$4.4 M Diabetes Patch Brand: Hidden Gem or Hidden Trap?

0:28Hello, everyone, and welcome back to Acquisitions Anonymous. kind of compliance medical device dynamics. And we also talk into the economics of licensing and then cash out refinance SBA loans. So we are all over the place, but some really interesting rabbit holes as we discuss a great business today on Acquisitions Anonymous. So without further ado, let's get into it.

1:01Big thanks to High Level for sponsoring this video and helping us pay for our editors. High Level is the all-in-one CRM that handles your emails, texts, funnels, and more all in one place. Think of it like the Swiss Army knife for small businesses, and you can try it for free for 30 days at gohighlevel.com slash Michael Girdley. All right, it's Caffeinated Friday, Acquisitions Anonymous. My wife went to Starbucks, and she brought me back a Starbucks cold brew, and I did not have breakfast and I am like lit this morning. So we started so early that I usually have like a cup of coffee when I leave the house and then like maybe two, you know, at work.

1:41And then I met somebody for coffee at 8am and they were like, you don't want a coffee. And I was like, this would be like my fifth cup at this point. I can't have any more coffee. I'm sorry to be rude, but no. Yeah. I'll just sit here and watch you drink here. Yeah. Well, Heather, you got, you've already had your coffee. It's 730. Yes, I have to have one before I get on. So I did have one and I have, you know, backup right here. So. All right. We are good to go. And Mills even came with a deal. Okay. Speaking of, I'm going to try and segue this. Speaking of high blood sugar and Starbucks drinks, I saw this thing that I've never, I've never looked at anything in this space.

2:20I'm curious if you guys have. This is an online broker. Bill, have you ever looked at website properties? Have I ever looked? I bought my first business from website properties. Oh my gosh. All right. Well, there's got to be a story that you'll tell after this. There is a good one. So this, it says sticking with success and it's listed as a pending sale, which is kind of intriguing. It says great business opportunity in the growing diabetes market. It says, I don't know what these little tags mean up here, but it's been on the market, I guess for a year, September 3rd of 2024. has a listing ID, Amazon and consumer goods is what it says.

2:58But the asking price is$4.4 million. Says this opportunity's trademark products have the exclusive feature of holding diabetic sensors in place without sticking to the sensor itself. The patches are sold through their website, Amazon FBA, and have achieved distribution in brick and mortar outlets as well. The success of the patches landed accounts with two major U.S. pharmacies where they are sold as a sole brand, generating approximately$789 ,000 in revenues in the last 12 months and resulting in overall profit margins of 41%. One pharmacy has requested four more SKUs this year, which presents a huge opportunity to drive profit margins higher.

3:43With the FBA and 3PL model, inventory is shipped directly from suppliers to the company's 3PL facilities and Amazon FBA, where items are stocked and prepared for customer fulfillment. The owner is currently working 10 hours per week overseeing and managing operations. With its excellent margins, huge addressable market, and other ideas for expansion, this is the perfect time for a new buyer to acquire this business and take it to the next level of growth. They said they have 64 % gross profit and 41 % net profit for the trailing 12 months that they clocked in April of 2025, so a few months ago now.

4:19It is a trademark brand with brand awareness, established distribution network, exploding market, and regular inbound business development opportunities. Uh, they're trailing 12 month April through 2025 gross revenues was 3.5 million and change. And the trailing 12 month, April, 2025 cashflow was 1.46 million. Um, I'm wondering if these are typos. Oh, no. Okay. Interesting. Here's the rub. You just found the rub. I was like, why don't these numbers match? So, uh, Bill beat me to it. There are also revenue and cash flow figures, not in U.S. dollars, but Australian dollars. And then it says converted from AUD to USD at the exchange rate of 0.63.

