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Medtronic's Deal With Nutrino Health to Boost Diabetes Arm

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Recently, Medtrnic, plc (MDT - Free Report) entered into a definitive agreement to acquire nutrition-related data services, analytics and technologies provider Nutrino Health Ltd. This development is part of the company’s efforts to expand its diabetes management business.

While financial terms of the deal remain undisclosed, Medtronic expects this transaction to culminate in third-quarter fiscal 2019, ending Jan 25, 2019, subject to certain customary closing conditions.

Notably, Nutrino is working on the improvement of universal health by enabling artificial intelligence (AI)-led analysis of how nutritional intake will affect a person’s health. The company has created a food database and nutrition data insights platform, collating data from millions of access points and food items globally.

According to Medtronic, based on the fact that food and nutrition are major components in effective diabetes management, the union with Nutrino will improve clinical outcomes for diabetic patients. Post completion of the transaction, Nutrino’s extensive food analysis infrastructure, nutrition science expertise and AI-driven personalized insights will integrate with Medtronic`s technology and future innovations.

Significantly, bringing Nutrino under Medtronic’s Diabetes Group will help the company accelerate its progress in this business. In this regard, this is not the first time that Medtronic has inked a strategic deal with Nutrino. The relationship dates back to 2016. Nutrino has played a vital role in Medtronic’s recent product introductions in the United States including the updated iPro2 myLog app used with professional CGM solutions as well as the Sugar.IQ diabetes assistant app used with the Guardian Connect smart CGM system.

Market Potential

Ageing population, unhealthy lifestyle, rising awareness and higher expenditure in healthcare are likely to drive the highly competitive diabetes market.

Per a report by Mordor Intelligence, the global market for diabetes care devices is projected to reach a value of $30.25 billion by 2021 at a CAGR of 5.93%. Considering this bullish market trend, we believe that the latest development is a strategic fit for the company.

Share Price Movement

Medtronic has been gaining investor confidence from consistently positive results. Over the past three months, the company’s share price has outperformed its industry. The stock has lost 2.8%, comparing favorably with the industry’s 7.7% decline.

Zacks Rank & Key Picks

Medtronic currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader medical space are Intuitive Surgical, Inc. (ISRG - Free Report) , Illumina, Inc (ILMN - Free Report) and Veeva Systems (VEEV - Free Report) .

Intuitive Surgical has an expected long-term earnings growth rate of 15.6% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Illumina’s long-term earnings growth rate is projected at 23.4%. The stock carries a Zacks Rank of 2.

Veeva Systems’ long-term earnings growth rate is estimated at 19.3%. The stock is a Zacks #2 Ranked player.

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