Diabetic Investor recommends listening to the Home Diagnostics (NASDAQ:HDIX) third quarter conference call. Not because the news was good, it wasn’t. Rather the struggles at HDI point to just how difficult it is for a smaller player to make headway against the Big Four. It was bad enough that they had to lower full year revenue guidance, again. The truly bad part is the difficulty they face in turning things around.
The company did announce several new initiatives to reinvigorate growth and they do have an opportunity to become the exclusive co-branded meter for Rite-Aid, but the fact remains that HDI lacks the resources they need to effectively compete in market dominated by larger players with vast resources. Compounding the problem is they are no longer the only “value player” in the market. Privately held AgaMatrix is coming on strong and is gaining traction. AgaMatrix also has the luxury of doing business with Liberty Medical who is now a unit of Medco (NYSE:MHS).
Although Diabetic Investor understands why HDI became a publicly traded company, the fact remains they would have been better off if they remained privately held. Many believed when HDI went public they would follow the path set by Therasense and be taken over by one of the larger players. Prior to AgaMatrix coming on to scene this may have been a possibility, however given the choice between acquiring HDI or AgaMatrix – AgaMatrix offers greater upside.