Madison-based medical technology startup Propeller Health has agreed to be acquired by San Diego-based digital health company ResMed for $225 million. The transaction, funded mainly by ResMed’s credit facility, is expected to close by March 30.
Propeller Health makes sensors that attach to inhalers to track usage on a companion mobile app among those with asthma and COPD. It was founded by David Van Sickle in 2010 as Reciprocal Labs Corp. and has grown to about 90 employees at offices in Madison and San Francisco. It was named a “2017 Most Innovative Company” by Fast Company.
According to Propeller, its products have helped patients increase medication adherence by 58 percent and symptom-free days by 48 percent, while reducing emergency room visits by 53 percent.
ResMed is a global connected health company that makes a variety of connected medical devices and out-of-hospital software-as-a-service solutions. It has 6,000 employees and more than 6 million cloud-connected devices. ResMed makes sensors for ventilators for people with stage III and IV COPD, which it said complement the Propeller products for people with stage II and III COPD.
Following the transaction, Propeller would become part of ResMed’s Respiratory Care portfolio. Propeller is expected to operate as usual, with no changes to management, employees, customers, locations or business processes. Van Sickle, chief executive officer of Propeller, would continue to lead the operation, reporting to ResMed Respiratory Care president Richie McHale.
According to SEC filings, Propeller has previously raised about $64.9 million from investors in equity and debt funding rounds since 2012.
“Acquiring Propeller is a significant step for ResMed toward becoming the global leader in digital health for COPD,” said Mick Farrell, chief executive officer of ResMed. “By working with Propeller’s existing partners to offer digital solutions for respiratory care pharmaceuticals and building on our proven ability to support digital solutions at scale, we can positively impact the lives of even more of the 380 million people worldwide who are living with this debilitating chronic disease.”
“ResMed shares our belief that connected health solutions create vastly better experiences and outcomes for people with chronic respiratory disease,” Van Sickle said. “Joining forces enables us to accelerate the adoption of Propeller’s solutions at a global scale, and serve as a powerful platform for a broad set of pharmaceutical and health care partners.”
This transaction would be among the largest reported startup exits in Wisconsin in the last several years. In May 2017, Wauwatosa-based Agro BioSciences Inc. announced it had been acquired by Ewing, N.J.-based Church & Dwight Co. Inc. for $75 million, plus a potential $25 million earnout based on performance.
Startup community leaders applauded the deal as an example of what can be achieved by a homegrown company.
“It becomes a highlight of the successes that the Madison tech ecosystem has achieved in 2018,” said Scott Resnick, entrepreneur-in-residence at StartingBlock Madison and chief operating officer at Hardin Design and Development. “This shows that you can have a successful exit in the state of Wisconsin,”
“The entire startup and venture community is thrilled for the Propeller team and this is a big step for the Madison and more broadly, the Wisconsin ecosystem,” said Joe Kirgues, co-founder of Madison- and Milwaukee-based startup accelerator gener8tor.
