As we head into the Thanksgiving holiday there is still business to be done unfortunately for Medtronic when it comes to diabetes business isn’t too good. Per their earnings release this morning.
“Diabetes Group second quarter revenue of $574 million decreased 3.7 percent as reported and 5.0 percent organic. Diabetes Group revenue performance was impacted by a delay in new patient starts on insulin pumps and continued competitive pressure. CGM grew in the mid-single digits.”
Include in the slide presentation which accompanied this morning’s call which we DID NOT listen to (hey some things just aren’t worth waking up for at 5am) the biggest news was they have filed their Zeus sensor with the FDA in October. And not to digress or anything but why is their next generation sensor not called Apollo instead of Synergy listen either stick with the Greek God thing or not.
Anyway when it comes to diabetes one-word can be used to describe where Medtronic is for as Professor Hill said they’ve got Trouble with a capital T. Tandem now has the coolest toy in the toy chest. They no longer own the most valuable piece of real estate, formulary position. And while they are making strides to improve their sensors these strides can’t come fast enough, nor will they be long enough to offset what Dexcom and Abbott are doing. The lone possible bright spot could be the InPen and their move into the Tyler market. But overall they’ve got Trouble with a capital T.
Making matters worse with the reemergence of COVID and states reinstituting restrictions things will likely get worse before they get better. The fact is, yes those pesky facts again, Tandem and Insulet have done a much better job of dealing with COVID and have a better rep than Medtronic does within the insulin pump community. Like it or not Medtronic NEEDS the patient to see their physician if they are to acquire new patients while Tandem and Insulet do not. Given the increasing role social media plays in insulin pump selection and the positive feedback generated from Control IQ and OmniPod users this is one more category where Medtronic is also falling behind in.
Speaking of social media we have decided to amend one of our maxims. Many times we have stated that a company can steal more money with a good PowerPoint presentation than they could with a gun. Well given the increasing influence of social media that really should read something like the more a company uses social media to promote their whiz bang way cool toy the more likely it is it will never see the light of day.
Just the other day Tidepool, a major user of social media, announced they were laying off 40% of their staff. The company blamed COVID, but this is only half the story as the real story which contributed to these layoffs was the company failed to deliver on many of the promises they made. If this sounds familiar it should as another social media maven Bigfoot has also failed to deliver on many of the promises they have made. Bigfoot finally got their connected cap cover to the FDA and once again is out raising more money but still after millions raised and lots of hype they still do not have an FDA approved product on the market.
Another company that we see falling into this over hype fail to deliver category is Levels. Now if you never heard of Levels they are a …wait for it .. a bio wearable company specializing in …wait for it … metabolic health. And yep they just raised $12 million to develop this bio wearable. The company of course has a slick web site, a blog and yep is very active on social media. What they don’t have at least not to our knowledge or anyone else who’s following this space is a REAL product.
Oops we almost forgot to mention they also have Podcasts and in case everyone is wondering yes the Wacky World of Diabetes the Diabetic Investor podcast will be launching very soon. We had anticipated an early November launch but given our move to San Diego we’ve had to push it back to early December.
Ok enough of the shameless self-promotion and back to Levels. While it’s possible they may actually have something we shall remain firmly in the skeptical department. We may not be from Missouri, but we do believe in their maxim, show me or as we would say in Chicago put up or shut up. Hey, we might be on the left coast now, but we will never abandon our Chicago roots although we sometimes would like to abandon our beloved Bears, but let’s not go there today.
We suppose at some point investors would learn their lesson. They would stop falling in love with the toys in the toy chest, the shiny new toy, the way cool whiz bang and understand that this is a BUSINESS. A very demanding and very difficult business with high hurdles to overcome. That as one ex-diabetes device executive said comes down to three fundamental truths – can you make the damn thing – can you support it and most importantly of all can you get it paid for.
As true as that may be investors continue to ignore these fundamentals and foolishly throw money into these social media hucksters. Sure once in a blue moon they hit a homerun but more often than not they swing and miss. We saw this with … wait for it… non-invasive glucose monitoring … it happened again with … wait for it … non-invasive continuous glucose monitoring and are now seeing it again with … wait for it … bio wearables.
Folks Momma Kliff has tried to warn investors about these hucksters, but Mom knows that sometimes no matter how many times you tell a child that the fire is hot they sometimes still have to stick their hands in to find out for themselves. Yet what Mom didn’t anticipate was how many times some of these investors would continue to stick their hands into the fire, what’s that old saying about once burned. As Mom once said hey I can only do my best to try and teach and protect you but if you choose to be continually stupid that is your choice.
Have a safe and Happy Thanksgiving everyone.