Just saying

Just saying

Tandem (NASDAQ: TNDM) closed today at $1.90 giving it a market capitalization of $58.22 million. The stock has sunk almost 84% this year. But according to their last earnings call they had some 46,000 patients. Kim Blickenstaff, the company’s CEO stated during the most recent earnings call;

“For three consecutive years we have offered the number 1 rated insulin pump and maintained a number 1 customer service rating according to the Q&A. resulting in the tremendous growth of our install base, which is now more than 46,000 people with Diabetes.”

So, let’s say someone came along and offered to buy Tandem and was willing to pay a 20% premium which would make the purchase price $69.86 million. Which means that someone could acquire these 46,000 patients for $1,518.70 each. Patients who on average spend $2,500 to $3,000 per year on pump supplies.

Considering that Johnson and Johnson (NYSE: JNJ) has decided to let Animas, their insulin pump unit swing in the wind and they are unwilling to pony up any more bucks to buy these much-needed patients, it looks like Medtronic (NYSE: MDT) could swoop in and buy Tandem for practically nothing. Not only would they increase their installed user base by 46,000 but they would blunt Dexcom (NASDAQ: DXCM) from picking up more CGM users. Keep in mind that Tandem and Dexcom work together.

As of today, Medtronic had a market cap of almost $111 BILLION and almost $13 BILLION of cash on their balance sheet. Which basically means Medtronic could buy Tandem by simply writing a check.

Not only would they pick up 46,000 patients and blunt Dexcom but they would get the best patient interface and the Tandem pipeline. Just for grins and giggles they would really tick off JNJ and make it harder for Insulet (NASDAQ: PODD) to gain more traction in the insulin pump market.

They can do all this for what is basically a rounding error. Heck they can do it just to have fun.

The fact is Animas needs Tandem in the worst way, JNJ could easily afford Tandem too, but as we have noted they have decided to go home and not big. They have decided to let Animas suffer. Seriously the folks at Animas must feel like the salves in Egypt who begged the Pharoah to let them go. Heck the entire diabetes franchise at JNJ must feel this way. They continue to ask the Pharoah to set them free, let them go but the Pharoah isn’t listening.

Now some may be thinking there is no way the government would allow Medtronic to acquire Tandem, that this would give them a near stranglehold on the insulin pump market. That may have been true had Hillary been elected but now that the Donald is about to take office, say goodbye to any anti-trust concerns.

Seriously the only question we have is why is Medtronic waiting. What like Tandem shares are going to fall even further? Honestly at just $1,500 or so per patient this is a no-brainer. Add in all the ancillary benefits and you wonder why the Medtronic team is not in San Diego right this very moment. Listen all along Tandem was built to be sold and there is no way they would spurn an offer. Especially given they are bleeding cash and have few if any options for raising more capital.

As Momma Kliff used to say; “Such a bargain.”