As a dedicated and knowledgeable RMD investor I assume you have read the following article in seekingalpha.com? Maybe you dismiss this sort of opinion because you prefer your own research, but I've highlighted some sections of the SA article that to me, make a lot of sense about the future of RMD including Bt. These comments are not wildly exuberant, but they clearly indicate the potential for positive synergistism, and therefore contradict your claim that RMD "is now doing something that is at odds with the cultural DNA of the business".
Also, "you don't run you engage" (whatever that means) OK but it sounds like you're trying hard to convince others to short RMD? ----
ResMed’s (NYSE:RMD) disastrous clinical trial failure last May has not affected its status as top dog in the global anaesthesia and respiratory market. But its shares are still down 11% since then, and the company is taking steps to diversify into new areas, with six acquisitions in the past 12 months (see table below). Its latest purchase, that of the healthcare informatics specialist Brightree for $800m, also illustrates medtech’s growing interest in digital health. ButResMed is not straying too far from its core sector of sleep-disordered breathing- Brightree’s presence in the post-acute care market will help it expand into home medical equipment suppliers, as well as to identify new patients who could require its devices, it says.
ResMed could be forgiven for wanting to shift its focus away from devices after last year's study failure – far from improving heart failure patients’ health, its ventilation therapies increased the rate of cardiovascular death in this cohort (ResMed crashes after death rate increase, May 15, 2015).
But a change in focus is not the aim of this acquisition, ResMed’s chief executive, Mick Farrell, said during a conference call to discuss the deal. He believes that there is “still a lot of room for device innovation”, citing the company’s flow generators and masks, which are used to treat breathing disorders such as sleep apnoea. Head in the cloud
Nevertheless, connected care has been getting more important to ResMed for some time. In the past 18 months the group has put communications chips into all of its sleep apnoea devices, which send patient data to the cloud.ResMed’s Air Solutions cloud-based software has helped reduce labour costs by 50-60% and has also improved patient adherence from 60% to 87%, says Mr Farrell.
Brightree complements these efforts. It primarily serves the home medical equipment market, supplying billing and management software to the companies that provide home equipment- quite possibly including sleep apnoea devices- to patients. ResMed already has a presence in these areas.
But the deal also expands ResMed’s offering into home and hospice care, with the added benefit of potentially identifying new patients with breathing issues who can be referred for treatment with ResMed devices.
The cash acquisition, which will see Brightree continue to operate independently, will be immediately accretive to ResMed earnings after close. Although the price tag might seem steep at a multiple of 13.5 times 2015 EBITDA including a tax benefit, Mr Farrell was adamant that it was a “solid financial deal.” ResMed should at least know what it is getting itself into, having partnered with Brightree for several years. But investors in ResMed, which is listed on both the Australian securities exchange and the New York stock exchange, did not seem convinced: its stock closed down 2% yesterday in Australia and 1% in the US.
Big data is certainly a buzz term at the moment, and the line betweenmedtech and software companies is becoming increasingly blurred – only last week the computing giant IBM bought Truven Health Analytics for $2.6bn (IBM grows healthcare cloud with $2.6bn Truven buy, February 19, 2016).
RMD Price at posting:
$7.97 Sentiment: Buy Disclosure: Held
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