A Medical Device Daily

Volcano (San Diego), a maker of products for the diagnosis and treatment of coronary and peripheral artery disease, said that it has closed its previously reported $21.5 million cash acquisition of Axsun Technologies (Boston) (Medical Device Daily, Dec. 24, 2008).

Axsun is a developer of lasers and optical engines used in medical Optical Coherence Tomography (OCT) imaging systems and advanced photonic components and subsystems used in other industrial applications.

Axsun will operate as a wholly-owned subsidiary of Volcano. Volcano said it believes Axsun's OCT technology will accelerate its OCT product development programs and provide the company competitive advantages in the invasive imaging sector.

Axsun has development partnerships with companies serving the cardiology and dental markets and said that it expects the launch of the first medical imaging systems using its technology during the first half of 2009. Volcano said it plans to use new integrated versions of Axsun's advanced tunable laser and optical engine technology in the development of new OCT imaging systems.

Axsun also offers devices for industrial applications and the telecommunications network sector. The company reports having more than 90 U.S. patents issued, another 40 pending, and about 85 employees. It recorded 2007 revenues from operations in excess of $18 million.

Scott Huennekens, president/CEO of Volcano, said that Axsun "is another complementary and important transaction for Volcano as it provides us proprietary OCT technology that we believe will both accelerate our OCT product development efforts and provide us significant and sustainable competitive advantages in the invasive imaging arena. We believe OCT technology will extend Volcano's reach to clinical indications and research opportunities that represent sizeable market opportunities ... beyond those served by our current offerings."

"The Axsun laser and optical engine technology is a key building block in our strategy to cement our already strong position in invasive imaging," Huennekens said. "The company's core technologies are truly leading-edge and will advance our programs to both enhance system performance and achieve lower manufacturing costs ..."

He said that Axsun's technology "has the potential to expand OCT applications into a number of new platforms serving large markets in the healthcare sector, including peripheral vascular, neurovascular, cancer and ophthalmology."

Volcano said it expects the transaction to be neutral to consolidated EPS in FY09 and that, with transaction close, it will have more than $145 million in cash, with no debt.

Osiris Therapeutics (Columbia, Maryland) reported that it has received a $5 million milestone payment for reaching the first production threshold of the Osteocel supply agreement with NuVasive (San Diego).

This past July, Osiris reported the sale of the Osteocel business to NuVasive for an initial payment of $35 million, followed by up to $50 million in additional milestones (MDD, July 28, 2008). Osiris said it expects to achieve the remaining $45 million in milestone payments from NuVasive, including $17.5 million for further delivery of product, $12.5 million upon transfer of certain manufacturing assets, and a $15 million payment upon NuVasive's achievement of $35 million in cumulative Osteocel sales.

"It is through the hard work and dedication of our Osteocel team that we have achieved the first product supply milestone under the agreement and are solidly on track to hit the remaining milestones," said Richard Hunt, CFO of Osiris.

Osiris is a stem cell therapeutics company focused on developing products to treat serious medical conditions in the inflammatory, orthopedic and cardiovascular areas.

In other dealmaking news:

• Press Ganey Associates (South Bend, Indiana) reported that it has acquired PatientFlow Technology (Boston), a provider of patient flow management tools and services for hospitals. The company specializes in improving hospital operations by offering strategic solutions for patient flow issues such as emergency room overcrowding, long wait times, bumped or delayed surgeries, and lack of available ICU and hospital beds.

Terms of the deal were not disclosed.

Adding PatientFlow to Press Ganey's lineup of products and services will increase the company's overall expertise in clinical and operational areas, and broaden its reach of consulting and improvement services, the company said

• LHC Group (Lafayette, Louisiana), one of the largest providers of home nursing services in the U.S., reported that it has entered into a joint venture with Southeast Alabama Medical Center (SAMC) to provide home nursing services, effective Dec. 31. This joint venture includes two home nursing agencies in Dothan and Eufaula, Alabama.

SAMC is a not-for-profit community health facility dedicated to improving the health and quality of life of residents in southeast Alabama, southwest Georgia and the Florida Panhandle. Led by a volunteer board made up of community leaders, SAMC operates as a 370-bed regional referral center, serving about 600,000 people throughout its neighboring communities and counties. SAMC offers a full range of healthcare services through its main campus in Dothan and is supported by a medical staff of more than 250 physicians representing virtually every medical specialty.

The primary service area of this joint venture spans 16 counties in Alabama and has an estimated population of 700,000, with almost 14% over the age of 65. The combined net revenue for the Dothan and Eufaula agencies during the most recent 12 months was about $1.4 million. This joint venture is not expected to add materially to LHC Group's earnings in 2009.

The company also reported that it has closed on the previously reported acquisition of Northwest Healthcare Alliance, effective Dec. 31. Northwest, which operates under the name Assured Home Health and Hospice, consists of four home nursing locations and five hospice locations located in the state of Washington. The service area of this acquisition spans nine counties in Washington and has an estimated total population of 650,000, with almost 15% over the age of 65.

• Ensign Group (Mission Viejo, California) reported that it has acquired Cabrillo Care Center (San Luis Obispo, California), a 156-bed skilled nursing facility. The transfer was effective Jan. 1. The facility has been renamed Cabrillo Rehabilitation & Care Center.

Among other things, the facility's local leaders will be adjusting clinical systems and staff to serve a larger skilled nursing population. Renovations and other building improvements are also planned.

Ensign's portfolio now consists of 65 facilities, 33 of which are Ensign-owned. Ensign affiliates hold purchase options on nine of the 32 leased facilities.