By M. Marin
NASDAQ:LGMK
Ambitious plan to transform business to a broad personal safety technology company
LogicMark, Inc. (NASDAQ:LGMK) is advancing an ambitious plan to transform its business from a hardware company generating one-time revenue from sales of personal emergency response systems (PERS) to a broader personal safety technology company offering software solutions, as well as hardware, for a substantially wider target market.
As product suite expands, the many features offered include advanced fall detection, geofencing for memory care, connected cloud & caretaker app support, among others…
LGMK believes it has a large market opportunity and that it is among the few companies innovating to modernize remote monitoring devices and platforms. For instance, the personal safety industry traditionally has primarily leveraged reactive technology. By comparison, LogicMark’s goal is to include and enhance preventive & predictive technology. Planned new products will include the ability to detect falls, a key concern for its traditional target demographic. LGMK is also strengthening its distribution channels, expanding its product portfolio with the introduction of new devices and services to diversify revenue and boost recurring revenue. With increased focus on online distribution channels, LogicMark expects to reduce its blended customer acquisition costs, lower its sales cycles and boost sales as the company develops its Care Village software suite.
Personal safety concerns impact not only older adults, the traditional PERS target market demographic, but increasingly other demographics, as well. In fact, according to a recent Gallup poll, concerns about personal safety are at a 30-year high in the U.S. In 2024 LGMK introduced Aster, a software application that broadens its target market beyond the senior demographic and their caregivers. Aster is a subscription-based software application that is available on the Apple and Google Play Stores. The LogicMark Bluetooth button can be worn or attached to the user’s pocket, key or other convenient location and can be paired with Aster to provide quick-access to Aster. The company believes Aster illustrates how well it can leverage its technology to launch new Internet of Things (IoT) solutions to help ensure safety for a broadening group of users and enable caregivers and family to monitor the health and safety of loved ones remotely.
The company envisions a broad market for Aster, ranging from college students concerned about their on-campus security, real estate agents showing houses alone, active seniors and more. About 40% of respondents to Gallup’s annual Crime poll in October 2023 indicate concerns about (responded yes) walking at night near their home. according to Gallup research, growing numbers of Americans believe crime has worsened over the past year and rate it as a serious problem. This growing concern inhibits people from a variety of activities, including visiting cities and exercising outdoors. With Aster, LogicMark aims to enhance security for any demographic group. The company also believes that personal safety issues become increasingly more complex as the care economy evolves. The Aster app provides a software solution that enables users to remain connected to emergency contacts and also easily contact emergency services when needed.
Aster is LogicMark’s first standalone software product that operates independently of any hardware component. The Aster app offers a “Follow Me” feature that enables users to connect their mobile phone calendars and share select events so that friends and family know where they are. The app sends automated texts regarding event start times and if the user fails to check in at the event, the app triggers an emergency alert that automatically sends texts to the user’s followers and also notifies a live agent in emergency situations. The user’s emergency followers and first responders will get a text / alert with a Google Maps link that indicates the user’s GPS location. In an emergency, a LogicMark live agent will be notified and will call the user. If there is no reply or request for help, the agent can notify emergency services. Aster is a subscription-based app with a $9.99 monthly fee.
The company believes there is a gap between demand for and supply of caregiving solutions and that technology can help narrow that gap. The company’s goal is to position its expanding portfolio to benefit from the ongoing growth of the care economy. The term refers to the rise in “the demand for childcare and care for the elderly [which] is increasing in all regions” as the population ages, according to UN’s ILO. The company’s Care Village model is envisioned as a connected care ecosystem that is both reactive and predictive and addresses the needs of a substantially broader market than the company’s traditional one. For example, an important new product in the portfolio is Aster, a recently launched software application that broadens Logicmark’s target market beyond the senior demographic and their caregivers. The senior population remains a key target demographic. The ‘graying’ of the population is occurring not only in the U.S., but in most other industrialized nations, as well. According to the World Health Organization (WHO), the global population is aging at a faster pace than in the past. In 2020, there were more 60+ people than children under 5- years. Moreover, the proportion of the world’s population 60+ is expected to nearly double from 2015 to 2050 to 22% from 12%. In the U.S. alone, about 20% of the population will be 65 or older by 2040. This also means that the sandwich generation – those adults taking care of both young families and aging parents – is expected to grow.
Recent product launches include Freedom Mini, Freedom Alert Max, in addition to intro of Aster app…
As LGMK indicates, old models of “emergency and safety needs … must be modernized to meet today’s technology standards.” A key component of the transformation strategy is to expand the product line and boost awareness and sales of a growing suite of products and services. Over time, the company expects new products and services to both diversify and augment its revenue streams and contribute to growing recurring revenues. In fact, LogicMark’s strong 3Q24 results – with revenue up 14% year-over-year – were driven primarily by its expanded product portfolio. The company attributed the improvement to higher sales of the Guardian Alert 911 Plus and the recently released Freedom Alert Mini PERS hardware device. The Freedom Alert Mini is LGMK’s new mobile medical alert device.
