Insulet picks up Neighborhood Diabetes for $63M

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Insulet, a diabetes device developer, has acquired Neighborhood Diabetes, a medical equipment distributor of diabetes supplies for an estimated $63 million in cash and stock.

Insulet develops the OmniPod insulin management system, a tubeless insulin pump technology. Woburn, Mass.-based Neighborhood Diabetes provides blood glucose testing supplies, insulin pumps, pump supplies and pharmaceuticals for type 1 and type 2 diabetics. The companies expect the current deal to be “immediately accretive to earnings,” but exclude one-time transaction expenses.

The $63 million purchase breaks down to $38 million in cash, $6.6 million of which is subject to a one year cash escrow and $25 million which comes from Insulet common stock.

Bedford, Mass.-based Insulet expects the acquisition to:

  • Expand the company’s product line;
  • Increase sales force expansion;
  • Enhance Insulet’s back office support with reimbursement and support infrastructure;
  • Expand the company’s access to insulin dependent multiple daily injection therapy patients. Currently, more than 15,000 of Neighborhood Diabetes clients are insulin dependent and using multiple daily injections of insulin; and
  • Provide the company with pharmacy adjudication capabilities to drive sales of insulin and other diabetes drug therapy.

DeSisto said that the acquisition is expected to increase revenue and earnings growth by providing the additional product platform to Insulet customers.

Insulet expects its full-year 2011 revenue to be in the range of $150 to $160 million and estimated that the company’s operating loss would be in the range of $20 million to $28 million. The company expects its revenue to increase during the second quarter of 2011. The one-month revenue from Neighborhood Diabetes is expected to raise revenue to almost $34 million.