ResMed Acquires Propeller Health for $225 Million to Strengthen COPD and Asthma Digital Health Portfolio

VCBeat (WeChat: vcbeat) learned from foreign media that on December 3, 2018, U.S. local time, ResMed, a San Diego-based medical device company, announced it had entered into an acquisition agreement with digital health company Propeller Health (“Propeller”) for $225 million.

Image source: ResMed official website

Propeller is a digital health company that primarily provides relevant solutions for patients with chronic obstructive pulmonary disease (COPD) and asthma. It was named one of the “Most Innovative Companies of 2017” by Fast Company. Propeller’s digital health platform consists of small sensors that easily attach to patients’ inhalers and pair with a mobile app to automatically track medication usage, providing personalized feedback and insights. According to Propeller’s clinical validation, participants in the trial demonstrated a 58% improvement in medication adherence, a 48% increase in symptom-free days, and a 53% reduction in emergency care visits.

ResMed’s acquisition underscores its strategic interest in Propeller’s capabilities in supporting patients with Stage II and III COPD. This move serves as a complement to ResMed’s portfolio of cloud-connected ventilators designed for patients with Stage III and IV COPD, which includes medical devices such as the Astral, Stellar, AirCurve 10 ST-A, and iVAPS, as well as ResMed’s new portable oxygen concentrator, Mobi.

ResMed CEO Mick Farrell stated, “The acquisition of Propeller is a significant step toward establishing ResMed as a global leader in digital health for COPD. By collaborating with Propeller’s existing partners, we can positively impact this chronic disease, which affects 380 million people worldwide.”

Over the eight years since its founding, Propeller has secured nine FDA approvals and established partnerships with industry players such as Novartis and Express Scripts. This year, Propeller also entered into a strategic partnership with Aptar Pharma. The collaboration aims to extend the capabilities of Propeller’s connected devices beyond asthma and COPD inhalers to cover a broader range of diseases. According to Crunchbase, Propeller has previously raised a total of $69.9 million in funding from its investors.

Under the terms of the agreement, ResMed will acquire Propeller for $225 million. ResMed will fund the transaction through its credit facility. Upon closing, the transaction is expected to have a dilutive impact on ResMed’s non-GAAP earnings per share for fiscal year 2019, ranging from $0.01 to $0.02.

The transaction is expected to close before the end of ResMed’s third quarter of fiscal year 2019 (ended March 30, 2019), subject to customary closing conditions, including regulatory approvals.

Following the completion of the acquisition, Propeller will operate as an independent business within ResMed’s respiratory care portfolio. Its existing office locations, business processes, and management team will remain unchanged in the near term. David Van Sickle, Co-founder and CEO of Propeller, will continue in his current role, reporting to Richie McHale, President of ResMed Respiratory Care. DLA Piper served as legal counsel to ResMed. Allen & Company LLC acted as the exclusive financial advisor to Propeller, and Fenwick & West LLP served as its legal counsel.

ResMed, founded in 1989 and headquartered in California, United States, is a global leader in medical devices, specializing in the development of equipment for diagnosing and managing sleep-disordered breathing and other respiratory conditions. The company has more than six million cloud-connected devices used for daily remote patient monitoring, with operations spanning over 120 countries worldwide. ResMed was listed on the New York Stock Exchange in 1995 under the ticker symbol RMD.

Propeller, founded in 2007 and headquartered in Wisconsin, USA, is a leading digital health company that primarily provides solutions for patients with chronic obstructive pulmonary disease (COPD) and asthma.