Medtronic expands services push to diabetes care with acquisition of Diabeter

Med tech company executives often talk about the need to provide not just products but "solutions" to problems like meeting Affordable Care Act metrics at hospitals and lowering the cost of patient care. Medtronic ($MDT) has been the most aggressive when it comes to action on that front. Now, it is expanding its push into healthcare services to a new front with the acquisition of the Netherlands' diabetes and research clinic Diabeter.

"This acquisition marks Medtronic's first entry into a diabetes integrated care model approach and signifies that Medtronic Diabetes is more than pumps and sensors--we are a holistic diabetes management company focused on making a real difference in outcomes and cost," Hooman Hakami, Medtronic's diabetes group president, said in a statement.

Diabeter manages more than 1,500 patients using innovative technologies such as the Diabeter Dashboard for connecting patients and physicians in order to improve self-management of the disease, Medtronic says.

"Diabeter has been pioneering this type of integrated care in the Netherlands, and we believe this approach can be applied more broadly to serve more patients, in more places around the world," said Dr. Henk Veeze, senior international medical director at Diabeter. "We have developed a unique system with improved clinical outcomes, combining outstanding clinical care with devices and information technology."

The terms of the transaction were not disclosed, but Medtronic said "the annualized earnings impact of this acquisition is not expected to be material."

The new addition will be integrated into the company's diabetes care group, which earns more than $6 billion in annual revenue on the backs of continuous glucose monitors and other devices, but not services, at least until now. This is company's first foray into the integrated treatment of diabetes.

Medtronic has applied the services and solutions strategy to cardiology. It manages the operation of catheterization labs at hospitals in Europe, the Middle East, Africa, Latin America and Canada. During an earnings call, Medtronic CEO Omar Ishrak said the company has more than 50 long-term contracts with hospitals representing $1 billion in revenue over the life of the deals, which typically last five to six years.

In addition, in 2013 the company bought disease management and remote patient monitoring firm Cardiocom for $200 million. Cardiocom manages patients with heart failure and diabetes. Medtronic says its model is similar to the one envisioned by Diabeter.

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