Henry Schein pushes back date for animal health spinout

Henry Schein One

Henry Schein (NSDQ:HSIC) said today that it is shifting the date for the spin-out of its animal health business, now dubbed “Covetrus,” from February 4 to February 7.

The change was implemented by the Melville, N.Y.-based company’s board of directors, according to company press release.

The new date reflects the new anticipated date for distribution of shares in the spinoff company to shareholders of Henry Schein, according to the release.

Each prior shareholder in Henry Schein will receive a 0.4 share dividend of Covetrus stock for each Henry Schein share held as of January 17. The newly spun-out company is slated to trade under the symbol “CVET,” Henry Schein said.

The company warned that it has filed an amended registration related to its recently announced spinoff ‘s merger with Vets First Choice, but that it now anticipates the amended statement “will become effective no later than February 4, 2019 (assuming a continuation of the U.S. federal government shutdown), rather than January 28, 2019,” according to a press release.

Last week, Henry Schein set an initial timetable for the spinout of its animal health business in a merger with Vets First Choice, branding the soon-to-be-public company as Covetrus. The spin-out was first announced last April.

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Abbott to acquire mitral valve device maker Cephea Valve Tech

Abbott

Abbott (NYSE:ABT) said today that it plans to acquire mitral heart valve replacement tech developer Cephea Valve Technologies for an undisclosed amount.

The Chicago-area healthcare giant backed the Santa Clara, Calif.-based valve company in July 2015 and secured an option to purchase it outright, which it has now chosen to exercise.

Cephea is developing mitral valve tech designed to be delivered through a vein in the leg and remove the need for open-heart surgery, Abbott said. Neither company has released any details of the acquisition.

“The acquisition of Cephea builds on Abbott’s strong position in structural heart therapies and is consistent with our strategy to develop comprehensive treatments for people with mitral valve disease. Cephea’s novel approach to replace the mitral valve adds to our other catheter-based technologies and is being developed to provide an additional option for patients who suffer from this difficult-to-treat disease,” structural heart biz VP Michael Dale said in a press release.

The newly acquired tech from Cephea will join other mitral valve-focused devices the company previously scooped up, including its MitraClip tech acquired in 2009 from Evalve and minimally invasive mitral valve systems from Tendyne Holdings, which it acquired when it originally invested in Cephea, Abbott said.

Earlier this week, Abbott won FDA pre-market approval for its Amplatzer Piccolo occluder intended for treating a congenital heart defect in neonatal infants as small as two pounds.

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Experts explore the state of M&A in medtech

At DeviceTalks West 2018, a panel of experts gathered to discuss the state of M&A in medtech and the forces driving startups to seek an exit.

Buyouts like Medtronic‘s (NYSE:MDT) $1.7 billion acquisition of Mazor Robotics (NSDQ:MZOR) dominated the headlines in 2018, but industry veteran Shayan Bhattacharyya found himself intrigued by the smaller deals that didn’t make the press.

“The things that keep me interested are the deals that are the tuck-in, bolt-on acquisitions,” he said at DeviceTalks West 2018 in Costa Mesa, Calif., last month.

“The classic medtech model has been to go into a new therapeutic area,” he added. “But now we’re seeing complementary plays. Now that you have the product, how can you help a hospital or a practice manage patient flow better? I’ve seen a number of those smaller plays and that’s not to be ignored.”

Fellow panelists Josh Copp, a partner at McKinsey & Co., noted that while 2018 was a slower year for M&A in terms of value, it was on par with past years in volume. Much of that was driven by explosive growth in the digital health sector.

“The reason to highlight digital is if you look at the volume of deals in 2008 to 2012 versus 2013 to 2017, the fastest-growing subcategories are the digital or software-oriented ones, and also care services,” Copp said.

Alongside the growing digital health market, companies are also experiencing increased quality and regulatory requirements. This puts pressure on startups looking to be acquired, he added.

“It increases the difficulty for new products – particularly hardware and implantables – to get funded and get to market, because you have a much higher bar that you have to meet in terms of what you file for regulatory-wise and also the infrastructure you put in place to manage that product,” he said.

