BEAT (BioTelemetry)

this company looks great. In a great market nich for connected health devices. Management seems good at bolt-on acquisition and not expensive compared to growth potential.

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BioTelemetry (BEAT) looks like a great investing opportunity. Using Google it was easy to put together the “story.”

Founded in 1999 “CardioNet, Inc. develops diagnostic and patient management tools for the diagnosis and treatment of patients with cardiovascular disease. It offers Mobile Cardiac Outpatient Telemetry, an integrated technology and service that enables heartbeat-by-heartbeat, ECG monitoring, and analysis and response at home, at work, or traveling.”

https://www.bloomberg.com/research/stocks/private/snapshot.a…

The March 2008 IPO was fortunate timing for the company and for the selling shareholders but not for investors. The stock crashed during the Great Recession. The cash received at the IPO was to pay for some acquisitions and to fund future ones. Remote patient monitoring is a highly fragment business which CardioNet was trying to consolidate. Apparently their next acquisitions were in 2012. At the time of the IPO CardioNet had a 24% market share of cardio remote monitoring while LifeWatch was second with 20%. Clearly LifeWatch is an important acquisition for BioTelemetry. A Swiss company made a tender offer for LifeWatch putting it in play. BioTelemetry upped the ante and has the blessing of the LifeWatch BoD. BioTelemetry is a better fit for LifeWatch than the Swiss outfit that wanted to buy it.

BioTelemetry is a small CAP (860.86M) that is consolidating the nascent industry. The LifeWatch acquisition will increase the market CAP by around 10%. Growth by acquisition is important at this stage because by bulking up they attract institutional investors not interested in small CAPs. That interest can drive up the P/E ratio now at a modest 17. If the growth strategy works out BEAT could easily grow by 30% for the next five years. It grew at 60% over the past five years. It beat AMZN!

http://softwaretimes.com/pics/beat-04-12-2017.gif

Remote patient monitoring is a nascent business made possible by advances in communications and mobile devices. It’s part of the IoT process and a new tool in the medical arsenal. Patients with cardiovascular disease and diabetes, among others, can benefit greatly from remote monitoring. To me it seems to be a great growth opportunity. It’s like being able to buy Amazon early on and at a cheap price.

Denny Schlesinger

AEVIS VICTORIA SA launches a public takeover offer for all publicly held
registered shares of LifeWatch Ltd.
http://www.finanztreff.de/news/eqs-adhoc-aevis-victoria-sa-l…

BioTelemetry, Inc. Launches a Tender Offer to Acquire LifeWatch AG
http://investors.cardionet.com/mobile.view?c=214891&v=20…

Conference call
http://edge.media-server.com/m/p/ygzjuxm4/lan/en

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SA article. Note: The article uses 84 cents earnings per share for FY 2016 but the 10-K says $1.75 per diluted share. The right P/E is 17.5.

BioTelemetry: Consolidating Its Leading Position For Continued Growth

https://seekingalpha.com/article/4052752-biotelemetry-consol…

Denny Schlesinger

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The article uses 84 cents earnings per share for FY 2016 but the 10-K says $1.75 per diluted share. The right P/E is 17.5.

Denny, it’s not like you, but you made a considerable error there. You didn’t read the press release and used GAAP earnings. Here’s what it says in the press release:

Recorded $40.4 million of GAAP net income for the fourth quarter, primarily due to a $37.6 million one-time income tax benefit resulting from the release of tax valuation allowance. Achieved $7.0 million adjusted net income for the fourth quarter.

If it seems to good to be true, it often is. that doesn’t mean it wouldn’t still be a decent purchase but there is a big difference between 84 cents annual earnings and $1.75.

Saul

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PS - GAAP earnings were almost six times the real earnings for the quarter.

Saul:

Apart from the P/E thing, do you like the “story?”

Denny Schlesinger

Denny, it’s not like you, but you made a considerable error there.

Of course it’s like me. As a human in good standing I make mistakes. One of the benefits of discussion boards is that people can spot these mistakes and point them out but there is no need to be judgmental.

Denny Schlesinger

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Saul: Apart from the P/E thing, do you like the “story?”

Enough to start looking into it. I don’t know enough about it yet to really say for sure.
Saul

As a human in good standing I make mistakes. One of the benefits of discussion boards is that people can spot these mistakes and point them out but there is no need to be judgmental.

Sorry, Denny, if I seemed judgmental. I was actually surprised rather than meaning to be judgmental, and thought I was saying “that’s not like you” in a kidding way. But that’s the trouble with text: you can’t hear tone of voice or see expressions. (I was also concerned that you would think their annual earnings were more than double what they actually were, and that you would act accordingly).

Best,

Saul

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Of course it’s like me. As a human in good standing I make mistakes. One of the benefits of discussion boards is that people can spot these mistakes and point them out but there is no need to be judgmental.

Saul, if I make an error with the numbers and you point it out to me then free feel to call me volcano breath if you want - just tell me my error- that’s all I care about.

Denny, he was being ultra-complimentary to you

Gotta admit, I’m uncomfortable with things like “its like buying Amazon early” regardless of what the numbers are, but you’ve been a valued and incredibly helpful poster for as long as I can remember and I’m sure you are working for everyone’s interests.

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Saul: Apart from the P/E thing, do you like the “story?”

Enough to start looking into it. I don’t know enough about it yet to really say for sure.
Saul

After looking at it a little more, here’s a quick opinion: They’ve been in business since 1999, that’s almost 20 years, and they grow largely by acquisitions instead of (or in addition to) organic growth. Despite almost 20 years in business, and lots of acquisitions, they only got to $50 million quarterly in revenue, and $200 million annually in revenue, this past year (2016). That’s rather pitiful at first glance, and not looking like a new Amazon to me. But that’s just an off the cuff opinion. I am aware that they have recently started advancing in stock price and I’ll keep looking to see what I can see.

Saul

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Gotta admit, I’m uncomfortable with things like “its like buying Amazon early” regardless of what the numbers are…

Looking for the next XYZ is always a dangerous proposition and “the next XYZ” is a very overused cliché. I was quite aware of that when I wrote it. The thing is that I am awed by the business model, a combination of high tech and medicine, which is irresistible to people who don’t want to die just now from their illness. The reference to Amazon comes from an insight by Jeff Bezos, Amazon could not have happened without all manner of infrastructure in place from the Internet and the WWW, to credit cards and common carriers for delivery. Jeff Bezos made it clear that without all that and more Amazon simply could not have happened. On top of that, consolidating a fragmented industry has proven over time to be a great investment strategy. More icing for the cake are an aging population and an obesity epidemic that could well be the primary driver of cardiovascular disease.

Two of my top investments are related to the human condition: NEOG which sells food and animal safety products, and HCSG which washes dirty linen and prepares food for nursing homes and hospitals. On my watch list there are two more related companies, SRCL which disposes hazardous waste and BCPC which “manufactures, and markets specialty performance ingredients and products for the food, nutritional, feed, pharmaceutical, and medical sterilization industries.” These are all terribly unsexy businesses but quite fantastic investments. BioTelemetry fits right in.

Denny Schlesinger

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It’s like being able to buy Amazon early on and at a cheap price.

Oh, so it’s due for a hype boom and crash and then it’ll be 10 years before it gets back to where we buy it at today?

Just sayin’.

Is that supposed to be funny?

Just askin’.

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Having had the Easter break to think it over I opened a position in BEAT and sold covered calls as a hedge and for income.

qwsong, thanks for bringing this stock to my attention – my first buy from Saul’s board.

Denny Schlesinger

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