Dive Brief:
- IRhythm said Thursday it has struck a deal to buy VitalConnect for $287.5 million to add mobile cardiac telemetry capabilities.
- VitalConnect sells a wearable device, VitalPatch, that monitors for 21 cardiac arrhythmias and several vital signs. The device lasts seven days, after which users can apply a new patch.
- IRhythm sells its own cardiac monitor and is working to secure clearance of a second device, but it has identified VitalPatch as a product that can unlock another part of the market.
Dive Insight:
IRhythm CEO Quentin Blackford discussed the rationale for the deal last week on an earnings call with investors. Zio AT, iRhythm’s current cardiac monitor, can serve about half of the mobile cardiac telemetry, or MCT market, Blackford said. Zio MCT, which is being reviewed by the Food and Drug Administration, could open up another 20% to 30% of the market, the CEO added. Blackford believes VitalConnect can unlock a broader opportunity.
“Having VitalPatch in there gives us access to the entire market, which is probably a $1 billion market, growing in the high single digits,” Blackford said. “It’s probably an incremental $500 million market opportunity for us.”
IRhythm remains committed to receiving FDA clearance for Zio MCT, the CEO said, but “VitalConnect is the primary focus here in the near term as we look to launch a new product into the MCT space.” The company wants Zio MCT clearance so it has more options for the future, but its top priority will be integrating VitalPatch into its commercial operations, Blackford added.
IRhythm expects to close the deal by the end of the year, meaning it would acquire VitalPatch before Zio MCT receives FDA clearance.
“We're not going to wait around for an MCT clearance to then figure out whether to introduce one product versus the other,” Blackford said. “We're going to lean right into VitalPatch, get that out there and get going with it.”
With the proposed deal combining competitors for the MCT market, an analyst asked Blackford about his confidence in getting the takeover past antitrust regulators. The CEO argued that “a tremendous amount of competition” remains in the category, pointing to Philips’ BioTelemetry and Boston Scientific’s Preventice Solutions as some of the largest players in the space.
“The combination of our company and VitalConnect doesn't change that competitive dynamic within the MCT category,” Blackford said, adding that he feels good about the ability to get through Federal Trade Commission and Hart-Scott-Rodino review.