5:06So Mills, I don't think there are some. I think this is an Australian business. Yeah, I think so. All of it is Australian. I think you're right. They're saying they've got 5.3 million of AUD revenue, and then they're converting to get 3.5 in USD. So I think they're doing close to all of their revenue in AUD. I think you're right. So they say down here, they left the employee line item blank. Inventory is not included in the asking price because I think they're saying they don't have any. And location is Australia. It is a home-based business, no seller financing. And they have some stuff about grow the two major U.S.

5:48farms. Okay, so I think they do have some U.S. customers, Bill, because they help out the U.S. pharmacy. Maybe it's an Australian-based business that is selling on Amazon U.S. Amazon U.S. being the largest Amazon market by a lot. Yeah. So maybe they're just Aussie-based and they do all their books in AUD, but all the revenues are in USD and then getting converted. So I would want to understand, but maybe you could still buy this as a U.S. buyer and just, well, then you've got to change the entity on the Seller Central account. which can be a little complicated. So I just want to diligence that, but probably not a deal breaker.

6:26So this business, so they got, let's just talk about it in USD because that's how they positioned it. Three and a half million in sales and how much profit? 1.46 in cashflow. Damn. Okay. And they're only asking 4.4. Yeah, it's pretty good. Okay. So great margins. They said gross margins of 64 % and net margins of 41. Yeah. This tells me they probably got like a, kind of loaded gross margin. Like I bet they've got all their Amazon fees and everything else above gross margin because Amazon selling fee commission is going to be 15 % of sales. So if that's not in gross margin, that's the entire bridge from gross to net.

7:02So that tells me it has to be up in gross, which is fine. So they've got a loaded gross margin after Amazon fees of 64%. It tells me the product margin on this stuff has got to be insane, which probably That makes sense because they're basically stickers, I think. Yeah. Yeah. Let's talk about what it is. My son has type 1 diabetes. Okay. So tell us what this is. Six years old. Wow. So the sensor is, I mean, people know about the insulin pump. This has nothing to do with the insulin pump. This is just for sensors, which you don't have to wear. That's optional. But that is like a continuous glucose monitor is what a sensor is.

7:40So that's a separate little device that you could put on your arm, on your leg, on your abdomen. And it's, instead of finger pricking, it's continuously every five minutes or whatever, telling you what your blood sugar is. And you stick it, you kind of, it's under your skin. There's a little cannula, but you also need to stick it down so it doesn't get, you know, it doesn't fall off easily. Yeah, yeah. Now, I've never bought separate stickers for it. You know, like the... Is it intrinsically sticky? Like it's a consumable item, right? Well, it happens with its own set. Yeah, like there's different brands and you're, you know, the hardware itself is going to come from different makers, depending on what system you decide on and your insurance pays for.

8:25And we've always gotten stickers with it. So this would be sort of like an additional sticker, you know, especially when kids are younger or very active. They might, you know, need some additional stickers or, you know, tape to kind of keep it on them, keep it waterproof, whatever. But that's what's kind of intriguing about this. It's sort of like just the stickers. So they're not. Like maybe there's a thing about it doesn't stick to the device, which I mean, in the hierarchy of regulation, medical devices are, you know, somewhere near the top. So I wonder if there's something kind of uniquely proprietary, but maybe not, you know, absolute rocket science about the fact that this is maybe it's a sticker, but it doesn't.

9:11It just encompasses the sensor, doesn't actually touch the sticker, the sensor, something like that. Maybe this is in some way like an aftermarket sticker, like an upgrade sticker, either it's more stylish or it's more comfortable or it's something like that where, yeah, it comes with the stock stickers, but these are better. for some reason. Yeah, right. Exactly. So this is like an extra thing you would buy because you're active or because it's a child or whatever. And now they talk, I've looked at other diabetes businesses before and they talk about the exploding growth or whatever. It's mostly in type 2 diabetes where the growth of new diagnoses are.

