A Medical Device Daily

Stryker (Kalamazoo, Michigan) reported that it has entered into a definitive agreement with Olympus (Center Valley, Pennsylvania) for the sale of its OP-1 product family, which includes OP-1 Implant, OP-1 Putty, Opgenra and Osigraft, for use in orthopaedic bone applications for $60 million.

The transaction also includes the sale of the manufacturing facility in Lebanon, New Hampshire. The planned sale is aligned with strategic objectives for both companies. Stryker will redirect a portion of the related R&D spending to other internal projects which it believes offers the potential for greater shareholder returns including its clinical efforts already underway with BMP-7 for potential use in osteoarthritis and research into other non-orthopaedic applications. Given the early stage of these clinical efforts and the expected scope of data to be required by FDA, commercialization of BMP-7 is not expected for at least five years.

The boards of both companies have approved the transaction.

As a result of this announcement, Stryker reported that it will incur a one-time non cash charge of nearly $75 to $80 million (net of income tax benefit) in the fourth quarter to reflect the anticipated loss on the sale of the previously described assets, which will reduce diluted net earnings per share by nearly $0.19 to $0.20.

Excluding the impact of the expected 4Q10 one-time charge, there is no change to Stryker's guidance for adjusted diluted net earnings per share for 2010, which is expected to be in the range of $3.27 to $3.30, an increase of 11-12% over adjusted net earnings per share of $2.95 in 2009.

The bone growth putty from the Op-1 line has been very contentious for Stryker.

Stryker Biotech, its former president and three sales reps have been sparring with federal prosecutors about criminal charges pending against them in a case alleging the illegal promotion of bone putties, including OP-1 putty.

In August, it took less than 24 hours — and $1.35 million — for Stryker to settle claims by Massachusetts Attorney General Martha Coakley that its biotech unit illegally promoted the combined use of a pair of its bone growth products and falsified Institutional Review Board documents.

In other dealmaking activity:

• National HealthCare (NHC; Murfreesboro, Tennessee), an operators of senior care services, reported the purchase of Macon HealthCare Center (Macon, Missouri), and Osage Beach HealthCare Center (Osage Beach, Missouri). The centers were previously owned by HealthCare Realty of Macon, and HealthCare Realty of Osage Beach.

Both centers have been continuously managed by NHC since 1982.

The effective date of the purchase was December 1.

In addition, NHC said it has entered into an operating agreement to lease Springfield Rehabilitation and HealthCare Center (Springfield, Missouri). The terms of the 10 year lease include five additional five-year options.

• Emergency Medical Services (Greenwood Village, Colorado) said that its American Medical Response (AMR) segment has entered into a definitive agreement to acquire Doctor's Ambulance Service (Laguana Hills, California). The transaction is expected to close within 90 days subject to regulatory approvals and customary closing conditions. The company expects that the acquisition will contribute nearly $18 million in annual net revenue.

• Aetna (Hartford, Connecticut) said that it has entered into an agreement to acquire Medicity (Salt Lake City). Medicity offers a broad range of products and services that enable health systems, hospitals, physician practices and health information exchanges to securely access and exchange healthcare information, improving the quality and efficiency of patient care and reducing unnecessary healthcare costs. Medicity markets its products and services locally, regionally and nationally.