San Clemente, Calif.-based ICU Medical Inc. has acquired Minneapolis-based Pursuit Vascular Inc. for $75 million and an additional, undisclosed earn-out payment that would be due in 2021. In the deal, it gains the Clearguard HD Antimicrobial Barrier Cap, which is the only U.S.-marketed device that's been shown to reduce central line-associated bloodstream infections in hemodialysis patients.
Catheter-line associated bloodstream infections (CLABSIs) occur in roughly 30,000 hemodialysis patients a year in the U.S. Catheters are only used on about one-fifth of dialysis patients, typically those with an emergent need for dialysis or those who require dialysis more than once weekly. But for those patients, these infections are quite serious, becoming one of the most common causes of death.
The Clearguard HD cap has a rod that extends into the hemodialysis catheter hub. The rod and the cap are coated with chlorhexidine, a broad-spectrum antimicrobial agent, that is activated when it is inserted into the liquid-filled catheter hub. The coating gradually dissolves to kill harmful microorganisms within the catheter hub. The Clearguard HD caps are used in place of a standard cap or connector.
"We have been following the progress of Pursuit Vascular in the hemodialysis space for a couple of years now," ICU Medical CEO Vivek Jain told BioWorld MedTech. "Based on the progress they have made proving clinical efficacy and scaling their operations – and with us having the majority of integration activities related to the Hospira acquisitions behind us – we felt this was the right time put this deal together."
In early 2017, ICU Medical acquired the Hospira Infusion Systems business from Pfizer Inc. for about $1 billion in cash and stock. That gave ICU their intravenous pumps, devices and solutions that, combined with its existing businesses, transformed it into a leading pure-play infusion company. (See BioWorld MedTech, Oct. 7, 2016.)
Pursuit Vascular is the first acquisition that ICU has made since Hospira, but it could offer a model for where the company is headed moving forward. Explained Jain, "We seek to supplement our internal growth through acquisitions of complementary businesses, technologies, services, or products, as well as investments and strategic alliances. Addressing catheter-line associated bloodstream infections is at the heart of many of ICU Medical's consumables technologies, and Clearguard HD provides natural synergies in this area."
He likened the Pursuit Vascular acquisition to ICU Medical's 2015 purchase of Excelsior Medical for $59.5 million, in that it should enable the company to innovate and expand upon an existing category. Excelsior marketed Swabcap, a disposable cap designed to disinfect needle-free connectors with 70% isopropyl alcohol when attached to an intravenous catheter, and Swabflush, which integrated Swabcap with a pre-filled saline flush syringe built in. With the Hospira acquisition now long behind it, ICU Medical decided it was ready to take on a bolt-on acquisition with Pursuit.
The valuation of ICU Medical skyrocketed around the Hospira acquisition, peaking during mid-2018 at more than $6 billion. This August, the market cap was hit hard when the company deeply cut its adjusted EBITDA from a range of $315 million to $340 million to a range of $260 million to $275 million.
While Consumable and Infusion Systems were in line with expectations, its IV Solutions business was blamed for the weakness that necessitated the retrenchment. The current valuation of ICU Medical hasn't recovered much from that blow; it now sits at around $3.5 billion.
ICU Medical's existing products are expected to be a good fit with the new deal. "All of our needle-free IV connectors incorporate our market-leading Clave technology and are designed to keep patients and health care workers safe by providing a mechanically and microbiologically closed system for vascular access applications. Our connectors feature technology that helps significantly reduce the ingress and colonization of bacteria," explained Jain.
"While needle-free IV connectors play an essential role in the fight against CRBSI, nursing guidelines still suggest that clinicians swab connectors before each access. Unfortunately, swabbing technique and compliance with these policies may vary, and visual confirmation of connector disinfection may be difficult," he continued. "Swabcap's patented disinfecting cap design has been shown to help enhance the barrier to bacterial ingress while helping you standardize disinfection protocols."
ICU Medical declined to offer any details on the 2021 earnout tied to the Pursuit Vascular acquisition, but said it would be providing more information about the acquisition on its upcoming Nov. 11 earnings call.
Pursuit Vascular was founded a decade ago and has only raised about $13 million in debt, according to SEC filings. So, even without the earnout, the multiple on this investment could be high given the relatively small financing amount.
In April, the company gained a CE mark for the Clearguard HD cap. In May 2018, the FDA expanded the cleared indication for the cap to include reduction in the incidence of CLABSI in hemodialysis patients with central venous catheters (CVCs). Then in July 2018, Pursuit Vascular said it had already sold two million of the Clearguard HD caps.
Last year, a study published in the Journal of American Society of Nephrology that was conducted by the research group of a major dialysis provider, Davita Clinical Research, found that the Clearguard HD cap reduced bloodstream infections by 63% vs. a control with a different connector and cap. This 13-month prospective, randomized trial was in 1,671 patients with 183,000 treatment days across 40 dialysis centers.
The estimated 2019 revenues for Pursuit Vascular were estimated at between $10 and $12 million, with margins comparable to the existing ICU Medical IV Consumables business. In the longer term, the company aims to move beyond the hemodialysis market to incorporate Pursuit Vascular technology in its consumables products.
"Our Clearguard HD is a leading-edge infection prevention device for dialysis procedures and a great fit with the existing product portfolio of ICU Medical," said Roy Martin, executive chairman of Pursuit Vascular. "We are poised for international expansion using the global distribution capabilities of our new parent, and our innovative R&D capabilities are a perfect match with ICU's long-standing reputation and culture of technology leadership."