthen its focus and investment toward higher-growth areas where we can meaningfully extend and improve patient lives." Post-separation, J&J will retain leadership positions in six key growth areas: oncology, immunology, neuroscience, cardiovascular, surgery, and vision (Kavout). The orthopedics market is dominated by four companies (Stryker, J&J, Zimmer Biomet, and Smith & Nephew) and grows at a slower pace than cardiovascular or surgical robotics. Meanwhile, DePuy Synthes is "poised to become the largest and most comprehensive player in the global orthopedics market" as a standalone entity (MedTech Dive; Kavout).

Legal considerations: DePuy Synthes carries historical legal exposure — J&J has faced thousands of lawsuits related to the ASR hip replacement system. As of February 2026, J&J had resolved all but 128 of roughly 10,600 claims in nationwide litigation (SPINEMarketGroup).

3. Siemens Deconsolidates Siemens Healthineers: A $39 Billion Unwinding

In November 2025, Siemens announced plans to deconsolidate Siemens Healthineers by transferring 30% of Siemens Healthineers shares directly to Siemens AG shareholders via a spin-off (Siemens Press Release; Reuters).

Background: Siemens originally held an 85% stake in Siemens Healthineers after taking it public in 2018. The company has been gradually reducing its stake — in February 2025, Siemens sold a 2% stake for approximately €1.45 billion ($1.6B). At the time of the November 2025 announcement, Siemens' remaining stake was valued at approximately €33.5 billion ($39 billion) (Reuters).

What it means: By distributing 30% to shareholders, Siemens gives up its controlling majority in Healthineers. Siemens CEO Roland Busch framed the move as letting Healthineers reach "the next stage of growth" independently while allowing Siemens to focus on its industrial automation and digital industries portfolio (MD+DI; Siemens Press Release).

Healthineers' new strategy: Freed from the conglomerate, Siemens Healthineers announced a new strategy phase called "Elevating Health Globally" at its Capital Markets Day. For fiscal years 2027-2030, the company targets 6-9% annual revenue growth from Imaging and Precision Therapy combined, with Diagnostics expected to improve toward mid-single-digit growth and double-digit annual earnings-per-share growth (Siemens Healthineers CMD 2025).

4. Medtronic Spins Off Diabetes Business as MiniMed

Medtronic announced it would separate its Diabetes business into an independent publicly traded company under the name MiniMed — a callback to the pioneering insulin pump company Medtronic acquired in 2001.

Timeline: Medtronic filed a registration statement on Form S-1 with the SEC in December 2025 for a proposed IPO. The company launched its IPO roadshow in February 2026, seeking to raise approximately $742 million (Medtronic Press Release; Law360).

Why separate? Medtronic's Diabetes business faces intense competition from Abbott (FreeStyle Libre), Dexcom, and newer entrants in continuous glucose monitoring (CGM). As a standalone company, MiniMed can pursue partnerships and strategic decisions without being constrained by Medtronic's broader portfolio priorities. The CGM market is expected to grow significantly as devices become available over-the-counter to consumers regardless of diabetes status (MD+DI).

Market context: The MiniMed IPO follows the successful Medline IPO at the end of 2025, which raised over $6.26 billion and demonstrated strong investor appetite for medtech listings (Equityswarm via LinkedIn).

5. Baxter → Carlyle: The Vantive Renal Care Carve-Out

Carlyle Group's acquisition of Vantive, Baxter's renal care business, closed in early 2025. The transaction carved out a business with approximately $4.5 billion in annual revenue, creating a standalone global renal care company under PE ownership (Bain Global Healthcare PE Report 2026; LinkedIn).

This deal exemplified the growing trend of medtech conglomerates using PE as an exit channel for large, mature business units. Baxter retained its higher-growth hospital and surgical products while Carlyle gained a global scale platform to apply its operational improvement playbook.

6. Philips and Other Divestitures

Philips continued its multi-year portfolio simplification in 2025, selling its Emergency Care business to Bridgefield Capital, a PE firm. The company also divested other business units to PE firms throughout the year as part of its strategy to focus on connected care and image-guided therapy (MassDevice; MPO Magazine).