9:50And they don't always wear sensors. Even type 1 don't always use sensors. So it's not like just because you have more diagnosis that everybody's going to be even using sensors, let alone buying their own stickers for the product. So there's that side of it. There's also the rise of continuous glucose monitor use for non-diabetics. Right. Then that's a good point. Right. So like this, I think this market is, is probably a good end market, you know, over time. My question would be, is there, is this defensible at all? You know, if it's just stickers on FBA, I'd be terrified of it. The thing that actually makes me way more interested is that there is clearly something about it.

10:31They've been able to get these two pharmacy chains interested and the pharmacy trains, I would assume are not interested in just some random garbage from FBA. So there's got to be something unique about it that got these pharmacy chains interested in it and they're buying$800 ,000 a year of stickers. So, and they're, they want more SKUs for next year. That, that totally changes this for me. If this was 100 % FBA, I would think there's almost no moat and it's probably easily knocked off and it's just stickers and these margins are amazing now, but Chinese sellers are coming for your margins. The fact that the pharmacy chains want it and they can sell it through these pharmacy chains, command margins still, they said they have great margins to the pharmacy chains and they're reordering and wanting more next year.

11:17We haven't signed the NDA, this is Acquisitions Anonymous, but that makes me much more excited. yeah and i think it must be that they're more stylish because just not sticking to the sensor i don't know how exciting that is but because you can always unstick it but uh it it is an intriguing product i would love to see it cool i think i found it oh um it's kind of interesting i mean i i don't think we're doxing them just for me to share this steel you got you got to tell us a little bit about it mills like what makes i'm just gonna show you okay it does it um let me see where was it it's kind of cool so i think this is it although the it looks like the couple hasn't updated the about us part of their website um and since like 2023 but they're actually look like a british family but they may have you know just moved to australia at some point um but these you know these patches they're they're very stylistic and kind of thematic you know there's a boys pack you know a floral essentials pack a girls pack you know uh i guess some of these are kind of branded but you can also do custom ones oh yeah they've got a labubu which is like those very trendy stuffed animal things um k-pop hunters the opportunity to do licensing here is incredible.

12:43I want NFL ones. It's also a big risk, right? Like, do you think they're actually, do you think they actually have licensing in place to print some of these things? I mean, I would definitely diligence that otherwise a lawsuit when it happened, but like, I don't think like, I'm not seeing NFL on here. You know, I'm not seeing like they're obviously infringing. Right. This is just rainbows and unicorns and, you know, all kinds of stuff that is clearly public domain. And what I love about a business like this, is in, in just briefly scanning it, the origin of this business was because the founder or the, the founder was a female and her and her husband, she like her duvet cover in the bed ripped off her sensor.

13:24And she's like, I need something. I can't find it. And created a business that way. Um, similar to how like a lot of food brands, you know, may start like my kids have food allergies. they're like all the food allergy brands all the allergy sensitive companies it started because they had a child with food allergies and they were looking for you know granola bars that were safe or whatever um so i like this as an origin story i think there's some kind of interest in that i like this a lot now yeah i like they didn't have these when my son was younger so and if they did we would have bought all different kinds because, uh, yeah, it's, it's, uh, Oh, these are cool.

14:06These are great. there's a lot of skews is what it looks like. Yeah. Yeah. Yeah. But I mean, it's, this is the cost of goods are basically zero. The mark, this is why the margins are amazing. The shipping is basically free. This is like the quintessential amazing e-commerce brand, right? Great gross margins, small, light revenue dance. I love this. Run it from home. So it doesn't matter that it's in Australia. You could buy it. No, you just, they got, I mean, it's probably not SBA eligible, right, Heather? Right. If it doesn't have US tax returns, it's not SBA eligible. So that's going to hurt, right?

14:44I mean, this is big enough. It's a four and a half million dollar deal and you can't get an SBA loan for it. So that's going to be tough. I mean, there's plenty of other ways to finance a deal, but that's a hurdle. you've also got the kind of probably international entity you know like diligence and structuring is hairy on this one um but this is a good business i like it i i do worry i would be trying to get into licensing as fast as possible because it i this podcast is going to come out like this stuff has been on amazon for a long time like the competition is coming for this the margins are amazing and there's nothing truly proprietary like i'm sure they don't have a patent on these stickers.

