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Inside Look: Finding a Rhythm in Wireless Telemetry


Posted in Medical Device Business by llloyd on January 14, 2011

An estimated 4 million people in the United States require physician care due to recurrent arrhythmias. These arrhythmias are often symptoms of other conditions, such as congenital heart defects, congestive heart failure, and heart valve disorders.

 

Highlights

  • December 2010: Acquires Biotel for $11.6 million.
  • November 2010: Partners with MedApps Inc. to advance position in the mobile wireless medical market.
  • August 2010: Wins lawsuit filed against it by disgruntled shareholders.
  • June 2010: Appoints Joe Capper as president and CEO.

When it comes to diagnosing and treating arrhythmias, time is of the essence. Delays can cause anxiety for patients, or, on the extreme end, death. Twelve-year-old device firm CardioNet Inc. (Conshohocken, PA) does its part to help speed up treatment with wireless telemetry systems. Specifically, the company has created Mobile Cardiac Outpatient Telemetry (MCOT) technology to enable constant ECG monitoring, analysis, and response. FDA granted clearance for the company’s flagship product in 2002.

The company has flourished thanks to the success of MCOT, but it took a hit in July 2009 when CMS’ Pennsylvania Medicare carrier slashed the reimbursement rate for MCOT from $1123 to $754. Shareholders then sued the company, accusing it of misleading them about Medicare reimbursement. Critics said that CardioNet had backed itself into a corner by having all of its operations in a single location and putting its entire Medicare business into the hands of a single local Medicare contractor.

 

Despite reimbursement issues, revenue has steadily increased for CardioNet in the past few years.

The hits kept coming. CardioNet Inc. tried to boost its position in the wireless medical technology market by acquiring Biotel, a firm that manufactures products that wirelessly record heart functions. The plan hit a snag when CardioNet backed out of the deal in the summer of 2009, saying that Biotel failed to comply with the terms of the agreement. Biotel then filed a lawsuit against CardioNet.

Litigation woes for the company spilled into 2010, but CardioNet pressed on. In February, it reached a milestone of 300,000 patients monitored by MCOT. By November, CardioNet had made up with Biotel and announced another purchase agreement. By December, CardioNet had completed its acquisition of Biotel for about $11.6 million. The firm closed the year with $43 million in cash and investments and no debt, setting itself up for a strong push in 2011.

 

CardioNet increased its R&D spending by 45% in FY 2009.

“We are excited to complete the acquisition of Biotel. We are looking forward to expanding our product offerings with Biotel’s wireless event monitor as well as diversifying our revenue with the addition of the manufacturing and clinical services businesses,” said CardioNet president and CEO Joe Capper.

The acquisition shows that deals aren’t necessarily dead after the first attempt. Indeed, CardioNet’s resiliency has served it well.
 

Published in MD+DI,



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