“It makes funding more challenging and that can push a company to have to be acquired sooner than they would otherwise ideally go,” noted Matt Arens, CEO of First Light Asset Management.

Arens also noted that he’s seen a change in the path that companies take to get to an exit. That path used to be very straightforward, he said.

“Almost every company followed the same path – you get an idea, you develop it, you move forward. You need funding, so you go to the capital markets. You go public. If it was a big victory, you remain public for a while. You hit your bumps in the road but you grow the business. You grow towards profitability and then the large company would come in and buy the company,” he explained. “Now it’s different. You don’t see the celebrations oftentimes the day companies go public because they realize they’re changing one set of headaches for a new set of headaches.”

Now, according to Arens, companies stay private for as long as they can and sometimes skip going public before being acquired.

Although that’s beginning to change, he acknowledged.

“Now, public markets have been pretty good and people are wading back into the water and that’s good,” Arens said. “There are stair steps in value creation for a company. You want to figure out what you need to get to that next stair step. If your plan includes four stair steps and one of them is going public, how confident can you be that you can hit each one of those steps in the value creation?”

Combined, these trends can present a challenge for cash-strapped startups, Copp said.

“We’ve highlighted increasing potential capital requirements and a less-willing public market. That creates a bit of tension. It’s a lot harder to get to an exit of some form,” he said.

Having worked for medtech titans like Boston Scientific (NYSE:BSX) and Medtronic, Bhattacharyya said that companies have to answer one crucial question for large organizations when they’re looking to be bought out.

“The question is not just, ‘Why should we invest?’ but, ‘Why now?’ Because the null hypothesis, when you’re sitting in the [business development] seat, is do nothing because the deal is going to be there,” he explained.

Arens supplied his own tip to companies hoping to be acquired.

“If you’re 5% market share in 20 different markets, who cares? If you can show with your limited resources that you can drive depth of adoption, then the larger company can look at it and say, ‘With our resources, we could do this on a broader scale,’” he said.

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Generex Biotech inks $1m deal to acquire distributor Medisource Partners

Generex Biotechnology, MediSource Partners

Generex Biotechnology said yesterday that it inked a deal to acquire medical and surgical product distributor Medisource Partners in a deal worth approximately $1 million.

Miramar, Fla.-based Generex said that the deal includes all assets of Medisource including its business operations, accounts receivable, inventory, contracts and real estate for $1 million worth of Generex stock, as well as additional cash and stock considerations for achieving certain sales and profit milestones.

“The strategic acquisition of Medisource Partners provides Generex with a value-added service model that fits the corporate mission of NuGenerex Distribution Solutions, adding immediate revenues and profits, while providing significant upside as we integrate the medical and surgical supply business into our current and future MSO networks. The extensive lines of surgical and biological products offered in the Medisource catalogue will enable us to expand our offerings to now include hospital systems, as well as our MSO partners. Our management services will not only integrate purchasing and billing, but will provide better pricing and access to new products, especially biologics, including platelet rich plasma, bone marrow aspirate, cord blood, and bone implants. We are excited that the acquisition of Medisource will provide access to a whole new line of products that not only enhances our current MSO network in the five states, but will eventually support the expansion of our MSO network into 27 states. We are in the process of completing the due diligence on this acquisition, with plans to close the transaction in the coming weeks,” Generex CEO Joe Moscato said in a press release.

Medisource Partners is currently contracted with more than 25 vendors to distribute implants and devices for spinal, hip, knee, foot, ankle, hand and wrist surgeries. The company distributes devices including biologics, durable medical equipment and soft goods, Generex said.

“MediSource Partners was founded in 2009 and designed to be unique amongst its competitors by operating as a service-focused, ‘one stop shop’ for the healthcare professionals it serves. With over 25,000 products in its catalogue, including thirteen lines dedicated to spine, Medisource prides itself on its ability to service everything from small private practices across several disciplines, to entire hospital systems. The large and broad-based inventory allows our client physicians to ‘customize’ their operating environment by selecting and implementing the hardware, biologics, soft goods and ancillary tools they feel most confident in and comfortable with. In addition, the ‘one stop shop’ model reduces the burden placed on support staff tasked with managing multiple reps from multiple vendors and shortens the distribution chain to reduce costs and potential redundancies. The success of this model is demonstrated in Medisource’s ability to offer this client-focused, low-impact service at a pricing matrix often below even standard GPO pricing, thus increasing client profitability and productivity,” Medisource CEO Travis Bird said in a prepared statement.