15:25I don't think there's a way to do that. So I w I think the best mode here is licensing. If you can have the NFL and no one else has it or whatever. I do like the name. I think it's a good, like from a brand awareness standpoint, it's not, it's nothing like obscure. Um, but I agree. I think the licensing would be, and it's a, it's not like you're, uh, you know, something on the kind of the fringe of what the NFL wants to be associated with. like it's not DEI, it's not, you know, something that it's like cigarettes, right? The NFL is never going to come out and say, yeah, you can be the official cigarette sponsor of NFL or something like that.

16:01This is like very wholesome. It's very, uh, pragmatic. And I think like people would generally be like, yeah, we want to support, you know, we want to support, uh, diabetes. What do you think bill about, like, I just noticed this in the bottom, they have Klarna, clear pay after pay uh lay by have they already kind of like fine-tuned this thing if they're if they're already accepting um you know kind of the installment pay type vendors like is do you think this is a well-oiled machine and they've like gotten all the value out of the existing model that they can uh yes to the first part no to the second part i think this is probably a well-run business.

16:44I mean, to your point, like they've, they've seemed to be doing everything right. We're on the website here. It's, it's a good website. What I first next want to check out Mills, if you could find them on Amazon, we can put that on the screen. Uh, and I can opine a little bit because that's where most of their revenue comes from, right? I'm betting there are Amazon listings look quite nice. The, the growth in this business is going to be entirely probably running Facebook ads, getting it in front of more people. I'd want to make sure that this isn't getting banned or blocked from Facebook because, you know, Facebook might think this is a medical device, even if it's not really, you know, diabetes adjacent, I would want to really figure out if I could run Facebook ads because if you can't, that's going to be a handicap to growth.

17:26Now it's not, doesn't mean you're dead. The next thing I would do is go hard on influencer with this brand. I mean, my cogs, my cost of goods are zero. Any diabetic person with an Instagram account is getting one of these for free in the mail from me. Like I'm blanketing the influencer landscape here. It's so Instagrammable. It's so shareable. It's colorful. I mean, I would be hitting influencers so hard with this business. And then I would also be pushing for, for licensing as fast as I could try to build them out. So, you know, I looked for this name type one style in Amazon and, uh, over here, I'm looking at all the possible sellers and I don't see their name, but if you just look up type one style patches, there are, you've got expression med expression med sponsored.

18:22Um, it's hard to tell though bill but i don't none of these really look like theirs to me yeah i don't really see it these are just try type one style all one word you did multiple words it's that's their brand is type one style one word there you go is that that cgm let me see that's a$56 one click on click into the listing and let's look at the seller name yeah so now click on type one style right below the buy box or right there is fine too and now you can see all of it what's really interesting here they don't have that many skews on here though you know what you're on amazon us i wonder if you need to be on amazon um aussie uh-huh i mean you're probably not even set up to be able to do it um but that so this now makes it harder because this means they are actually if they're not selling in Amazon US, this is double-edged sword.

19:22On one end, massive opportunity. Yeah. Massive, right? To bring this to the US market on Amazon. On the other hand, now this is really more of an Australian business, right? And you're doing business in Australia and that's a little harder. And maybe that's why they mentioned working with two US pharmacies and having 800 ,000, almost$800 ,000 worth of revenue, because if that's their gateway to distribution is just through two existing pharmacies. Those, like I say pharmacies, it could be a dedicated US website that just sells this kind of medical equipment, medical consumables online, and they just, you know, wholesale with them or something.

