Thesis for Propeller Health

After todays results and the market's shock at suspending Resmed share buy back, I wanted to detail my thesis on why Resmed sees greater value in investments such as their recent acquisition in Propeller Health. 

Why would a company invest $250 million into a company that makes no revenue?

Data driven healthcare is the new frontier. Resmed sees Propeller Health as their vehicle to become the leader in CPAP and Asthma digital health. http://investors.resmed.com/investor-relations/events-and-presentations/press-releases/press-release-details/2018/ResMed-to-Acquire-Propeller-Health-a-Leader-in-COPD-and-Asthma-Connected-Health-Solutions-for-225-Million/default.aspx

The Resmed CEO spent a year observing the business from a far, first acquiring a small stake to observe. They quickly realised that Propeller Health is following the same trajectory in that of CPAP machines and the impact that it had with OSA.

Most of the public (and even health professionals) don't realise but the number one intervention to improve Asthma and CPAP control is regular follow up with a patient's GP/Respiratory Physician. The reason is to monitor a patient's compliance to their puffers and monitor technique. This has mortality benefit and much greater impact than any single new drug therapy for CPAP or Asthma. 

What Propeller Health is proposing to do, is capture an objective markers of patient compliance, technique and environmental factors. On a patient level, it's a simple little click on sensor to a patients asthma puffer. But it transmits seamlessly through wifi to a database (akin to Resmed's CPAP machine) and records important data points. 



The exciting thing is that Propeller Health's sensors are evidence based. The numbers are astounding. They demonstrate a 58 percent improvement in medication adherence, 48 percent increase in symptom-free days and 53 percent reduction in emergency room visits. If New England Journal of Medicine published these numbers tomorrow for a drug, it would become automatically part of the guidelines. If the drug didn't have any side effects, it would be first line.

A first line therapy for Asthma would be paradigm shifting.

Now, Propeller Health isn't the only one that's doing this. It's a race and there's other companies in this space as well including an ASX listed Respiri(ASX RSH). But Propeller Health is leading the way. They've got the most seamless product and they've got the digital architecture that makes digital health integration seamless. Now with Resmed's extensive experience with Airview behind it, Propeller Health now has the ability to be the market leaders and be the Resmed of 2030 in the Asthma/CPAP space.

I look forward to following this space with interest. Here's a review recently on their facebook page.