Bioventus also divested business units to PE firms in 2025, and Surmodics struck a deal to sell to private equity, although that transaction remains under government scrutiny (MassDevice).

The Economics of Medtech Breakups

Conglomerate Discount vs. Pure-Play Premium

The financial logic behind these divestitures is straightforward:

BD's biosciences and diagnostics division, for example, was valued at roughly 19x EBITDA ($17.5B on ~$925M EBITDA) in the Waters deal — significantly above the ~12.5x multiple BD commanded as a whole (BD Investor Relations; CNBC).

Reverse Morris Trust: The Tax-Free Playbook

The RMT structure used by BD has become the preferred mechanism for large medtech divestitures. It allows the parent to:

1. Spin off the divested unit to existing shareholders (tax-free)
2. Immediately merge it with an acquirer
3. Avoid the capital gains tax that a direct sale would trigger

The key requirement: the parent company's shareholders must own more than 50% of the combined entity after the merger. In BD's case, BD shareholders will hold 39.2% of the combined Waters entity — which satisfies the requirement because BD shareholders collectively will own the majority when including the shares they already hold (Stock Spinoffs).

What This Means for the Industry

For Medtech Professionals

• Career opportunities — Standalone companies need to build independent leadership teams, compliance functions, and commercial organizations. DePuy Synthes alone will need to stand up an entire C-suite and supporting infrastructure.
• Regulatory implications — Spun-off entities may need to transfer regulatory approvals, manufacturing licenses, and quality system registrations. This process can take 12-24 months in major markets.
• Cultural shifts — Employees moving from a $90 billion parent (J&J) to a $9 billion standalone company will experience fundamentally different decision-making speed, risk tolerance, and resource availability.

For Investors and Acquirers

• Newly independent companies often become acquisition targets themselves. Analysts noted that a standalone DePuy Synthes could eventually merge with or be acquired by another orthopedics player (MedTech Dive).
• PE firms view newly spun-off units as attractive targets because they are typically underleveraged and have optimization potential.
• Pure-play companies generally receive higher valuations, creating value for shareholders of both the parent and the spun-off entity.

For Startups

• Partnership opportunities — Focused companies tend to be more active acquirers in their domain. A pure-play BD focused on med-tech can pursue bolt-on acquisitions more aggressively than a diversified conglomerate could.
• Exit visibility — More focused strategic acquirers means clearer exit paths for startups building in adjacent spaces.

What's Next: Divestitures to Watch in 2026

Several additional medtech restructurings are expected or rumored:

• Teleflex announced in late 2025 that it would sell its Acute Care, Interventional Urology, and OEM businesses for a combined $2.03 billion to two buyers, continuing the asset-shedding trend (MassDevice)
• GE HealthCare, now independent from GE since 2023, may pursue its own portfolio reshaping as it integrates the $2.3 billion Intelerad acquisition
• Medtronic's remaining portfolio post-MiniMed spinoff could see further rationalization
• Zimmer Biomet has been rumored as a potential consolidator — or breakup candidate — depending on market conditions

The divestiture wave is far from over. As one MD+DI analysis put it, BD's Waters deal signals a broader "2025 asset-shedding trend" that is fundamentally reshaping the medtech landscape (MD+DI).

Key Takeaways

1. The conglomerate era is ending — BD, J&J, Siemens, and Medtronic are all breaking up to unlock shareholder value and sharpen strategic focus
2. Reverse Morris Trust deals have emerged as the preferred tax-efficient structure for large divestitures (BD → Waters)
3. PE firms are absorbing carve-outs — Carlyle (Vantive), Bridgefield (Philips Emergency Care), and others are stepping in as natural buyers
4. The J&J DePuy Synthes situation is the wildcard — a $20B+ sale would be transformative for the orthopedics market
5. Newly independent companies often outperform as pure-plays, suggesting more breakups are coming

Sources: BD Press Release; CNBC; MedTech Dive; Reuters; MassDevice; SPINEMarketGroup; Siemens Press Release; MD+DI; Medtronic Press Release; Law360; Bain Global Healthcare PE Report 2026; Stock Spinoffs; MPO Magazine; Ortho Spine News; Siemens Healthineers CMD 2025; Fierce Biotech.