Welcome to the wacky world

Welcome to the wacky world

This morning BioTelemetry, Inc. (NASDAQ: BEAT) announced they would be acquiring Telcare. Per a company issued press release;

“BioTelemetry acquired Telcare Medical Supply, Inc. and associated assets for upfront consideration of $7.0 million in cash with the potential for additional performance-based earn-outs of up to $5.0 million in cash. Telcare is expected to generate over $5.0 million in revenue on an annualized basis and be near breakeven by the end of 2017.

Joseph H. Capper, President and Chief Executive Officer of BioTelemetry, Inc., commented: “BioTelemetry is one of the few companies to successfully scale a profitable digital health business. We have a tremendous core competency in real-time remote data collection, analysis, storage and distribution. As we detailed on our last earnings call, we see digital population health management as a natural fit to leverage our expertise and existing partnerships to improve outcomes and reduce costs in some of the more widespread chronic conditions. We chose the diabetes market as our first major digital population health initiative because of its significant overall burden on the healthcare system, with estimated direct annual costs in the U.S. of over $245 billion.”

If the name Joe Capper sounds familiar it should as Mr. Capper has a long and distinguished history in this wacky world, proving once again that the wacky world of diabetes is like the Hotel California where you can check out but never leave. Prior to coming to BioTelemetry Mr. Capper was Chief Executive Officer and member of the Board of Directors of Home Diagnostics, Inc. (now Trividia Health), Chief Executive Officer of CCS Medical Inc. and spent nine years with Bayer Corporation, ultimately becoming National Sales Director of the Diabetic Products Division.

The question now becomes what does this mean for a company like Livongo which also has a way cool whiz bang cloud enabled conventional glucose monitor. The folks at Livongo can’t be thrilled with the purchase price of just $7 million, which pegs the multiple at barely over 1Xsales.

This also isn’t good news for the folks at Intuity who recently raised another $40 million on top of the $200 million they have already burned through. Yes, they have an FDA approved whiz bang way cool all in one device the Pogo. What they don’t have is any revenues, a sales organization or much hope.

To be quite honest we don’t know much about what BioTelemetry has in store for Telcare but we can guess as they likely will join the long and growing list of companies competing in the … wait for it .. interconnected diabetes management (IDM) market. Which means they will ultimately compete with a small company in Mountain View, another in Northridge and so on and so forth. We don’t want to minimize anything hear but you can’t swing a dead cat these days without hitting a company that isn’t interested in IDM.

A market where … wait for it… hardware doesn’t matter all that much but systems combined data analytics does.  Again and no disrespect to BioTelemetry but everyone wants to improve outcomes and reduce costs.

So, kudos to the good people at Telcare as it has been a long and winding road.  And good luck to the folks at BioTelemetry as you’ve just entered an over-crowded, highly competitive market. Or as Momma Kliff would, “Welcome to the wacky world, are you really sure you want to do this?”