Columbia, SC and Boston, MA -- Jan 31 -- Sleep Disorder Centers of America and DigiTrace Care Services, Inc., two of the leading sleep service companies in the United States, announced the completion of their merger and the formation of SleepMed incorporated.
SleepMed intends to build the first national brand in sleep services. The company will also maintain its DigiTrace brand as the leader in ambulatory EEG monitoring services. SleepMed operates 45 sleep laboratories and 25 ambulatory testing sites (for home sleep studies and long-term EEG monitoring) in 19 states and the District of Columbia. It has a 15 person sales force that reaches over 2,000 physicians each year. The company has relationships with 75 academic and regional hospitals.
Sleep Disorder Centers of America was founded in 1994 by Dr. Richard K. Bogan, a pioneer in the field of clinical respiratory disorders. Dr. Bogan is board certified in sleep medicine, critical care medicine, pulmonary medicine and internal medicine. The company provides training programs for physicians and technicians interested in sleep medicine.
DigiTrace was established in 1991 as a neurodiagnostic monitoring service. The company introduced the first digital device for EEG ambulatory monitoring and provided access to its technology by establishing testing sites in major metropolitan areas. In 1995 its proprietary technology was extended to perform sleep studies (polysomnography) in patients' homes. The device is clinically validated to perform a full polysomnography in the home unattended by technicians.
SleepMed will maintain administrative offices in Columbia, South Carolina and Boston, Massachusetts. Dr. Bogan will serve as Chairman and Chief Medical Officer. Jerry K. Myers, former President & CEO of DigiTrace, will serve in that capacity for SleepMed. Bogan and Myers will serve on SleepMed's six-person Board of Directors.
Blair E. Hendrix, former Executive Vice President and Chief Operating Officer of DigiTrace, and David J. Lewis, former Vice President and Chief Operating Officer of Sleep Disorder Centers of America, will serve as Executive Vice Presidents and Co-Chief Operating Officers of SleepMed. Carl R. Iberger will serve as SleepMed's Executive Vice President and Chief Administrative and Chief Financial Officer, titles he held at DigiTrace. Iberger has responsibility for SleepMed's finances, accounting, reimbursement and Human Resources administration.
Over 40 million Americans suffer from chronic sleep disorders and another 30 million have occasional problems. Sleep disorders include sleep apnea, insomnia, and narcolepsy. Fewer than 10% have been diagnosed and treated. Treatments include airway pressure appliances, medication, surgical procedures to remove excess tissue from the airway, custom fitted oral appliances, and lifestyle changes including weight loss. The annual market for serving sleep disorders exceeds $1.5 billion and is expected to grow at an annual rate in excess of 20%. Over the last decade the number of sleep laboratories has grown from a few hundred to over 2,000. Most are owned by hospitals or physicians and address only diagnosis. Sleep disordered patients obtain therapy from other providers. The lack of coordination contributes to low rates of treatment compliance.
The field of sleep has emerged as a medical discipline over the past 20 years. To date, over 80 distinct disorders have been identified, each of which may contribute to excessive daytime sleepiness, reduced quality of life and, in some cases, serious illness or premature death. Individuals with untreated sleep disorders are heavy users of healthcare services. As a group they experience a much higher incidence of cardiovascular and respiratory problems, contribute to as many as 200,000 automobile accidents each year and reduce the nation's annual productivity by an estimated $19 billion. Still, medical students receive only a few hours of instruction on sleep disorders and there are fewer than 2,000 physicians boarded in sleep medicine in the country.
"The market for sleep services is highly fragmented, particularly from the patient's perspective," said Bogan. "SleepMed has a unique opportunity to provide a continuum of care for patients. We will integrate the delivery of diagnostic and treatment services and expand to locations throughout the United States. Our expansion will be achieved through a combination of internal growth and selected acquisitions. Later this year we will form a Medical Advisory Board composed of national leaders in sleep medicine. The Advisory Board will guide us in our quest to expand access and maintain leading-edge diagnostic and treatment protocols."
"In addition to providing integrated sleep services, SleepMed will continue DigiTrace's leadership position in ambulatory EEG monitoring," said Myers. "A ‘DigiTrace' is the gold standard in ambulatory EEG monitoring. Our proprietary monitor is the only ambulatory device that provides on-line spike and seizure detection. We intend to expand the number of ambulatory testing sites and will co-locate some of these facilities with our sleep labs. There are a number of other synergies between EEG and sleep. Many of the Neurologists who refer EEG patients also refer sleep disordered patients. We use the same technology for EEG monitoring and ambulatory (in the home) sleep studies and our technicians can be cross-trained to serve both types of patients. We intend to maintain our technology leadership."
SleepMed's 1999 revenue exceeded $19 million and its EBITDA exceeded $2 1/2 million before deducting the one-time costs associated with the merger. The merger was accounted for as a "pooling of interests."
