“So, upon full separation, we’re expecting our adjusted gross and operating margins to improve by approximately 50 and 100 basis points, respectively.”

In context

“two steps. First, we plan to execute an IPO of up to 20% of the Diabetes business. The proceeds are expected to appropriately capitalize the New Diabetes Company and provide the ability to retire Medtronic shares. Second, we intend to execute a split-off, where Medtronic will exchange our remaining New Diabetes Company shares for Medtronic shares from willing shareholders. We plan to retire those shares, resulting in a lower Medtronic share count. We’re targeting completion of the entire separation within 18 months, and taking this preferred path should result in a tax-free impact to Medtronic shareholders for US federal income tax purposes. From a financial standpoint, there are several benefits to Medtronic. Diabetes has lower gross margins and operating margins than overall Medtronic. So, upon full separation, we’re expecting our adjusted gross and operating margins to improve by approximately 50 and 100 basis points, respectively. Given the share retirement, this separation is expected to be immediately accretive to Medtronic EPS upon completion. We don’t expect any change to our dividend policy. So financially, there are some clear short-term financial benefits. But the most important aspect is what Geoff mentioned earlier, this separation will allow us to increase our growth-accretive investments in our core businesses where margins are structurally higher. This is all about capital allocation and creating the conditions to fuel our future growth. So clearly, this separation will be beneficial for both Medtronic and the New Diabetes Company, unlocking both strategic value and shareholder value. With that, let’s now come back to Medtronic overall and recap our Q4 results. As Geoff mentioned earlier, Q4 revenue of”