Abbott Laboratories’ (ABT - Free Report) next-generation FreeStyle Libre 2 integrated continuous glucose monitoring (iCGM) system recently received Medicare coverage. This achievement marks a major breakthrough for the company. The U.S. Centers for Medicare & Medicaid Services (“CMS”) reimbursement coverage has expanded the access of the Libre 2 to Medicare patients for better management of diabetes. The iCGM system is now accessible to all diabetic Medicare patients that satisfy the eligibility criteria.
Per management, securing the reimbursement coverage will enable Medicare-eligible diabetics of all age groups to gain access to the latest technology.
Investors should note that Abbott has secured partial or full reimbursement for the FreeStyle Libre portfolio in 37 countries including Canada, France, Germany, Japan, the UK and the United States.
With the expansion, Abbott aims to fortify grounds in the global CGM market, thereby boosting the Medical Devices segment. The FreeStyle Libre portfolio is a component of the company’s diabetes care business.
Significance of the Expansion
The FreeStyle Libre 2 system includes an easy-to-use sensor that can be worn on the upper arm for upto 14 days and measures glucose every minute. Further, a handheld reader can be placed over the sensor to obtain real-time glucose reading and trend arrows (which indicate rates of glucose change and can be described as the anticipated glucose change). Additionally, it provides an eight-hour glucose history to take better treatment decisions.
The system also boasts a superior day one accuracy unlike other iCGMs, and excellent accuracy as well as alarm performance at low end glucose levels.
Notably, the latest iCGM is the only self-applied iCGM sensor with a longer durability unlike other sensors currently available. It also does not require fingersticks and is comparatively much cheaper than other CGM systems that are currently available.
Per a report by Grand View Research, the global CGM device market size was valued at $3,929.7 million in 2019 and is anticipated to reach $10.4 billion by 2027 at a CAGR of 12.7%. Factors like rising incidence of diabetes and increasing adoption of CGM devices are expected to drive the market.
Given the market potential, this well-timed expansion in reimbursement coverage will boost Abbott's business.
Recent Developments in Diabetes Care
Of late, Abbott has been witnessing a slew of developments in its business arm.
Abbott, in June, finalized the diabetes care deal (proposed in October 2019) with Tandem Diabetes Care, Inc. (TNDM - Free Report) . The deal enabled the companies to integrate Abbott's FreeStyle Libre CGM technology with Tandem Diabetes’ insulin delivery systems for enhanced diabetes management.
In the same month, the company announced the receipt of the FDA’s approval for its next-generation FreeStyle Libre 2 iCGM system for use in diabetic patients aged four years and above.
Further in June, Abbott announced new late-breaking data illustrating that the use of the FreeStyle Libre system is associated with significant reduction in hemoglobin A1c levels for people having type 2 diabetes on either long-acting insulin or non-insulin therapy.
In April, the company announced the receipt of Health Canada’s authorization for use of the FreeStyle Libre system in hospital settings during the COVID-19 pandemic. This enabled frontline healthcare workers to remotely monitor patients' glucose status and history.
Shares of the company have gained 29.9% in the past year versus the industry’s 0.6% growth and S&P 500's 17.5% rise.
Zacks Rank & Key Picks
Currently, Abbott carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space include QIAGEN N.V. (QGEN - Free Report) and Hologic, Inc. (HOLX - Free Report) .
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.
Hologic’s long-term earnings growth rate is estimated at 15.5%. The company presently sports a Zacks Rank #1.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>