Reporter’s notebook: 2018: The year of DTC, M&A

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Thursday, January 24, 2019

YARMOUTH, Maine – Two of the most read vendor stories of 2018 concerned Philips (No. 1) and Invacare (No. 5) going direct to cash-paying consumers for their portable oxygen concentrators.

That’s not surprising, of course. HME providers have been on watch for years for manufacturers tip-toeing into the DTC market, much like Inogen did years ago. But they haven’t had anything concrete to go on—until now.

Unlike Inogen, Philips and Invacare are only providing POCs direct to cash-paying customers, whereas Inogen provides them to cash-paying and insurance-holding customers (not to mention sells them to other providers, largely through a private labeler). But providers will be the first to point out that, in the beginning, cash sales was how Inogen dipped its toe in the water, too.

To date, ResMed has towed the line that it will use a go-to-market model that focuses on a “full partnership with our HME customers” when it fully launches its new POC, the Mobi, in early 2019. We’ll soon see.

Speaking of ResMed, another theme that dominated a number of the most read vendor stories was mergers and acquisitions, particularly in the software market. “ResMed buys another software provider,” which detailed the company's efforts to broaden its offerings beyond the HME industry, came in at No. 2. ResMed, as you know, already owns Brightree. Now it also owns HEALTHCAREfirst, which provides software specifically for home health and hospice agencies, and MatrixCare, which provides software for skilled nursing, senior living and private duty facilities.

Also in late 2018, Brightree bought Apacheta, which provides a mobile delivery platform.

ResMed may not have plans to go DTC, but with a growing portfolio of software solutions for the post-acute market and connected devices, it sure is sitting on a pile of provider and customer data. What will it do with all of that data, and will we find out in 2019?

Invacare and its efforts to rebound from a years-long consent decree with the U.S. Food and Drug Administration also made an appearance in the most read vendor stories, much like it has in the past few years. It seems the company can’t catch a break, with slow sales due to changes to Medicare’s competitive bidding program and with an expected increase in tariffs. At press time in late December, Invacare was trading at $3.78; a year earlier, it was trading at $18.50.

The clock’s ticking on Invacare’s goal to hit $100 million in EBITDA by late 2020.