Dive Brief:

• Medtronic on Tuesday announced it's buying privately held Companion Medical, the maker of InPen, which it contends is the only FDA-cleared "smart" insulin pen system paired with an integrated diabetes management app on the market. 
• The acquisition, expected to close within one to two months, is intended to augment the medtech giant's diabetes management portfolio by combining InPen with Medtronic's intelligent algorithms to deliver personalized and proactive dosing recommendations to diabetic patients using multiple daily injections. Medtronic said it plans to expand global sales of InPen, which consists of a reusable injector pen and phone app that stores insulin settings and calculates the dose for the user. 
• Medtronic did not disclose terms of the transaction, but said the deal should be neutral to earnings in the current fiscal year before turning accretive.

Dive Insight:

Although Medtronic has taken a financial hit due to deferred elective procedures from COVID-19, CEO Geoff Martha in May reiterated his intention to do more tuck-in deals and to look for buying opportunities with asset prices down during the pandemic.

Touting the fact that the company has its strongest balance sheet in years, Martha said the company was poised to increase its M&A activities amid the uncertainties of the current business environment.

Medtronic's first publicly announced acquisition since the coronavirus outbreak came in July when it announced its intention to buy French spinal surgery technology company Medicrea through an all-cash tender offer, a deal expected to close by the end of this calendar year with the expectation that it will boost earnings come fiscal year 2023.

Tuesday's announcement of the Companion Medical acquisition is the second deal in as many months. Medtronic said its plans to acquire the manufacturer of InPen will serve to meet the medtech giant’s "long-term financial metrics for acquisitions" and builds upon prior diabetes-related buys, including nutrition data analytics company Nutrino in late 2018 and meal detection software developer Klue in late 2019.

The latest Companion deal, combined with the Klue and Nutrino acquisitions, will provide the "building blocks" to "design powerful algorithms leveraging the company’s deep data science and AI capabilities," according to Medtronic, with an eye toward further dosing automation to help reduce the burden on diabetics regardless of the preferred technology for insulin delivery.

In February, Companion announced that it received FDA clearance for its InPen bolus calculator for fixed dosing and meal estimation, designed to track a user’s current glucose level and active insulin for more precise insulin dosing as well as recommend mealtime and correction doses.

At the time, Companion claimed it was the first time a regulatory clearance had been given for those with Type 1 diabetes, or for insulin-dependent people with Type 2 diabetes, who administer a fixed amount of insulin for meals or deliver a dose based on the approximate size of their planned meal, as opposed to individual carb estimations.

Martha told investors on May's fourth quarter earnings call that while Medtronic is looking for deals of all sizes, he prefers acquisitions in the "medium, billion-dollar" range because they have a bigger impact on Medtronic's growth rate. "We don't buy growth, we grow what we buy and so that's what we're focused on," he added.

Medtronic is slated to report financial results for the first quarter of its fiscal year 2021 on Aug. 25.