Home Diagnostics Joins Russell Indices

Home Diagnostics Inc. (HDIX - Snapshot Report) recently announced that it has received the honor of being added to the Russell 3000, Russell 2000 and Russell Global Indexes. As the name suggests, these indices rank top U.S. companies by market capitalization. The indices are used by investors, primarily institutions, as benchmarks for both passive and active investment strategies.

Home Diagnostics is a developer, manufacturer and marketer of blood glucose monitoring systems and disposable supplies for people with diabetes. The company sells its products through food and drug retailers, mass merchandisers, distributors, mail service providers and third-party payors in the United States and Latin America, the United Kingdom, Germany, Australia and China.

Home Diagnostics addresses a large and expanding diabetes market ($7.0 billion, according to our estimates). Diabetes is a chronic life-threatening disease that is incurable. The goal of intensive blood glucose management is to achieve near-normal blood glucose levels without risking low blood sugar levels.

The American Diabetes Association, or ADA, recommends that people with Type 1 diabetes (people born with inability to produce insulin) test their glucose levels three or more times per day. The American Academy of Family Physicians advises insulin-dependent people with Type 2 diabetes (those with acquired insulin resistance, and occasionally insufficient insulin production) test as frequently as people with Type 1 diabetes.

The World Health Organization estimates that the number of people with diabetes will reach 360 million worldwide by the year 2030. Given awareness and additional testing enhancements, the diagnosed diabetic population could grow to 18.3 million, or 77% of the diabetic population, by 2011.

According to Frost & Sullivan, the combined worldwide market for blood glucose monitors and test strips was approximately $6.9 billion in 2006 and is expected to grow 8% per annum in North America and 17% per annum outside of North America through 2010.

Home Diagnostics' blood glucose monitoring system is less expensive than those of its competitors. The company has co-branded its offerings to more than 40,000 retailers and wholesalers in North America , including Walgreen’s (WAG - Analyst Report), Wal-Mart (WMT - Snapshot Report), Pathmark and Stop & Shop.

The co-branding strategy is central to the company’s success. Using the co-branded offerings, cash payers can reduce their costs substantially. Based on the company’s performance, our recent report on Home Diagnostics has a ‘Hold’ rating.