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Tandem Diabetes' Sugarmate Buyout Boosts Digital Offerings

Zacks Equity Research
·4 mins read

Tandem Diabetes Care, Inc. TNDM recently acquired Sugarmate, an app popular among insulin-dependent diabetic patients. Post the buyout, Sugarmate will become a wholly-owned subsidiary of Tandem Diabetes and will be led by its founder.

However, the financial terms of the deal have not been disclosed.

With the recent buyout, Tandem Diabetes aims to strengthen foothold in the diabetes care business across the globe.

Few Words on Sugarmate

The Sugarmate app enables diabetic patients to keep a track of their glucose levels, and health and nutrition information. The app will notify and alert users along with their care providers about any fluctuation.

Sugarmate will operate as a standalone entity in the near term and will continue to provide services to existing customers. The existing and new customers will continue to go through the Sugarmate app and website for information and support.

Rationale Behind the Deal

Per Tandem Diabetes’ management, the recent buyout adds to the company’s digital portfolio and is an important step toward the company’s expansion of the ecosystem of diabetes-related products and services.

Notably, Tandem Diabetes will continue to support the Sugarmate app user community with innovative data tools, regardless of their choice of therapy.

However, it is to be noted that the current Sugarmate app will not replace the t:connect mobile app, the launch of which is expected for t:slim X2 pump users this summer.

Industry Prospects

Per a report by Allied Market Research, the global digital diabetes management market was valued at $3,375.8 million in 2018 and is anticipated to reach $17,118.7 million by 2026, at a CAGR of 22.5%. Factors like increasing adoption of smartphones and tablets along with healthcare apps and a surge in the diabetic population worldwide are likely to drive the market.

Given the market potential, the buyout seems strategic for Tandem Diabetes.

Recent Developments

Of late, Tandem Diabetes has been witnessing a slew of developments.

The company, in June, announced the receipt of the FDA’s approval of an expanded pediatric indication for its t:slim X2 insulin pump with Control-IQ technology for children aged six and above.

In the same month, the company presented favorable real-world data from the early use of the t:slim X2 insulin pump with Control-IQ technology. The outcome demonstrated statistically significant improvements in sensor TIR in patients having both type 1 and type 2 diabetes with no increase in hypoglycemia (or glucose deficiency in the bloodstream).

During the first-quarter 2020 earnings call of the company in May, Tandem Diabetes confirmed strong momentum in the quarter, with growth of more than 80% year over year in renewal pump shipments to approximately 2,200. Further, the company’s mobile application with Remote Bolus capability for the t:slim X2 is one of the most highly requested features by customers. The first generation of the app had a beta launch in the first quarter and will be rolled out broadly in the coming weeks.

Price Performance

Shares of the company have rallied 41.3% in the past year compared with the industry’s 3.5% growth and the S&P 500’s 7.6% rise.



 

Zacks Rank & Key Picks

Currently, Tandem Diabetes carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Quest Diagnostics Incorporated DGX, Hologic, Inc. HOLX and QIAGEN N.V. QGEN.

Quest Diagnostics’ long-term earnings growth rate is projected at 7.6%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hologic’s long-term earnings growth rate is estimated at 7%. The company presently has a Zacks Rank #2.

QIAGEN’s long-term earnings growth rate is estimated at 12.2%. It currently sports a Zacks Rank #1.

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Quest Diagnostics Incorporated (DGX) : Free Stock Analysis Report
 
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