September 10, 2015 / 1:55 PM / in 2 years

3M exploring sale or spinoff of health software unit

(Reuters) - U.S. diversified manufacturer 3M Co MMM.N said on Thursday it was exploring a sale or spinoff of its healthcare data and software business.

Specialist trader Peter Elkins works at the post that trades Chevron, PVR Partners and 3M on the floor of the New York Stock Exchange, October 24, 2013. REUTERS/Brendan McDermid

The decision comes as Chief Executive Officer Inge Thulin reviews 3M’s broad business portfolio, which includes Post-it notes as well as adhesives, abrasives and other products for a variety of industries. At the same time, the company has struck acquisition deals to expand in other areas.

The healthcare technology business has become more competitive as companies and the U.S. government raise spending as regulatory requirements increase.

Xerox Corp XRX.N said in July that it would exit some government health information systems businesses, including managing state Medicaid systems, and focus on higher-margin healthcare areas.

Cognizant Technology Solutions Corp CTSH.O earlier this year purchased U.S. healthcare IT services provider TriZetto Corp for $2.7 billion, pushing its second-quarter healthcare revenue up 39 percent.

3M Health Information Systems, a unit of the company’s healthcare business, had trailing 12-month revenue of about $730 million, according to 3M.

The health information systems business provides healthcare data aggregation, analysis and strategic services. It counts more than 5,000 hospitals as among its customers along with government clients.

St. Paul, Minnesota-based 3M said it hired Goldman Sachs GS.N to advise on strategic alternatives for the health information unit. It said it expected a decision by the end of the first quarter of 2016 and could choose to retain and invest in the business.

3M in June struck a deal to boost its presence in worker protection gear by buying Capital Safety from private equity firm KKR & Co KKR.N for $1.8 billion, its largest purchase ever.

3M shares were down 0.3 percent at $140.50 in morning trading on the New York Stock Exchange.

Reporting by Lewis Krauskopf and Caroline Humer in New York and Ankit Ajmera in Bengaluru; Editing by Kirti Pandey and Lisa Von Ahn

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