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A $738 million deal to acquire a South Korea-based maker of a wearable insulin patch could provide a long-term boost to Medtronic's struggling diabetes business.

The deal to buy EOFlow Co. is expected to close in the second half of the year, Medtronic said on Thursday.

Medtronic, based in Ireland but run from Fridley, announced the deal at the same time it reported its quarterly financial results.

Net income was down 20% to $1.2 billion, or 88 cents a share, for its fourth quarter ended April 28. Adjusted earnings per share of $1.57 were a penny above Wall Street expectations.

Medtronic reported a revenue bump of 6% to $8.5 billion for the quarter, topping consensus estimates of $8.25 billion. The company's shares were down 4.5% Thursday and 15% over the past year.

Medtronic's diabetes division was its poorest performing segment for U.S. sales in the fourth quarter. Domestic diabetes revenue was down 6.6% for the quarter while overall U.S. sales were up 9.3%.

But Medtronic CEO Geoff Martha said developments during the quarter could turn the tide.

"In diabetes it was a big quarter for us," said Martha on a conference call with analysts.

Martha pointed to two Food and Drug Administration actions in April as examples of momentum in the unit.

The FDA issued a warning letter in December 2021 that detailed concerns about how Medtronic handled recalls and complaints over some of its insulin pumps. After another inspection of Medtronic's facility in Northridge, Calif., where the diabetes business is based, the agency in April lifted the warning and related restrictions.

At about the same time, the FDA approved Medtronic's MiniMed 780G insulin pump. Orders should start shipping in June, the company said.

Martha said the EOFlow deal will complement Medtronic's current portfolio, including the MiniMed.

The deal was "one of our traditional tuck-in type of deals," said Martha, adding Medtronic still has a lot of appetite for similar deals.

The diabetes division is Medtronic's smallest, with $2.3 billion in annual sales.

John Boylan, senior equity analyst with Edward Jones, said the EOFlow deal is a boost for the diabetes franchise but won't have an immediate impact on sales growth.

"We think that it is a promising acquisition and it could help long-term growth, but incorporating the technology into Medtronic's platform won't happen overnight so may take time to see that incremental growth," he said. "We view diabetes to be a solid part of Medtronic's long-term growth."

EOFlow makes the EOPatch, a tubeless, wearable and disposable insulin patch that is approved for use in Europe, South Korea, Indonesia and the United Arab Emirates but not yet in the United States.

"Our goal is to simplify diabetes management and deliver the well-established benefits of automated insulin delivery to our customers in the ways they want and need," said Que Dallara, president of Medtronic Diabetes, in the statement announcing the deal.

Medtronic said in its earnings release that it continues to manage profit expectations with a slower-growing sales environment, inflation and foreign currency exchange rates. It started global layoffs in April but has not provided specific numbers about the job cuts, which will continue over the next few months.

Company officials estimate organic revenue growth of 4 to 4.5% for the next fiscal year. Adjusted earnings growth, it said, should be in the range of $5 to $5.10 a share. That's below the consensus analyst estimate of $5.20 a share compiled by Refinitiv.

With non-emergency surgeries continuing to recover from pandemic lows and the MiniMed approval, among other positive notes from Medtronic, "the guide does seem conservative to us," Evercore ISI analyst Vijay Kumar said in a note.

Includes reporting by Reuters.