Medtronic plc MDT recently announced plans to acquire privately-held manufacturer of InPen, Companion Medical. Notably, smart insulin pen system InPen is the only FDA-cleared system paired with an integrated diabetes management app currently available in the market.
With the recent buyout announcement, Medtronic aims to strengthen its Diabetes Group business across the globe.
The acquisition deal is expected to be closed within one to two months, subject to the fulfillment of certain customary closing conditions. The transaction is not expected to have any material impact on Medtronic’s adjusted earnings per share in the current fiscal year and will be accretive thereafter. Additional terms of the transaction were not disclosed.
Notably, the latest decision to acquire Companion Medical came on the heels of the company’s two earlier acquisitions in this line, viz. Nutrino (an AI powered personalized nutrition firm) and Klue (an AI based behavior tracking company). According to Medtronic, these two purchases were the stepping stones to strengthen the company’s data science and AI capabilities, thereby helping it in designing powerful algorithm. Companion Medical purchase undoubtedly will further the company’s big data and AI foothold.
Rationale Behind the Acquisition
Medtronic’s acquisition of Companion Medical is expected to expand its diabetes management business and simplify the insulin delivery.
With the latest acquisition, Medtronic will work toward advancing the automation of insights and dosing capabilities, thus enabling patients to enjoy customized proactive dosing advice. Additionally, Medtronic will work toward expanding the availability of InPen globally.
Industry Prospects
Per a report by Fior Markets, the global insulin pen market is expected to reach $42.11 billion at a CAGR of 4.82% between 2019 and 2026. Factors like rising incidences of diabetes in various age groups and increasing usage of insulin pen in medical application are expected to drive the market.
Given the market potential, the planned acquisition seems to have been timed well.
Recent Developments in Diabetes Group
Of late, Medtronic has been witnessing a slew of developments in this business arm.
The company announced entering into a non-exclusive patent cross-license agreement with Tandem Diabetes Care, Inc. TNDM for certain technologies in diabetes management. In the same month, Medtronic launched an easy-to-use insulin infusion set, MiniMed Mio Advance, for insulin-dependent diabetic patients in the United States.
In June, the company presented favorable results from its U.S. pivotal trial of its investigational MiniMed 780G Advanced Hybrid Closed Loop (“AHCL”) system at the American Diabetes Association’s session.
In the same month, Medtronic announced the receipt of CE Mark for its next generation closed loop insulin pump system, MiniMed 780G AHCL, for the treatment of type 1 diabetes in the age range of seven to 80 years.
In May, Medtronic received FDA’s approval for the Android version of its Guardian Connect continuous glucose monitoring system.
In the same month, the company announced an expansion of the Medtronic Assurance program with a new option to support diabetics who have lost their health insurance due to COVID-19-related job losses. Current eligible customers in the United States will receive a three-month supply of glucose sensors, infusion sets and reservoirs free of charge.
Price Performance
Shares of the company have gained 1.2% in the past year against the industry’s 2.4% fall and the S&P 500’s 17.5% rise.
Zacks Rank & Stocks to Consider
Currently, Medtronic carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are QIAGEN N.V. QGEN and Thermo Fisher Scientific Inc. TMO.
QIAGEN’s long-term earnings growth rate is estimated at 22.3%. It currently flaunts a Zacks Rank #1. (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Thermo Fisher’s long-term earnings growth rate is estimated at 15%. It currently carries a Zacks Rank #2 (Buy).
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