DJO Global Buys Therapeutic Footwear Provider

DJO Global Inc. is trying on the diabetes care market for size.

The San Diego, Calif.-based company is purchasing Dr. Comfort, a provider of therapeutic footwear for the diabetes care market. One of the firm’s indirect subsidiaries has signed an agreement to acquire Rikco International LLC (also known as Dr. Comfort) for $254.6 million. The deal is expected to close within 30 to 45 days.

DJO executives said the acquisition will give the company access to a portfolio of diabetic footwear and related medical and comfort products that cater to the needs of a market worth an estimated $150 million to $200 million last year in the United States, according to DJO statistics. Executives, however, expect the market to significantly expand in the next several decades as the disease grows among aging baby boomers. Indeed, data from the American Diabetes Association indicate considerable growth potential exists: The agency claims there are 7 million Americans who have not officially been classified with the disease, while another 79 million people are living with pre-diabetes (blood glucose levels that are higher than normal but not yet high enough to be diagnosed as diabetes). Add these people to the 25.8 million U.S. children and adults (8.3 percent of the nation’s population) already suffering from the disease and the $116 billion in costs to the healthcare system, companies serving this market seem destined for steady future growth.

Spending on diabetes accounts for 10 percent of all U.S. healthcare costs and 25 percent of Medicare costs, according to DJO; less the 8 percent of the more than 11 million diabetics who could benefit from therapeutic footwear due to peripheral neuropathy and poor circulation are fitted with such footwear, the firm added. By purchasing Dr. Comfort, DJO hopes to expand the reach of products to diabetics.

“Use of prescribed therapeutic footwear by patients suffering from diabetes complications is proven effective treatment in preventing and treating foot ulcers, which can eventually lead to toe and foot amputations,” DJO Global President and CEO Les Cross said in a news release. “Wearing the appropriate therapeutic footwear offers diabetes patients a significantly improved outcome with their disease and improves their overall quality of life. At the same time, medically necessary and prescribed therapeutic footwear can also reduce the high cost of care associated with diabetic foot ulcers and leg amputations, fitting nicely with DJO’s mission to provide effective and conservative treatment modalities while reducing the high cost of healthcare. With only a fraction of U.S. diabetic patients who need medically therapeutic shoes actually receiving them, Dr. Comfort has a robust runway for continued growth. Diabetes is a global disease, providing Dr. Comfort with a large international market opportunity.”

DJO Global plans to expand the reach of Dr. Comfort’s products, currently sold primarily in the United States, to the wider international market. Last year, Mequon, Wis.-based Dr. Comfort generated $71.8 million in net sales, a 22.5 percent increase compared with the $58.6 million it reported in 2009.

Eric Lorenz, president of Dr. Comfort, his management team, and employees will join DJO Global.

DJO Global provides medical device solutions for musculoskeletal health, vascular health and pain management. It also owns Chattanooga Group, a Tennessee-based manufacturer of rehabilitation equipment such as continuous passive motion machines.