Conshohocken-based CardioNet to reorganize corporate structure, become BioTelemetry, Inc

Tom Paine

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Conshohocken-based CardioNet, a pioneer in telemetry-based cardiac monitoring, announced a proposed major corporate reorganization along with its quarterly earnings announcement on Monday. Pending shareholder approval, it will adopt a holding company structure and change its corporate name to BioTelemetry, Inc. CardioNet and acquisitons Cardiocore and Braemar will become operating subsidiaries of BioTelemetry. BioTelemetry will continue to trade on the NASDAQ under the symbol "BEAT".

CardioNet CEO and President Joseph H. Capper said in a statement: “Qur strategy is to achieve sustained long-term growth by solidifying our leadership position in remote cardiac monitoring; building a leading research services business; and identifying markets that would benefit from the application of our wireless platform and proprietary technology. As a result, we recently launched a more comprehensive sales approach in our patient services business and acquired Cardiocore in order to expand our research services capabilities. Simultaneously, we have built an operational infrastructure capable of sustained growth in several areas of the developing mobile health services market. Consequently, we expect to derive economic and functional benefits through the alignment of our adjacent businesses, each with distinct brand equity, under this holding company structure."

Although Capper was not very specific during the earnings conference call (free registration required for transcript) in identifying the markets BioTelemetry might expand into under its new structure, the implication is that it plans to move beyond cardiac monitoring into other areas of remote health monitoring, as well as expanding research applications for the patient data it collects. In this sense, it is possible CardioNet's strategy may begin to look more like that of Sotera Wireless, a California-based venture that Safeguard Scientifics took a 7.7% stake in earlier this year as I wrote about here.

Dr. Eric Topol, the cardiologist and leading wireless healthcare technology pioneer who is now Chief Academic Officer of Scripps Health and serves on Sotera Wireless' board, was the first physician to serve on CardioNet's Medical Advisory Board in 1999, although to the best of my knowledge he no longer has a connection to CardioNet.

CardioNet, which did an IPO in 2008 and moved to Conshohocken from San Diego, has since suffered due to reimbursement rate cuts by payers and questions by some about the value of its services. It has since recovered somewhat and is showing revenue growth again, although its still losing money. BEAT closed today at $2.76, well down from its 2008 post-IPO high of $34.50.




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Safeguard Scientifics takes stake in wireless health monitoring venture Sotera Wireless

Tom Paine


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Correction: Earlier version misspelled Sotera name in title and first line.

Last week, Safeguard Scientifics announced it had acquired a 7.7% stake in San Diego-based Sotera Wireless, a wireless health monitoring venture, for $1.33 million. It was part of an overall financing round of $14.8 million.

Safeguard joined a prestigious cast of existing investors including Sanderling Ventures, Qualcomm Ventures, EDBI, Intel Capital, Cerner Capital and West Health Investment Fund, as well as new investor Delphi Ventures. James A. Datin, Executive Vice President and Managing Director at Safeguard, will join Sotera's board of directors.

Sotera’s ViSi Mobile platform is a comprehensive vital signs monitoring system that is designed to keep clinicians connected to their patients, whether in or out of bed, or in transport. ViSi Mobile is initially targeted for in-patient use; Safeguard says that by some estimates, around 60 percent of the approximately 1,000,000 U.S. hospital beds are not continuously monitored. Last year the FDA granted Sotera Wireless 510(k) clearance for in-patient use, and Safeguard's Datin told me in a phone interview that the economic case for in-patient use is strong with savings in areas such as nursing staff time and liability insurance.

However, the larger potential market could be for out-patient or in-home monitoring, and Sotera does not have a product with FDA clearance for that market yet.

Conshohocken-based CardioNet, which also started out of San Diego before moving here, was an early pioneer in wireless in-home monitoring. In fact, Dr. Eric Topol, the cardiologist and leading healthcare technology pioneer who is now Chief Academic Officer of Scripps Health and serves on Sotera Wireless' board, was the first physician to serve on CardioNet's Medical Advisory Board in 1999. CardioNet, which had an IPO in 2008, has suffered financially more recently, in part due to a Centers for Medicare and Medicaid Services decision to slash its medicare reimbursement rates for CardioNet.

Safeguard's acquisition of a 7.7% stake for $1.33 million implies a current valuation of lass than $20 million, although Safeguard says that the total equity invested in Sotera is $65.5 million, including when it operated under the name Triage Wireless.

Datin says Sotera is going to need to raise more money, and Safeguard may be interested in participating again under the right terms. In fact, as part of this investment Safeguard gains the option to raise its ownership stake to 20 percent under certain scenarios. Datin also envisions part of Sotera's potential value for Safeguard lying in analyzing in the vast amounts of healthcare data its system may eventually collect. He also sees possible synergies with other Safeguard healthcare portfolio companies.


Here Dr. Topol demos ViSi Mobile on the TV show Rock Center:






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