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Medtronic (MDT) to Expand Diabetes Care With New Buyout

Medtronic plc MDT recently inked a set of definitive agreements to acquire EOFlow — manufacturer of the EOPatch device — a tubeless, wearable and fully-disposable insulin delivery device. The acquisition will increase the company's insulin-delivery portfolio, helping it to assist more individuals with diabetes worldwide within a single, seamless Medtronic support ecosystem.

The latest move will strengthen Medtronic’s Diabetes business.

Financial Details

After closing, the acquisition is anticipated to be dilutive to MDT’s adjusted earnings per share for the first three years and neutral to accretive thereafter. The guidance Medtronic released on May 25 for fiscal 2024 includes the anticipated half-year dilution.

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EOFlow is anticipated to match Medtronic's long-term financial requirements for acquisitions and be accretive to the company's weighted average market growth rate (WAMGR).

More on the News

Following the transaction's completion, Medtronic will move promptly to incorporate the EOPatch device into its MiniMed 780G system's next-generation sensor and clinically tested Meal Detection Technology algorithm. Medtronic’s customers will have access to a wide range of solutions across smart multiple daily injections (MDI), tethered insulin pumps and wearable insulin patch technologies with the development and regulatory approval of the next-generation EOPatch device.

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Zacks Investment Research

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The EOPatch device is approved for marketing in Europe, South Korea, Indonesia and the UAE. It uses a proprietary microfluidic technology to deliver insulin with high accuracy and reliability, while reducing the risk of insulin occlusion. Users can monitor and manage the patch using a compatible smartphone application.

Strategic Implications

Per Medtronic’s management, the company is thrilled to present a unique wearable patch alternative to patients who want to use technology to simplify living with diabetes. This option will increase patient choice and inspire more innovation. Along with Medtronic's Meal Detection Technology algorithm and next-generation continuous glucose monitor (CGM), the addition of EOFlow is anticipated to increase the company's capacity to meet the needs of more people with diabetes, regardless of where they are in their treatment journey or their preferred method of insulin delivery.

Industry Prospects

Per a report by Grand View Research, the global diabetes devices market size was valued at $26.7 billion in 2021 and is expected to witness a CAGR of 8.2% by 2030. Factors such as an increase in technological advancements and a rise in the incidences of obesity is driving the market.

Recent Developments

In May 2023, Medtronic declared the findings of its investigational Extravascular Implantable Cardioverter–Defibrillator (EV ICD) study. These were presented as late-breaking science at Heart Rhythm 2023 in New Orleans. The results confirm that the system provides the advantages of a device with lead outside the heart and continues to provide pause prevention pacing and anti-tachycardia pacing to avoid shocks with prolonged follow-ups.

In April 2023, Medtronic received the FDA approval of its MiniMed 780G system with the Guardian 4 sensor requiring no fingersticks while in SmartGuard technology. This milestone marks the approval of the only system with meal detection technology that offers automatic adjustments and corrections to sugar levels every five minutes. The system provides insulin to help account for when users occasionally forget to bolus or underestimates the number of carbs in their meal.

Price Performance

Shares of the company have lost 12.9% in the past year compared with the industry’s fall of 31.5%.

Zacks Rank and Other Key Picks

Medtronic carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are Addus Homecare Corporation ADUS, Merit Medical Systems, Inc. MMSI and Davita Inc DVA.

The Zacks Consensus Estimate for Addus Homecare’s 2023 earnings indicates 10.9% year-over-year growth. The Zacks Consensus Estimate for ADUS’s 2023 earnings has moved 0.5% north in the past 30 days.

Addus Homecare has a long-term estimated growth rate of 11.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Merit Medical reported a first-quarter 2023 adjusted EPS of 64 cents, beating the Zacks Consensus Estimate by 16.4%. Revenues of $297.6 million surpassed the Zacks Consensus Estimate by 5.9%. It currently carries a Zacks Rank #2.

Merit Medical has a long-term estimated growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.

DaVita, carrying a Zacks Rank #2 at present, has a long-term estimated growth rate of 14.6%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 17.3%.

DaVita has lost 1.9% compared with the industry’s 18% decline in the past year.

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Medtronic PLC (MDT) : Free Stock Analysis Report

DaVita Inc. (DVA) : Free Stock Analysis Report

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