Best Buy Inc. has bigger plans in mind for digital healthcare, using its $800 million acquisition of GreatCall Inc., a San Diego provider of cell phone and related digital home healthcare services to seniors, as a springboard.
“We believe this acquisition can be a beachhead for Best Buy in the health space, providing the entry point to more growth opportunities,” Best Buy CEO Hubert Joly told stock analysts yesterday on the consumer electronics retailer’s second-quarter earnings call based on a transcript from SeekingAlpha.com. “The combination of their products, services and expertise with Best Buy assets, including our merchandising, marketing, sales and service capabilities, provides the opportunity to both scale their existing consumer business and pursue commercial opportunities with payers and providers.”
The deal to acquire GreatCall, which Best Buy expects to close this fall, will help the retailer provide more digital health services to the homes of seniors. GreatCall estimates this to be a $9 billion market.
Approximately 50 million Americans are 65 or older, and that number is expected to grow more than 50% within the next 20 years, says Best Buy. “GreatCall is a profitable, growing, recurring revenue business that already has more than 900,000 paying subscribers and more than $300 million in annual revenue,” Joly told analysts. “They have an established expertise in serving the aging population and their caregivers, and they have a strong management team and a culture that is well aligned with Best Buy’s.”
Going forward, Best Buy will run GreatCall as a separate entity even as both organizations begin to build a shared synergy for digital health business development, Joly said. “We will be initially running GreatCall as a separate entity because it is a different business,” he told analysts. “There is an exciting opportunity in this idea of monitoring the behaviors in health of seniors in their homes with potentially very significant benefit, of course, for the aging seniors, their caregivers, as well as the payers and providers.”
Best Buy isn’t a name usually associated with healthcare. But it began changing that perception last October with the launch of a new digital health and wellness program aimed at senior citizens in the United States, 90% of whom want to stay in their home and live on their own as long as possible, says Best Buy. At a recent investor’s day presentation, Best Buy executives discussed a new corporate strategy called Best Buy 2020 that includes Assured Living, a program aimed at using the mobile web, sensors and other digital or smart-home healthcare technology to help adult children or caregivers remotely check in on the health and safety of aging residents at home.
The acquisition of GreatCall will accelerate Best Buy’s aim to diversify its business offering well beyond selling consumer electronics. “The health market is an exciting space, especially as it relates to seniors,” Joly told analysts. “Helping this fast-growing population live longer in their homes, provides significant benefits not only for seniors and their families, but also for payers and providers.”
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