Platinum Equity Plans to Reorganize Lifescan Diabetes Testing Business in Chapter 11 Filing

My readers may recall that on May 2, 2025, I blogged (catch my post at https://blog.sstrumello.com/2025/05/cvs-caremarks-preferred-brand-switch.html for details) that my insurance company Aetna's pharmacy benefits provided by the vulturous PBM Caremark (the same parent company of CVS Health has owned the healthcare insurance company known as Aetna since 2018) was officially switching its "preferred" fingerstick testing supply vendor from Lifescan's OneTouch to Roche's Accu-Chek brand on July 1, 2025. 

While I acknowledged that the Lifescan business selling the OneTouch brand of testing supplies has been owned by the private equity firm known as Platinum Equity since 2018), it never occurred to me that there was anything other than a legally-exempted rebate kickback which was driving the decision. However, on July 14, 2025, Bloomberg News reported that "Platinum-Backed LifeScan in Talks to Hand Control to Lenders" (see https://www.bloomberg.com/news/articles/2025-07-14/platinum-backed-lifescan-in-talks-to-hand-control-to-lenders for the article) which may be the real reason for the Aetna/CVS Caremark test strip brand-switch.

Remember: when Johnson & Johnson sold the Lifescan testing supply business back in 2018, it selected Platinum Equity because that was the highest bidder for the business. At the time the business sale closed, J&J reported that Platinum Equity had paid J&J approximately $2.1 billion for that particular line of business.

Recall that a year earlier, on October 5, 2017, J&J had announced (see the Press Release HERE for details) J&J simply shut down its Animas insulin pump business and discontinued operations of that. Johnson & Johnson agreed to acquire Animas Corporation for approximately $518 million back in December 2005.

Anyway, at the time the Lifescan business was sold to private equity investors, Platinum Equity Partner Jacob Kotzubei said "LifeScan is an innovative company that has been a leader in diabetes care for more than 30 years."

The thing is that J&J has always been a well-managed, profit-driven company, and its J&J's businesses tend to be highly-regarded for their returns to shareholders. I question exactly what business miracles Platinum Equity assumed it could engineer that J&J had not done already.

As we now know from Bloomberg News on Lifescan "To implement the agreement efficiently, LifeScan plans to file prearranged Chapter 11 cases in the U.S. Bankruptcy Court while maintaining normal operations throughout the process" adding that it "is negotiating with first- and second-lien lenders to hand over governance control as part of its debt-restructuring discussions." But we also know, according to J&J in 2018, that the Lifescan business had "generated net revenues of approximately $1.5 billion in 2017."

Platinum Equity said "We believe strongly in the [Lifescan] company's core mission and are committed to helping LifeScan continue improving the quality of life for people living with diabetes. We believe strongly in the company's core mission and are committed to helping LifeScan continue improving the quality of life for people living with diabetes." These statements seem questionable now.

At the time the Platinum Equity purchase of the J&J Lifescan business closed, then-LifeScan President and CEO Val Asbury said "We are excited for our future and what we can accomplish with the addition of Platinum Equity's financial and operational resources. We share an unwavering commitment to patient care and know there is tremendous opportunity for LifeScan to grow and evolve. With LifeScan's talent and capabilities, our iconic OneTouch brand, and Platinum's support, there's no limit to what we can achieve."

Evidently, Platinum Equity had no talents or capabilities, but it is quite possible that Platinum Equity loaded Lifescan up with debts unrelated to that business as a way of eradicating its own debts without repaying them. Increasingly, this is what private equity firms do, and it's kind of sleazy. We saw that with the retailer Sears-Kmart which I covered in a different blog and supposed genius Eddie Lampert.

It would appear that Platinum Equity was unable to cut its way to growth, nor was it able to grow the business materially more than J&J had. Perhaps private equity investors were not the smartest guys in the room after all? 

With Lifescan, J&J had found an entity which presumed that it knew more than J&J did, and it sold the Lifescan business for about $2.1 billion. Evidently, Platinum Equity was unable to identify any cost-cuts or business growth opportunities that J&J had not already discovered.

Under the deal's terms, lenders would gain day-to-day decision-making authority, although Platinum Equity would retain an equity stake in the newly reorganized business. Right now, the future of Lifescan is very much in question. 

As for Roche Accu-Chek, Roche was reportedly shopping that business around at the same time Platinum Equity bought Lifescan, but there were few companies which could afford the prices Roche was seeking, and the bids actually received were reportedly miserly. Plus, Roche also faced Swiss government backlash if it simply closed the line of business rather than trying to spin it off as a stand-alone business.

But right now, the future of Lifescan is very much in question. It is being reorganized in a bankruptcy filing so Platinum Equity can eradicate any debts incurred to buy the business. For me personally, I have found it easier and less costly to bypass my own insurance pharmacy benefit to buy the strips directly from Mark Cuban Cost Plus Drug Company. I can get as many strips as I need that way without insurance trying to screw me. Yes, it costs me slightly more (but less than you might suspect given how long I have to fight with my insurance company). But with Lifescan looking more and more like a historical relic, and with less-than-accurate CGMs occasionally alarming without cause, it would seem that the outlook for the traditional blood glucose testing supply business looks rather weak.

Then again, perhaps once the Lifescan business is reorganized, perhaps a new buyer such as Charlotte, North Carolina-based Unistrip Technologies, LLC might emerge which would be a better owner than private equity? Watch this space!