Medtronic and DaVita Launch New Kidney Tech Company

It's official – Medtronic and DaVita have launched a new company to develop new tech for kidney health.

"Mozarc Medical's focus will be on meaningful and innovative kidney health technologies that improve the overall patient experience and increase access to care globally," said Ven Manda, CEO of the newly launched Mozarc Medical, which is co-owned by Medtronic and DaVita. "At a time when patient preferences are evolving and in-home kidney care is on the rise, Mozarc Medical is uniquely positioned to better serve patients with kidney disease around the world."

Manda previously led Medtronic's renal care solutions (RCS) business, which is now part of Mozarc Medical. In addition to Manda, Medtronic's former RCS leadership team has also transitioned to the new company's leadership team.

Medtronic and DaVita first announced intentions to launch the new kidney health tech company last May.

"With proven industry leadership, a strong product portfolio and R&D pipeline, and strategic investment from Medtronic and DaVita, Mozarc Medical is well-positioned for long-term success," Manda said. "I look forward to unlocking the full potential of our new company, with a dedicated global team and innovative pipeline that will transform kidney care."

Medtronic and DaVita each have equal equity stakes in the new company. Through the first three quarters of Medtronic's fiscal year 2023, the RCS business drew in revenue of $64 million, $63 million, and $70 million, respectively.

"The launch of Mozarc Medical holds tremendous promise to improve the lives of patients living with kidney disease as it seeks to revolutionize the approach to home dialysis by improving accessibility, ease of use, and clinical performance," said Mahesh Krishnan, MD, group vice president of research and development at DaVita. "Our investment in this venture is born from our decades-long commitment to advancing kidney care, and our aim is that it will fuel patient-centric solutions that may not have otherwise been possible."

Expect more big things from Medtronic

CEO Geoff Martha, who took the reins in April 2020 after Omar Ishrak retired, hinted during an earnings call in February 2022 that the company would be making some big changes.

"Over the last 18 months, we've made significant changes to our operating model, moving to 20 focused operating units as well as making major enhancements to our culture and incentives. These changes have improved our pace of innovation and our competitiveness, as evidenced by recent product filings and approvals that came faster than expected," Martha said at the time. "And we're not finished driving change. We're accelerating improvements to our global supply chain and operations, leveraging our scale to further improve quality, increase product availability, and reduce costs."

Martha also said at the time that the management team would be looking at the Medtronic portfolio with a more critical eye, with a focus on growth, and creating shareholder value.

"I'd be surprised if there weren't changes over the coming fiscal year, but I don't know yet if they will be smaller or more significant," he said.

While Martha declined to get into specifics, his reply does give us at least a vague idea of what his line of thinking is.

"Our north star is durable growth. And we're looking at our businesses and we're evaluating them for, one, how well they fit into the portfolio, how well they fit into our strategy, are we the right owners of these assets? And then how we, Medtronic, add value and grow these businesses," he said. "... we don't know if these changes will be significant or more limited."

Medtronic is also shedding its patient monitoring and respiratory interventions businesses. While the company initially said it would spin these two businesses into a new company, GE HealthCare and ICU Medical are reportedly competing to buy Medtronic’s patient monitoring and interventions business. According to a Reuters report, the sale could fetch between $8 billion and $9 billion.