Reflecting a shift in product mix toward higher margin products, LGMK registered 3Q24 gross profit of $1.8 million, up 13% compared to 3Q23. The company maintained the gross margin at 67%, despite some upward pressures on costs. LGMK’s gross margin has been stable at 67% over the past six quarters.
The Freedom Alert Mini offers fall detection and GPS location in a compact sized mobile device that enables seniors to remain connected to caregivers and family while maintaining their mobility. The company believes its mini size makes it convenient for wearers to use it daily and keep up an independent lifestyle. In the U.S., there are more than 50 million people 65 years old or older. Moreover, seniors increasingly want to live independently. In fact, more than 25% of U.S. seniors live alone. The company’s technology is designed to help monitor people remotely so that caregivers and family can make sure they are safe. LGMK’s new Care Village ecosystem is a proprietary software stack that includes an iOS and Android app, proprietary middleware, AI-enabled cloud infrastructure and subscription services that are expected to enable LogicMark to create new higher margin added revenue streams.
The device’s 4G LTE connectivity provides two-way communication regardless of location. The fall detection and GPS location features in the event of a fall or other issue increase the wearer’s sense of confidence. Moreover, reflecting the R&D behind the technology, management believes that the quality of its fall detection solutions is better than technology in competing products. Based on early sales and feedback, the company is optimistic about the Freedom Alert Mini. LGMK sold 1,106 units in 3Q24, which compares to 191 units sold in the prior quarter and implies, we believe, that the product is gaining traction.
LogicMark also launched the Freedom Alert Max. The new product offers over-the-air updates, regular alerts including medication reminders and others, as well as fall detection technology. Freedom Alert Max offers geofencing for patients with dementia and Alzheimer’s, and cellular communication technology, among multiple features. The company believes it provides the convenience of a cell phone, while addressing the growing need for innovative mobile technology for seniors.
The company has expanded its software and technology portfolio and, with the Freedom Alert Max, now has multiple PERS solutions in its suite. Product features include advanced fall detection, geofencing for memory care, connected cloud and caretaker app support, leveraging Big Data, sensors, AI and ML (machine learning). Most PERS products are focused on reactive technology, but the company’s focus is both to improve reactive technology versus competitors’, upgrade continuously and provide fewer false positive triggers. The company’s developing AI technology is expected to detect pattern changes that might indicate potential for falls (predictive technology), as well as health communications services such as medicine reminder (preventative technology). The company believes false positive triggers frequently makes people not want to wear PERS devices. By incorporating enhanced sensors, algorithms, and machine learning technology to analyze movement patterns and other relevant data, the company expects to report and even predict the likelihood of a fall more accurately than competitive devices that rely on legacy technologies. LGMK has indicated that future innovations likely will incorporate additional technologies to monitor health data and provide additional services.
Growing patent portfolio
The company also has a growing intellectual property position to support its opportunities to license its technology and boost recurring revenue. Since 2021, LGMK has filed multiple new patent applications. The newest patent relates to risk and safety metrics calculation and assessment using sensors and algorithms. Other patents cover AI capabilities, game theory, environmental sensing, and personalized behavior monitoring, among other features.
New Black Knight relationship expected to facilitate new government contracts
As the company innovates and creates new products, LogicMark intends to retain its non-monitored hardware products, which carry a roughly 60% margin, and also introduce new hardware and recurring services and software products into the mix. The goal is to further expand its established government business and VA solutions, even as it innovates across the board and expands beyond its traditional target demo. Therefore, the company is also optimistic about its new reseller agreement with Black Knight LLC, which is a service-disabled, veteran-owned small business that will promote and sell the company’s growing product portfolio.
The company’s PERS technologies traditionally have been sold through retailers and distributors, the LogicMark website as well as through the United States Veterans Health Administration (VHA), which remains an important partner for LGMK. The VHA serves veterans, many of whom suffer from chronic conditions that often require emergency assistance. LogicMark has a more than 10 year history selling to the Veteran’s Administration since 2013. The VHA is the largest hospital network in the United States and over the last decade, LogicMark has sold over 800,000 appliances to the VA. The company expects the new Black Knight relationship to facilitate its ability to pursue government contracts with preferential status and broaden its reach within the Department of Veterans Affairs (VA) and other government agencies. As the company builds out an expanding suite of products and technologies to provide security solutions to multiple demographic groups, the VA is expected to remain a key demographic for LogicMark.
Risks
We believe risks to LogicMark achieving its goals, and to our valuation, include that LGMK might not gain market share in new areas as quickly as the company expects, which could lead to slower than anticipated revenue ramp, the company could incur unanticipated costs associated with its initiatives, competition could increase and the company might need to raise capital to support its strategy that might be dilutive to current shareholders, among other risks.
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