In a move that could help offset its $458 million 4Q07 Gudiant-related losses, Boston Scientific (Natick, Massachusetts) reported that it has signed a definitive agreement to sell its investments in a portfolio of companies, subject to certain closing and other conditions, to Saints Capital, a secondary direct-investment firm.
Boston Sci first disclosed the $458 million loss in February (Medical Device Daily, Feb. 6, 2008).
The company said in a press release that the transaction will raise pre-tax proceeds in excess of $100 million, the majority of which will be in cash, with a portion in a note payable over several years.
Boston Sci hadn't returned calls to Medical Device Daily as of presstime yesterday.
The company expects to record a net pre-tax loss of roughly $60 million ($40 million after-tax, or about 3 cents a share), consisting of a loss of $85 million ($55 million after-tax, or about 4 cents a share) in 2Q08, to be offset by anticipated gains of $25 million ($15 million after-tax, or about 1 cent a share) during the remainder of 2008.
"The sale of these investments, which represent the vast majority of our private investment portfolio, is part of our previously announced plans to divest non-strategic assets, while focusing on our core businesses and increasing shareholder value," said CFO Sam Leno. "We are pleased to be selling our investments in these companies to Saints Capital, a firm we believe has the experience and commitment to support them going forward."
Separately, Boston Scientific said it has signed a definitive agreement to sell its investments in a portfolio of venture funds and companies, subject to certain closing and other conditions, to Paul Capital Partners for pre-tax proceeds in excess of $40 million. The company expects to record a net pre-tax loss of roughly $10 million ($6 million after-tax) on the transaction, primarily in 2Q08.
"The net after-tax cash proceeds will be used principally to pay down debt, and consistent with previous divestitures of non-strategic assets, these expected net gains and losses will be excluded from our adjusted earnings per share," Leno said.
Some of the recent asset sales that triggered the quarterly loss were part of a plan by Boston Scientific to reduce the hefty debt load the company was saddled with after it purchased Guidant in 2006. Last fall the company went through a massive restructuring that included the loss of 2,300 non-manufacturing jobs and an 11% decrease in staff (MDD, Oct. 19, 2007).
The job cuts were part of a plan to cut operations costs by about $500 million this year.
In other dealmaking news:
• AngioDynamics (Queensbury, New York) reported that it has completed its acquisition of certain U.S. and UK assets of Diomed (Andover, Massachusetts). The purchase price for the assets is $11 million subject to adjustment for changes in working capital to be determined subsequent to the closing date.
"With the acquisition of Diomed's assets, AngioDynamics has substantially strengthened its position in the worldwide market for the treatment of varicose veins," said Eamonn Hobbs, president/CEO of AngioDynamics. "The Diomed endovenous laser products, combined with our existing venous product line, provide us with a compelling, comprehensive venous product offering for our customers and their patients."
He added, "We will immediately begin integrating the Diomed business and expanding our sales organization. We welcome the Diomed customers and employees to the AngioDynamics family. This acquisition, combined with the recent settlement with VNUS Medical, provides AngioDynamics with valuable licenses to patents for use in endovenous laser therapy. This enhances our ability to provide physicians with innovative technologies for superior patient care in the high growth market to treat varicose veins."
Due to the higher-than-expected management time required to close the Diomed transactions and the VNUS settlement, the company said it now plans to provide fiscal 2009 guidance during its year-end earnings conference call scheduled for July 24.
AngioDynamics is a provider of medical devices used by interventional radiologists, surgeons, and other physicians for the minimally invasive treatment of cancer and peripheral vascular disease.
• Cardo Medical (Miami), a company engaged in the development of orthopedic medical devices, and clickNsettle.com (Los Angeles), a publicly-traded company with no active operations, have signed a merger agreement pursuant to which Cardo Medical will become a wholly owned subsidiary of clickNsettle.
After the merger is completed, clickNsettle will be renamed Cardo Medical, and will be headquartered in Los Angeles. The merger is expected to close in 3Q08, and the company intends thereafter to apply to have its shares listed on the American Stock Exchange.
Simultaneously with the signing of the merger agreement, Phillip Frost, former chairman/CEO of Ivax (Miami), and others invested $9.5 million in Cardo Medical. Certain other investors will make up to an additional $4 million investment in Cardo Medical before the merger is consummated.
Proceeds from these investments are expected to be used to close on the acquisition of the outstanding equity interests of three partially owned subsidiaries of Cardo Medical, and to enable Cardo Medical to accelerate its research and product development. Following such acquisitions, Cardo Medical will directly and indirectly own 100% of the equity interests of Accelerated Innovation, Cervical Xpand and Uni-Knee.
It is expected that clickNsettle shareholders will own roughly 5.56% of the combined company on a fully diluted basis upon consummation of the merger. The current holders of Cardo Medical's membership interests will own between 64.44% and 66.67% of clickNsettle following the merger, and the new investors in Cardo Medical will own between 27.78% and 30% of clickNsettle, in each case, depending on the total amount of the investment in Cardo Medical prior to the merger.
Following the merger, the board of directors of Cardo, will consist of five directors to be appointed by Andrew Brooks, MD, and two directors to be appointed by Phillip Frost, MD. Brooks, an orthopedic surgeon and president/CEO of Cardo Medical, will be the CEO of the combined company.
Cardo Medical develops orthopedic and spinal medical devices. The company's product portfolio includes devices for spinal motion preservation and fusion, hip replacement and unicompartmental knee replacement.
• Johnson & Johnson Nordic (Sollentuna, Sweden) a Johnson & Johnson (J&J; New Brunswick, New Jersey) company, reported the acquisition of Amic, a privately held Swedish developer of in vitro diagnostic technologies for use in point-of-care (POC) and other near-patient settings.
The acquisition will provide Ortho-Clinical Diagnostics (Rochester, New York), also a J&J company, with access to a high-performance technology platform currently in development in this rapidly growing area of diagnostics that complements its clinical laboratory, immunohematology and donor screening businesses.
As a result of the acquisition, Johnson & Johnson expects to incur an estimated one-time after-tax charge of approximately $40 million during the 2Q08 related to the expensing of in-process R&D. Other terms of the transaction were not disclosed.
Amic is developing technology that uses a chip-based micro-fluidic platform to enable fully quantitative, immunoassay tests in POC or near-patient settings. This next-generation technology represents an advance in an area of diagnostics where double-digit market growth is anticipated.
• InSight Health Services Holdings Corp. (Lake Forest, California) reported that a wholly owned subsidiary completed the sale to RadNet Management (Los Angeles) of its final diagnostic imaging center located in the San Fernando Valley area of Southern California.
Kip Hallman, InSight's president/CEO, said, "With the sale of this final center, we have now exited the San Fernando Valley, which was a non-core market for us. We are pleased to be able to focus our efforts going forward on the execution of other non-core market transactions and on our opportunities to reinvest in our chosen core markets."
InSight is a nationwide provider of diagnostic imaging services. It serves managed care entities, hospitals and other contractual customers in over 30 states, including the following targeted regional markets: California, Arizona, New England, the Carolinas, Florida and the Mid-Atlantic states. As of March 31, its network consisted of 92 fixed-site centers and 111 mobile facilities.