20:03But to your point, still massive opportunity to bring the direct-to-consumer business to the US. Yes, huge business. I mean, they clearly, yes, it's free worldwide shipping on all orders over 30 pounds. If this is in fact the brand Mills, you're, you're guessing this is the brand, right? Yeah. Yeah. I'm guessing. Um, it says we shipped to the USA free track shipping worth$8. So I mean, potentially just huge opportunity to bring this to the biggest economy in the world. You know, we have a lot of diabetics here, you know? Um, so like huge opportunity, not going to be easy because to your point mills there's a ton of competition on amazon that that you found in one keyword search that is clearly bidding on their terms you search type one style yeah there were sponsored results yeah so you know the competition knows they exist and is bidding on their terms but just getting this on amazon us and be make make sure you have us 3pl so you do free ship like you should it should not cost eight dollars to ship this stuff to the end consumer right you should be able to offer free shipping all day long i mean you've talked about this but it's small it's lightweight like it could probably fit in an envelope depending on the quantity yes i would be engineering the packaging so it would um to get my shipping cost down big big big opportunity uh there is a search fund community in australia that's growing i kind of i'm connected to them on linkedin and i mean it would be a great opportunity for one of them yeah yeah why do you think that this is only selling for three times i think it's aussie i think there's no financing available i think it's got some hair on it not from the business the pnls of the business seems not hairy at all in fact it seems wonderful but all of your buyers are in the united states your business buyers right yeah i think that's it or there's something that we don't understand about it or it's like super young maybe it's been around since 2019 for e-commerce yeah that's That's like two decades.

22:03Yeah. There's got either something like it's, maybe it's declining. Maybe that's, I don't know. There's either that. But they were going to trailing 12 months. And it was for sale for a year. I just wonder if it's just hard to match buyers and sellers given the Aussie nature of it, the no SBA debt, et cetera. Yeah. So, Bill, let's play it out. You like this business. You want to pursue it. you've got to, you know, one, deal with the complications of buying a foreign entity. And then two, you've got to deal with the complications of migrating their Amazon seller account from that old entity to a domestic entity.

22:43Yeah. And in, we don't know what the revenue mix is on their own.com on Amazon and through these, you know, other kinds of distribution channels. but if you're migrating your seller account on amazon it stands to reason that your amazon revenue could go to zero for a period of time that's why i wouldn't do it that way so what i'm realizing now because we couldn't find them on amazon us this means that they are selling on amazon aussie amazon which means they probably are an australian entity so what i'm actually doing is i'm probably starting a new wholly owned us subsidiary and i'm registering fresh on Amazon.

23:21So you're starting over with, you know, reviews and well, yeah, you're doing that anyway. Well, so maybe because what I'm, what you can probably do is bring the ASINs over to the new market and hopefully you'll get some reviews porting over. But yes, you are potentially starting from scratch in the U S but that doesn't damage your Aussie business. Right. I mean, that business probably keeps on clipping along, but yes, you're probably starting from ground zero in the U S which is why, but like you probably have a lot of email traffic. I'm definitely emailing everybody I know and going, we're now in the U S I'm trying to get a U S 3 PL set up, right?

23:57I don't know where this is manufactured, but like I'm have make sure I'm co-locating inventory in the United States so I can replenish amazon.com FBA from the United States. I'm you're bootstrapping a business from scratch in the United States, but you have everything behind the scenes worked out. You have a supply chain, you have a product, you have a brand, you know, and then you start running ads in the U S and yeah, it's going to be like, I don't think this is easy to just turn it on and instantly you're swimming in profit. Um, but there's a pretty, I think, direct path to setting this up in the U S and over a year or two scaling it.

24:29Don't you think too, that this is just a perfect, like almost gorilla ground game marketing where you are in the Facebook groups, like you said, Bill, like you're sending people free samples, Like, cause your cogs are so low, you can send them to them. Like you said, you could find, you know, influencers who are, you know, publicly, you know, talking about their journey with diabetes. You could, you know, like, there's just so many things you could do to just ground game. Influencer would kill it. And no paid customer acquisition. And you've got huge margins. You can offer huge affiliate payouts.

