The deal, expected to close during the first quarter next year, adds $1 billion in revenues and $80 million in earnings before interest, taxes, depreciation & amortization to Owen’s & Minor’s books annually.
“Halyard’s S&IP business is a market leader in the prevention of healthcare-associated infections, and its portfolio of products and services is highly complementary to the innovative solutions we currently provide to our customers,” Owens & Minor chairman, president & CEO Cody Phipps said in prepared remarks. “In today’s rapidly changing healthcare industry, Owens & Minor is taking aggressive steps to strengthen and diversify our business model, and this transaction supports and enhances our ability to execute our strategy and provides significant opportunities for growth.”
“This transaction is both strategically and financially compelling,” added CFO Richard Meier. “It will allow us to enhance our product offerings to our acute care and non-acute care customers in a wider range of global markets and—combined with our recent acquisition of Byram Healthcare—will position us to achieve sustainable, profitable growth.”
Halyard said the sale speeds its move toward becoming a pure-play medical device company in the higher-margin pain management and chronic care markets.
“This transaction represents a natural evolution and is a milestone moment for both of our businesses. It accelerates our transformation to becoming a pure-play medical devices company and provides significant resources to accelerate our growth,” CEO Joe Woody said in prepared remarks. “The S&IP business and its employees will have an exciting future as part of Owens & Minor – an ideal buyer with strong expertise in marketing and distributing these products in our major markets.
“This divestiture will begin the next chapter for our company, one that is defined by a high-performance culture focused on developing innovative solutions for our customers and addressing our industry’s most pressing healthcare needs,” Woody said.
“We have enjoyed a strong relationship with Halyard as one of their largest customers,” Phipps added. “This transaction is value creating, and we look forward to welcoming Halyard’s talented teammates and global capabilities to the Owens & Minor family.”
Owens & Minor misses the mark; Halyard beats The Street
Owens & Minor reported profits and sales that missed the consensus forecast on Wall Street, while Halyard beat both the bottom- and top-line outlooks on The Street.
O&M posted profits of $10.9 million, or 18¢ per share, on sales of $2.33 billion for the three months ended Sept. 30, for a profit slide of -63.6% on a sales decline of -3.4%. Adjusted to exclude one-time items, earnings per share were 40¢, a full dime below the forecast on The Street, where analysts were looking for sales of $2.40 billion.
The company chalked the slide up to the loss of a “significant” customer last year and one less sales day in Q3 2017, plus lower growth with existing customers, margin pressure domestically and higher new business costs in Europe.
Owens & Minor cut its adjusted EPS forecast to $1.75 to $1.85, down from $1.90 to $2.00 previously.
For its part, Halyard reported profits of $16.6 million, or 35¢ per share, on sales of $401.4 million for the three months ended Sept. 30, for a top-line gain of 82.4% on sales growth of 1.0%. Adjusted EPS came in at 60¢, 14¢ ahead of The Street, where the consensus called for sales of $396.1 million.
Halyard raised its adjusted EPS guidance to $2.03 to $2.13, up from $1.85 to $2.05 previously.
The post Owens & Minor to buy Halyard Health’s infection prevention biz for $710m appeared first on MassDevice.
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