Healthcare Industry News: pulse oximeter
News Release - June 29, 2006
Spacelabs Healthcare to Acquire Cardiac Business from Ferraris Group plcAcquisition Expected to be Accretive for Company as Synergies Realized
HAWTHORNE, Calif.--(HSMN NewsFeed)--June 29, 2006--OSI Systems, Inc. (NASDAQ:OSIS ) announced today that its subsidiary, Spacelabs Healthcare, Inc., has entered into a stock purchase agreement with Ferraris Group plc ("Ferraris") to acquire Del Mar Reynolds Limited and Del Mar Reynolds Medical, Inc. (collectively, "DMR") representing Ferraris' Cardiac Division.
Under the terms of the agreement, Spacelabs will pay Ferraris approximately GBP 14 million ($25.5 million), subject to an adjustment of plus or minus GBP 1 million ($1.8 million) based upon revenue and EBITDA results for DMR for the 13 month period ended September 30, 2006. In addition, there is a further earn-out provision whereby Spacelabs would potentially pay Ferraris up to GBP 5 million ($9.1 million) if DMR achieves certain revenue targets in fiscal 2007. Any further earn-out shall be satisfied, at Spacelabs' discretion, either in cash or by the allotment and issue of Spacelabs stock.
Spacelabs intends to finance the proposed acquisition through a senior credit facility.
Del Mar Reynolds is a global developer, manufacturer and seller of cardiac monitoring systems including Holter recorders, ECG, Stress Systems and related software and services under the trading names, "Del Mar Reynolds," "Hertford Cardiology," and "Hertford Medical." In addition, DMR operates a Core Lab business that provides clinical trial services to pharmaceutical companies and clinical research organizations.
OSI Systems' CEO, Mr. Deepak Chopra, stated, "We look forward to welcoming the customers, vendors and employees of DMR into Spacelabs Healthcare. We believe DMR will be a positive contributor to the growth plans of Spacelabs as we provide added scale to expand DMR's sales opportunities. The acquisition would allow us to broaden upon our patient monitoring product offering within the hospital market while essentially doubling the size and geographic presence of our Clinical Trials business. This transaction reaffirms our commitment and strategy to aggressively grow our business."
Mr. Chopra further commented, "We are extremely pleased with the performance of our healthcare business and expect that our fiscal 2006 healthcare revenue will grow at a double digit rate driven primarily by the strong operating performance of our patient monitoring business in the U.S. market. As a result, we anticipate strong bottom line growth compared to the prior year."
Spacelabs expects that the proposed acquisition will provide the following benefits to its overall operations:
- Expanded product offerings to the hospital market:
DMR's cardiac monitoring systems can be marketed to hospitals
in conjunction with Spacelabs' core products of patient
monitoring solutions and anesthesia delivery systems.
- Integration of IT components among product lines:
The product lines of both Spacelabs and DMR include advanced
IT components, providing opportunities for enhanced
connectivity between product lines.
- Strengthened geographic presence in the UK and German markets:
DMR is a leader in both the UK and Germany in cardiac
monitoring markets; its presence and connections to hospitals
in these markets is expected to augment Spacelabs' ongoing
sales efforts in these territories.
- Enhanced Core Lab business for clinical trials:
Both Spacelabs and DMR operate clinical trials core lab
service businesses (Spacelabs operating primarily in the U.S.
market and DMR operating primarily in the European market); in
combination, they expect this business to achieve greater critical mass.
- Synergistic savings
Synergies are expected to be realized by leveraging upon
Spacelabs' existing global sales and distribution channels and
through utilization of its manufacturing capabilities, global
supply chain and existing support infrastructure.
According to the unaudited financial information provided by Ferraris, DMR generated sales of GBP 21.2 million ($38.6 million) with earnings before depreciation and amortization of GBP 3.8 million ($6.9 million) and profits before taxation of GBP 1.8 million ($3.3 million). As at 31 August 2005 the total assets attributable to DMR were GBP 28 million ($51 million) including goodwill of GBP 18 million ($32.7 million). In the six months ended 28 February 2006, DMR generated sales of GBP 9.8 million ($17.8 million) with reported earnings before depreciation and amortization of GBP 0.4 million ($0.7 million) and a loss before taxation of GBP 40,000 ($73,000). The Company expects that once the identified synergies and efficiencies have been realized the acquisition of DMR will be accretive to the Company.
The proposed transaction is subject to Ferraris receiving shareholder approval and other customary closing and regulatory conditions.
About Del Mar Reynolds
Del Mar Reynolds is a leading designer, manufacturer and seller of non-invasive diagnostic cardiology monitoring solutions for hospitals and clinics worldwide. Additionally, the company provides ECG laboratory services to pharmaceutical companies undertaking clinical trials, whereby patient ECG data are recorded, analyzed, tabulated and interpreted.
The company specializes in Holter monitoring products including Holter recorders, stress systems, ECG machines, trans-telephonic ECG monitoring, ambulatory blood pressure monitoring, event recording, apnea monitoring and information management systems. The business employs approximately 233 personnel in its five offices located in the UK, Germany and the United States.
Del Mar Reynolds is currently a wholly-owned subsidiary of Ferraris, a UK public company listed in the Official List of the London Stock Exchange.
About Spacelabs Healthcare, Inc.
Spacelabs Healthcare (www.spacelabshealthcare.com) is an international developer, manufacturer and distributor of medical equipment and services including patient monitoring solutions, anesthesia delivery and ventilation systems, pulse oximeters and sensors and bone densitometers selling to hospitals, clinics and physicians offices. Additionally, the company provides ECG laboratory services to pharmaceutical companies undertaking clinical trials, whereby patient ECG data are recorded, analyzed, tabulated and interpreted.
The company has established brand names in both medical devices and medical services such as "Spacelabs," "Blease" and "Dolphin." The company employs approximately 1,050 personnel in its 14 offices in the UK, Canada, France, Germany, Finland, Singapore and the United States. The company conducts its manufacturing and R&D in India, the UK and the United States.
Spacelabs Healthcare is a subsidiary of OSI Systems, Inc., a US-based, Nasdaq listed company.
About OSI Systems, Inc.
OSI Systems Inc. is a Hawthorne, California based diversified global developer, manufacturer and seller of security and inspection systems, medical monitoring and anesthesia delivery products, and optoelectronic-based components, as well as a provider of engineering and manufacturing services. The company has more than 30 years of experience in electronics engineering and manufacturing and maintains offices and production facilities located in more than a dozen countries. OSI Systems implements a strategy of expansion by leveraging its electronics and contract manufacturing capabilities into selective end product markets through organic growth and acquisitions. For more information on OSI Systems Inc. or any of its subsidiary companies, visit www.osi-systems.com.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include information regarding our expectations, goals or intentions about the future, including, but not limited to, statements regarding the acquisition of Del Mar Reynolds and the benefits expected to arise following the closing. The actual results may differ materially from those described in or implied by any forward-looking statement. In particular, there can be no assurance that the acquisition will close on time or at all, or that, following the close, the combined operations will in fact achieve any of the currently expected benefits, such as expanded product offerings, improved connectivity solutions, increased sales or improvements in the Core Lab business, among other improvements. Other important factors are set forth in the Securities and Exchange Commission filings of OSI Systems, Inc. All forward-looking statements speak only as of the date made, and we undertake no obligation to update these forward-looking statements.
Source: OSI Systems
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