BD to Acquire Edwards Lifesciences’ Critical Care Business for $4.2 Billion

Jun 03, 2024 22:31 CST Updated 22:31

BD

Medical Device R&D Manufacturer, Distributor

Edwards Lifesciences

Cardiovascular Surgical Equipment Provider

Source: Siyu MedTech

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Becton Dickinson (BDX.US) recently announced that it has agreed to$4.2 billion (approximately 30.432 billion RMB)Cash Acquisition of Edwards Lifesciences (EW.US)Intensive Care Unit. This move aims to expand BD's medical monitoring product line and further strengthen its position in the global medical device market.

# $900 Million Critical Care Business Changes Hands

It is reported that critical care will operate as an independent business unit within BD's Medical segment in Irvine, California, led by Katie Szyman, Vice President of Edwards Critical Care.

BD plans to fund this all-cash transaction with approximately $1 billion in cash and $3.2 billion in new debt. Subject to customary regulatory reviews and closing conditions, the transaction is expected to be completed in...By the end of this yearCompleted.

Company executives expect the transaction to immediately boost all financial metrics and generate strong returns. Critical care generated over$900 million (approximately 6.521 billion RMB)The revenue, with approximately 4,500 employees.

Edwards Lifesciences invented the hemodynamic monitoring category, itsMonitoring solutions are currently used by more than 10,000 hospitals worldwide for cardiovascular diseases. Edwards LifesciencesThe addition of critical care operations will expand BD'sSmart Connected Care Solutions。

The technologies included in this acquisition are: the gold-standard Swan-Ganz pulmonary artery catheter, minimally invasive sensors,Non-invasive blood pressure cuff, tissue oximeter sensors and monitors. The smart technology in the aforementioned devices is driven by data analysis using machine learning and AI-based predictive and prescriptive algorithms.

# Edwards Lifesciences: To Focus on Cardiovascular

Edwards LifesciencesFocus on the field of cardiac disease treatment and intensive care. Main products include: heart valves, cardiac interventional treatment devices, cardiac monitoring equipment, and surgical tools, etc.

Last December, Edwards Lifesciences announced plans to spin off its critical care business by the end of this year. Subsequently,In February 2024, Edwards Lifesciences released its financial report for the fourth quarter of fiscal year 2023:Sales in the fourth quarter increased by 14%, reaching $1.53 billion; net profit was approximately $370 million.Fiscal Year Ended December 31, 2023Sales reached $6 billion, representing a 12% increase year-over-year.

Critical Care Sales Reach $250 Million in the Quarter, Up 11% Year-over-YearFiscal Year 2023Intensive Care Sales Reach $928 Million, Up 9.9% Year-over-Year; Sales growth was driven by contributions from all product lines and key regions, led by the HemoSphere platform and Smart Recovery technology, and further bolstered by the strong adoption of the Acumen IQ sensor equipped with the Hypotension Prediction Index algorithm.

It is reported that,Edwards LifesciencesWill use the after-tax cash proceeds to fund strategic growth investments. The company expects this sale to enhance the flexibility of its balance sheet.Follow-upWillFocus on expanding opportunities in the cardiovascular and surgical fields, particularly in TAVR, TMTT, and surgical business, with plans to increase investment in interventional heart failure technologies.

“Edwards Lifesciences"The basic rationale for spinning off the critical care business remains unchanged: we are focused on pursuing a strategy centered on structural heart disease,"Edwards LifesciencesCEO Bernard Zovighian said in the press release.

"Our goal is to address a large number of unmet patient needs through our differentiated innovative services, while expanding our global leadership, achieving sustainable growth, and increasing shareholder value. The critical care business has made significant contributions to our company and has a long history of innovation. We believe this transaction will strengthenEdwards Lifesciences"Severe监护 business and BD, paving the way for both companies to create greater value for patients."

# Sell First, Buy Later! BD Makes Big Moves Continuously

On June 20, 2023, BD Medical announced that it had signed a definitive agreement to sell itsSurgical Instrument PlatformSold to STERIS (NYSE: STE). It is reported that the surgical instrument platform belongs toBD Interventional DepartmentSurgical business under its umbrella.

Coincidentally, the critical care business acquired this time from Edwards Lifesciences also falls under BD.Interventional Department。

Based on the company's Q2 financial report, the total revenue of the intervention department was $1.292 billion, of whichMedical Surgical Revenue $379 Million,A decrease of 0.3% year-on-year；AndExcellent performance in intensive care,Revenue$424 million, a year-on-year increase of 26.7%, representing the best growth among all interventional business units.; The performance of this business benefited from the licensing revenue of PureWick™ franchise and strong double-digit growth, driven by the continued adoption in acute care and home care settings.

It is reported that BD is divesting several major product lines, including surgical instruments, laparoscopic instruments, and sterilization containers, covering the three brands V. Mueller™, Snowden-Pencer™, and Genesis™. At the same time, BD will also divest its three manufacturing plants located in St. Louis, Missouri, Cleveland, Ohio, and Tuttlingen, Germany. Approximately 360 employees supporting this platform will transfer to STERIS upon completion of the transaction.

The transaction will be funded through a combination of debt and cash on hand and is expected to close in BD's fiscal year 2023 (ending September 30), subject to the satisfaction of customary closing conditions and regulatory approval by the U.S. Federal Trade Commission (FTC).

According to the press release, divesting the surgical instrumentation platform is an important step in advancing BD's 2025 Strategy ("BD 2025 Strategy"), which aims to streamline BD’s product portfolio and manufacturing footprint. The BD 2025 Strategy is centered around three key words: "Grow," "Simplify," and "Empower."

It is reported that the surgical instrument platform has three dedicated manufacturing bases and approximately 20,000 SKUs in its product portfolio. This divestiture plan will support BD in achieving its financial goals for 2025, including revenue growth and margin expansion.

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