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Cantel Medical acquires dental tech dev Vista Research Group for $11m

Cantel Medical, Vista Research Group

Cantel Medical (NYSE:CMD) said today that it acquired dental water treatment, purification and management solution company Vista Research Group for $10.5 million.

In the deal, Cantel said it will pay $7 million upfront with an additional $3.5 million to be paid based on performance-based milestones over a two-year period, the Little Falls, N.J.-based company said.

“We’re excited that Vista Research Group is now part of Cantel. The integration of their water treatment technologies into our existing portfolio allows us to offer our customers more comprehensive infection prevention solutions that provide clean water across all touchpoints in the dental clinic. This acquisition also reinforces our position as the market leader in dental water compliance,” Vista Research Group prez & CEO Jorgen Hansen said in a press release.

Ashland, Ohio-based Vista Research Group reported sales of approximately $2 million during the previous fiscal year. The company currently has a portfolio of solutions for filtration, purification, treatment and management of dental water to reduce infection risk, improve workflows and patient care and protect dental equipment.

“The addition of Vista Research Group’s solutions will broaden our dental water purification portfolio and advance the development of our product line. In addition to our DentaPure Cartridge, it also will enable us to provide a full suite of end-to-end dental water compliance solutions to dental practices. In our ongoing commitment to infection prevention and compliance, we look forward to driving the awareness of and access to the VistaPure, VistaCool, and VistaClear products so more dental practices can benefit from improved efficiency, simplified workflows, and better protection for both patients and staff,” Cantel dental division prez Gary Steinberg said in a prepared statement.

Last November, Cantel Medical posted fiscal first-quarter earnings that matched the consensus forecast on Wall Street, but missed the mark with its top-line numbers.

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Genae buys regulatory affairs company MedicSense

Medical device contract research provider Genae (Antwerp, Belgium) recently acquired MedicSense, a clinical, regulatory affairs and quality assurance consultancy firm based in Tel Aviv, Israel. Terms were not disclosed.

“The vast regulatory and quality assurance expertise of the MedicSense team represents a logical expansion of Genae’s value chain of services,” said Genae CEO Bart Segers in a prepared statement. “Being involved in the early stages of the development process lowers the risk of potential re-engineering and accelerates the time to market, while remaining in compliance with worldwide regulatory requirements.”

Get the full story on our sister site, Medical Design & Outsourcing.

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Zoll Medical acquires Payor Logic

Zoll, Payor Logic

Zoll Medical said today that it acquired healthcare software solution developer Payor Logic for an undisclosed amount.

Centerville, Ohio-based Payor Logic develops and supports accounts receivable software solutions specifically for the healthcare industry. The solutions are intended for use by emergency medical services, emergency physicians, DME providers, hospitals and labs, Zoll said.

“In today’s environment, healthcare organizations must consider the bottom line across their operations. We’ve always delivered better efficiencies to our customers, but with Payor Logic technology, our customers will see unprecedented improvement on their bottom line. Some customers have increased total payments by over 110 percent, and improved claim processing throughput by 88 percent. With this acquisition, Zoll can bring that level of A/R efficiency to hundreds of organizations across the healthcare spectrum, offering better financial performance, freeing up capital to reinvest in their operations and ultimately providing better patient care,” Zoll data systems prez Alex Moghadam said in prepared remarks.

Payor Logic has worked with Chelmsford, Mass.-based Zoll since 2015, the companies said, providing its services as part of Zoll’s Billing Pro solution.

“Payor Logic has always been recognized for our ability to increase reimbursements for healthcare providers, most of whom can’t afford to leave any revenue on the table. Our innovative solutions are truly unique, and we are pleased to join Zoll and leverage their reach and strategic vision to deliver these benefits to a wider segment of the market,” Payor Logic founding partner Ted Williams said in a press release.

