Philips gets serious with the $750 million acquisition of personal emergency response company Lifeline. Philips can read demographic trends as well as anyone, and looks to establish a major foothold in the remote monitoring market outside of their base in hospitals.
The aging of the population provides strong underlying market
growth for home healthcare solutions such as those offered by Lifeline.
Today, seniors represent around 15% of the population in the developed
world and are expected to almost double in size over the next 25 years.
At the same time they are becoming increasingly active in managing
their own health and wellness. Personal response services are already
the largest category of home healthcare solutions purchased
out-of-pocket by older adults and their caregivers. Still, penetration
in the age group 65 years and older is just 2-3%, allowing for
significant future growth.
Lifeline's revenues in 2005 are
expected to be approximately USD150 million, representing a 15%
increase over 2004. A large part of the revenues are recurring in
nature. Lifeline's operating margins in 2005 are expected to be
approximately 15%. The company has a broad market presence in the
United States and Canada. The company markets its services through a
network of more than 2,500 hospitals and other healthcare providers and
serves a subscriber base of nearly 470,000.
Hmm - reasonable growth, recurring revenue, utilizes hospitals for distribution (where Philips is very strong), with almost a half million consumers - this deal makes most acquisitions look like a waste of time. Lifeline's customers are probably more affluent and have more chronic diseases than the population as a whole. Expect to see integration with consumer targeted AEDs and up-selling their Motiva disease management products.