25:03so i'm sending you know i'm offering to 50 of revenue to influencers right like huge affiliate payouts and you could be you would bootstrap this overnight and you push all the tiktok shop would rush this would crush on tiktok shop it's so visual you know like you could probably sell their 50 packs are pricing at like 50 bucks i would immediately have a 20 pack i get it to$19.99 or I'd even get a trial pack to$9.99 or something. And I'd do a$9.99 trial pack. I'd revenue share 50 % with the creator. I'd make no money, but I would be trying to go viral on TikTok shop and push all that volume to Amazon to bootstrap my Amazon USA.

25:44Yeah, yeah. Hey everyone, it's Bill. And I want to tell you about maybe the most exciting sponsor we've had in a long time on the pod. It's called Capital Pad. And it is the thing that I wish existed when I started my journey of operating and investing in small businesses. So CapitalPad is a marketplace for acquisition entrepreneurs, that is people who want to buy a business and need capital, to list their deals and solicit capital from other people who want to invest in acquisition deals. So if you want to back somebody buying a small business, CapitalPad is the place to do it. And if you want to buy a business and need capital, you can go on CapitalPad to be introduced to investors.

26:29So the really great thing too from the investor side is that CapitalPad takes care of all of the details that can get hairy with small business acquisitions. They handle standardized terms, standardized governance, standardized distributions all up front in black and white. Basically CapitalPad professionalizes investing in small businesses and the returns can be really, really good. I'm so stoked they exist. It's founded by my friend Travis, who is a phenomenal entrepreneur in his own right. So if this sounds like something that's appealing to you, if you want to buy a small business and need capital, or if you want to invest in small businesses, go check out CapitalPad.com and tell them that Acquisitions Anonymous sent you.

27:12Why should we not go try and buy this? There is risk, but don't you think there's a massive arbitrage play to say, I want to buy something that isn't viable right now. You won't get SBA financing. It's a foreign entity. You could probably at least 2 to 3x the value if you just – now, I'm not saying it's easy, but you take the steps that we're talking about, you immediately are driving so much multiple expenses. I think you got to know what you're doing. Mills, if you bought this, I mean, no offense. I was going to say, build knows what he's doing. You got to understand how to build and influence your ground game on TikTok shop, which is learnable.

27:54But if I bought this business and was doing that, I wouldn't stumble my way through it. I would take a course on how to do it. I would network my way to people who've done it before and get good advice and push and expand this thing in the United States. And the great thing also is it's all synergistic because when we're trying to launch a product on Amazon, ultimately what you need is off Amazon traffic, right? So you're, you're having to launch on Amazon US anyway, and you're also trying, it's so perfectly suited for TikTok shop or influencer more broadly off Amazon traffic, right? So you're kind of doing this all at the same time and it all works together.

28:30I would expect to make no money on my US business for the first year or two. I would expect to reinvest all of the margin in affiliate commissions and ads to just get the U.S. business bootstrapped. I think you get revenue growth going pretty quick, but I think you'd be reinvesting all of the EBITDA in the U.S. But if you've got the core Aussie business, you could probably afford to do that because you may not even be burning cash as much as you are just, you know, chopping your profits by 75 to, you know, 80 % or something like that. Yeah. I would be, I would expect to use the Aussie business to service my loan, which is not going to be an SBA loan, but probably a private loan and pay for my lifestyle, right?

29:11If I'm going to buy this and be the CEO and all my investing is going to go into the US side of the business. And I'm also going to be just going so hard on licensing because if this works, there's not really any IP mode here, I don't think. So you got to borrow someone else's IP licensing, right? And make sure you get an exclusive in the category. But I would, I mean, not just sports, like I'd be doing all characters. I'd, you know, I'd be doing Bluey for kids. I'd be doing i'd be doing anybody that would license me the ip i'd be doing it so okay bill let's talk through that i don't know anybody first hand who has done something like that there's a guy on twitter who has like the bucky's uh merchandise online or something like that i can't remember his name do you do either of y 'all know anybody who has like licensed something with like disney or the nfl or like oh yeah i have a ton of friends i mean john from ridge wallet like ridge does nfl wallets and all that stuff.