Last summer, Zoll Medical said that it won more than $5 million with an arbitrator’s decision in its spat with former partner AutoMedx.

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Henry Schein sets timetable on $5B Covetrus animal health spinout

Henry Schein OneHenry Schein (NSDQ:HSIC) yesterday set the timetable for the spinout of its animal health business in a merger with Vets First Choice, branding the soon-to-be-public company as Covetrus.

The Melville, N.Y.-based dental products giant set the record and distribution dates for the spinout, first announced last April. Covetrus is slated to trade on the NASDAQ exchange beginning with the record date of Jan. 17, with a distribution date of Feb. 4, at which point the merger is expected to close. Assuming that the federal government shutdown continues, trading in Covetrus is anticipated on a “when-issued” basis for Jan. 28 under the CVETV symbol, until “regular way” trading begins on the first business day after Feb. 4 using the CVET symbol, Schein said.

Each HSIC share is due to receive a 40% dividend in the spinout, the company said. The stock closed up 1.7% at $75.37 apiece yesterday; with roughly 152.4 million shares in play, the valuation on the Schein portion of the combined business would be $4.60 billion at that price.

The spinout also means a dual market for HSIC shares between Jan. 17 and Feb. 4, Schein added, with regular-way trading under its usual symbol and “ex-distribution” transactions under the HSICV tag that have no entitlement to the Covetrus distribution.

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IZI Medical picks up Cook Medical’s Quick-Core biopsy and breast localization needle assets

Cook Medical, IZI MedicalIZI Medical Products extended its M&A spree today with the acquisition of a set of biopsy and breast localization needles from Cook Medical for an undisclosed amount.

Last September YY-based IZI picked up Benvenue Medical’s vertebral augmentation portfolio, also for an undisclosed amount; in May 2017, the company paid an unspecified price for Cook’s vertebroplasty devices, including the Duro-Ject Osteo-Site, Osteo-Force and Vertefix brands.

The latest deal with Cook includes the Quick-Core biopsy needle, MReye breast localization coil and the Kopans and X-Reidy lesion localization needles, IZI said. The company is owned by Shore Capital.

“This represents IZI’s third add-on acquisition in the last 18 months and significantly adds to our world-class portfolio of minimally invasive diagnostic and therapeutic products for the interventional radiology market,” CEO Greg Groenke said in prepared remarks. “Cook has done a wonderful job over the last several decades establishing these products as leading brands in their space. We are excited to increase the market penetration of these products through significant investment in domestic and international selling resources, select product enhancements, and new product development. These products are complementary to the line of Osteo-Site needles that IZI acquired from Cook in 2017.”

“IZI is strategically focused in diagnostic and therapeutic areas with imaging modalities, which will allow them to have a closer relationship with the diagnostic and interventional physicians that are performing the procedures,” added Cook vascular VP Mark Breedlove. “We were looking for a company that could invest more resources and continue to support these product families, the patients that benefit from them, and the physicians that use them. We have worked with IZI in the past and determined that they would be the ideal partner moving forward, and we are pleased to support the transition as IZI prepares to manufacture these products. This agreement will benefit patients, customers, and hospitals alike.”

“This acquisition continues to expand the breadth of products offered by IZI and is consistent with the strategy we developed when we partnered with Greg Groenke and the management team at IZI less than three years ago,” Shore Capital partner Don Pierce said. “We are building a leading platform to serve the interventional radiology and oncology markets with quality diagnostic and therapeutic medical devices. These product families will further extend IZI’s international sales reach and increase the depth of its portfolio.”

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ResMed closes $225m Propeller Health purchase

ResMed, Propeller HealthResMed (NYSE:RMD) said yesterday that it completed its $225 million acquisition of Propeller Health and its digital medicine platform.

Lead by CEO David Van Sickle, Propeller will continue to operate as a standalone business within ResMed’s respiratory care portfolio, the companies reported.

Get the full story at our sister site, Drug Delivery Business News.

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