Nevada companies have never attracted
much in the way of venture capital. And the
venture capital industry has been in deep
doldrums for the last couple years. Last year
investors put up about a third the amount
of money they did the year before.
Despite all that, Alere Medical Inc.
managed to raise $30 million since its
founding in 1996. That's the most venture
capital money ever raised by a Nevada company,
according to Robb Smith, principal,
Nevada Ventures, one of two venture capital
firms in the state and an investor in Alere.
In that time, Alere has grown quickly.
In 1996, the company was averaging
$10,000 a month in revenue, according to
K. Randall Burt, president of Reno-based
Alere.Two and a half years later, Alere was
making $1 million a month. It went from
serving 200 patients to 7,000 and is on
track to add more than twice that when it
signs up 15,000 patients next year through a
recently-awarded four-year Medicare contract.
"We'll have 25,000 patients next year,"
said Burt.
Alere's patients are culled from the 4.8
million people with heart failure in the
United States, and more specifically the
500,000 individuals at high risk for re-hospitalization.
Alere makes and provides service
for its DayLink Monitor. The monitor is
a device, like a super sophisticated scale,
placed in the home of patients suffering
from heart failure. It's connected to the
patient's home phone line. Every morning
the patient gets on the scale and verbally
responds to three or four questions asked by
the device that cover possible changes in
their medical condition. The whole process
takes about a minute.
Heart failure symptoms, said Burt, are
subtle and early intervention is vital because
patients can significantly deteriorate within
a day. "When the heart starts to fail the
patient starts to retain fluid," he said. "The
key with heart failure is getting an objective
weight."
The data collected by the DayLink
Monitor including the patient's weight
to a quarter of a pound and the answers to
the medical questions are transmitted via
the phone line to Alere's nursing staff, comprising
43 nurses in a Reno facility and
another 7 nurses in a Portland, Maine, call
center under contract with Intellicare.
There nurses track the patients and
monitor them for early warning signs of
heart failure. The patients' doctors can also
review the data remotely and securely via
Alere's Data Exchange Network. Alere also
maintains the database which can be used
to generate reports and research history.
The result, says Alere, is a reduction in a
patients' doctor's office visits. "The cost of
heart failure is so high," said Burt. "About
$10,000 per patient a year in office visits."
Already, PacifiCare Health Systems has
saved $22 million through its patients' use
of the Alere DayLink Monitor, said Burt.
PacifiCare is an insurance provider for
employer groups and Medicare beneficiaries.
The company is also Alere's partner in
the $25 million contract from the Centers
for Medicare & Medicaid Services. That
contract, announced earlier this month, is
called a Disease Management
Demonstration Project. The goal is to
measure the DayLink Monitor's efficacy,
both from a medical and cost point of view.
Today, Alere's customer base consists of
patients in the Medicare Plus Choice program,
which uses HMOs. But that program
is being cut back, said Burt, and his goal is
to foster a second market in billing
Medicare directly.To do that, Alere would
receive a Medicare reimbursement code,
enabling doctors outside HMOs to prescribe
the DayLink Monitor to patients and
Alere to bill the government directly.
The four-year Medicare contract should
help Alere's cause. "This award is to
demonstrate that it works," said Burt.
Like other Nevada technology companies,
Alere moved to Nevada after first
establishing itself somewhere else.
"We moved from San Francisco about
two years ago," said Burt. "We moved here
for the quality of the labor pool, the work
ethic and the cost of doing business."
The company currently employs about
100 people and will likely double its headcount
next year. It may also build another
nurse station here or contract for another
call center with Intellicare.
The company is also looking to partner
with or acquire another provider that monitors
other diseases, such as diabetes which
often occurs with heart failure.
To that end, Alere hopes to raise more
money in the first half of next year. In
February the company closed a $5 million
round financing which included an additional
$5 million line of credit with its
device manufacturer.
Right now the company is working on
gross margins of 35 percent to 40 percent,
but Burt hopes to bump those up to an
even more attractive 60 percent to 65 percent.
And sooner or later Alere will look to a
buyer or the public market, if it can beat the
odds there like it has in the venture capital
market. For now, though, it's business as
usual.
"Our current investors are willing to support
us for six to 12 months," said Burt.
"But at some juncture we'll be looking for
an exit strategy that would bring our shareholders
the greatest value."
Spoken like a company that knows how
to raise venture capital.
