A Medical Device Daily
Xcorporeal (Los Angeles) and CT Holdings Enterprises (CTHE; Dallas) said they have executed a definitive merger agreement. In the deal, a reverse triangular merger, Xcorporeal will emerge as the surviving entity.
Xcorporeal is a medical device company that has developed an extra-corporeal platform technology to build devices that may potentially perform functions of various human organs. The four products that it plans to market are a hospital congestive heart failure (CHF) device; a hospital renal replacement device; a portable home hemodialysis device; and a wearable artificial kidney.
On Nov. 20 and Dec. 13, 2006, Xcorporeal issued shares of its common stock at a price of $7 per share in private placements to about 100 institutional and accredited investors for gross proceeds of about $29.4 million.
CT Holdings will effect a 1-for-8.27 reverse stock split of CT Holdings’ common stock immediately prior to the merger. CT Holdings will then acquire all of the issued and outstanding capital stock of Xcorporeal, and the holders of Xcorporeal capital stock will receive an equal share of common stock of CT Holdings which, upon the closing of the merger, will equal about 97.6% of the total issued and outstanding shares of common stock. In addition, options and warrants to purchase shares of common stock of Xcorporeal outstanding prior to the merger will be converted into options and warrants to purchase shares of common stock on the same terms and conditions, and CT Holdings will adopt a new equity incentive plan substantially identical to Xcorporeal’s existing plan.
“We believe facilitating access to the public markets for this exciting medical device company represents a significant opportunity for our shareholders,” said Steven Solomon, CT Holdings’ CEO. “With a proven and experienced management team, promising clinical results and unique technology, the company is well positioned to become a leader in the large market represented by patients suffering from congestive heart failure and advanced kidney disease.”
Upon close of the merger, the board of directors of CT Holdings will resign, and the current Xcorporeal directors will be appointed to the board.
Although the transaction requires shareholder approval, a majority-in-interest of the shareholders of both companies have already agreed to vote in favor of the merger. The transaction is expected to close in the 3Q07.
Xcorporeal said it plans to commercialize the CHF device in the latter half of 2008 and a renal replacement device in the first half of 2009.
CT Holdings formerly operated as a business development firm providing capital and management expertise to start-up ventures. Since 2006, it has been engaged in seeking business opportunities to maximize value for its shareholders, including acquisitions of new operating businesses and technologies as well as potential merger opportunities.
Perot Systems (Plano, Texas) reported that it has entered into a definitive agreement to acquire JJWild (Canton, Massachusetts), provider of integrated healthcare delivery solutions for organizations using the Meditech Healthcare Information System. Perot Systems will acquire the company for $89 million, subject to certain adjustments and offsets.
Perot sad the acquisition of JJWild adds to the capabilities of the company’s Meditech Solution Center, enabling it to expand its Meditech service offerings to serve a broader range of hospitals.
“JJWild’s position in the healthcare market deepens our expertise with the clinical and financial information system used by more than 2,000 hospitals in the U.S., Canada, and other select international markets,” said Perot Systems CEO Peter Altabef.
“As we respond to the increasingly complex requirements of healthcare, we believe that the broader capabilities of JJWild/Perot Systems will be invaluable in implementing patient safety and quality initiatives. JJWild will not only be able to support our customers who require implementation and optimization services for technology and applications, but will also have the capability to provide operating assistance to those customers who desire that additional level of support,” said Howard Messing, Meditech’s (Westwood, Massachusetts) president/COO.
Consistent with the financial projections issued on July 31, Perot said it expects JJWild to report 2007 revenue between $80 million to $90 million, of which it expects to consolidate about $30 million over the remainder of 2007, including $8 million for 3Q07. This acquisition is expected to be slightly dilutive to full year 2007 earnings per share.
JJWild develops and delivers integrated IT solutions that empower healthcare organizations using the Meditech Healthcare Information System to optimize healthcare delivery.
In other dealmaking news: Advocat (Brentwood, Tennessee) reported it has closed the acquisition of the leasehold interests and operations of seven skilled nursing facilities from Senior Management Services of America North Texas (SMSA). As previously disclosed the purchase price is about $10.1 million, including about $8.6 million in cash, the assumption of certain liabilities and estimated transaction costs. At this purchase price, this acquisition is about $8,000 per bed and represents a multiple of roughly 4.2 times May 2007 year to date annualized pro forma EBITDA and 3.0 times 2006 pro forma EBITDA. The transaction is expected to be accretive to Advocat’s earnings and cash flow following the close of the transaction.
Concurrently, the company completed its previously reported financing with LaSalle Bank. The financing consists of a $16.5 million term loan and a $15 million revolving credit facility. The term loan will be used to finance the SMSA acquisition and refinance certain existing Advocat indebtedness. The revolving credit facility will be used to support a letter of credit facility and for working capital needs.
Advocat provides long-term care services to patients in 49 skilled nursing centers containing 5,671 licensed nursing beds, primarily in the Southeast.