A Medical Device Daily

Medical Action Industries (MAI; Hauppauge, New York), a supplier of disposable medical and surgical disposable products, said it has agreed to acquireMedegen Medical Products (Scottsdale, Arizona) for $80 million in cash.

Medegen, which has manufacturing facilities in Colorado and Tennessee, makes plastic patient utensils consisting of wash basins, bed pans, urinals and emesis basins. Medegen has annual revenues of about $100 million and will continue to operate out of its current facilities after deal closing.

MAI said the acquisition will be 10th and “by far the most significant” in its history.

“This transaction, which is expected to close in about 45 days, will be accretive to earnings immediately,” said Paul Meringolo, president/CEO of MAI. “This acquisition further diversifies our breadth of product offering to our existing customers, as well as adding customers outside of our current channels of distribution. The combination of expanded contracts, increased volumes and strategic product line extensions will all lead to increased synergies for Medical Action.”

MAI manufactures disposable medical devices, marketing them primarily to acute care facilities in domestic and certain international markets. MAI said it has expanded its target market to include physician, dental and veterinary offices, out-patient surgery centers and long-term care facilities.

RoundTable Healthcare Partners (Lake Forest, California), a private equity firm focused on healthcare, reported that it has acquired a majority interest in Aspen Surgical Products (Grand Rapids, Michigan), a manufacturer of disposable products for surgical and general healthcare applications. Financial terms were not disclosed.

Daniel Bowen, owner/founder and current president of Aspen, will retain a substantial ownership stake in the company and continue to help lead the management of the organization.

“Aspen has developed an attractive portfolio of disposable surgical products and accessories that provides a platform for expansion in the operating room,” said Joseph Damico, a founding partner of RoundTable and new chairman of Aspen.

As part of the transaction, and to finance further growth opportunities for Aspen, RoundTable facilitated a new senior credit facilities and a private placement of senior subordinated notes. The senior credit facilities were led by GE Commercial Finance Healthcare Financial Services, and included National City Bank.

Aspen's senior subordinated notes were acquired by RoundTable Capital Partners, RoundTable's captive subordinated debt fund. The capital fund, which closed in July 2006 and raised $200 million, makes fixed -rate subordinated debt investments alongside the equity investments of RoundTable's equity funds.

Aspen is RoundTable's 10th platform investment and the third from RoundTable's $500 million Fund II. Aspen represents the first investment from the Capital Fund.

RoundTable manages $1.1 billion in capital, including two equity funds totaling $900 million and a subordinated debt fund of $200 million.

In other dealmaking:

• Ventana Medical Systems (Tucson, Arizona) reported that Vision Systems Limited (Melbourne, Australia) has submitted an application to the Supreme Court of Victoria in Australia seeking orders to convene on Nov. 2 a scheme of arrangement meetings for Ventana's acquisition of Vision. In separate meetings to be held on that date, Vision will seek approval from its shareholders and noteholders for the acquisition by Ventana.

The application is scheduled to be heard by the court Sept. 22.

On Aug 14, Ventana and Vision entered into a merger implementation agreement in which Ventana will pay about $346 million in cash (A$2.13 a share) for the outstanding shares of Vision Systems and retirement of Vision Systems' convertible debt (Medical Device Daily, Aug. 15, 2006). The agreement has been unanimously approved by the boards of both companies.

Ventana develops instrument/reagent systems that automate slide preparation and staining in anatomical pathology and drug discovery laboratories worldwide. Its clinical systems are used in the diagnosis and treatment of cancer and infectious diseases.

• Orion HealthCorp (Roswell, Georgia) reported signing a stock purchase agreements for the acquisition of all of outstanding capital stock of two revenue cycle management companies in Los Angeles, California, and Mobile, Alabama.

In support of the company's growth plan, it has also obtained a $3 million commitment from Phoenix Life Insurance company and a $1.65 million commitment from Brantley Partners., currently Orion's largest investor, which will result in an equity capital infusion to the company of about $4.65 million.

The company also reported a $3.35 million commitment from Phoenix Life Insurance company for mezzanine financing.

Orion said it expects these transactions to close in the next 60 - 75 days, pending approval of certain of the transactions by its shareholders at a special meeting, obtaining regulatory approvals and satisfying other closing conditions, including obtaining senior financing, the terms of which are currently being negotiated with a potential lender.

Orion provides complementary business services to physicians through two wholly owned subsidiaries: Integrated Physician Solutions, providing business and management services to physician practices; and Medical Billing Services, providing physician billing and collection services and practice management solutions to hospital-based physicians.

• MSA (Pittsburgh) reported purchasing Paraclete Armor and Equipment (St. Pauls, North Carolina), a developer of advanced ballistic body armor used by military personnel including Special Forces units of the U.S. military, for $30 million.

Paraclete employs about 200 people and had annual revenues of $16 million in 2005. It will continue to operate from its North Carolina.

Paraclete has focused on developing tactical vests and load bearing equipment that allows users to more efficiently and safely carry weapons, communications, medical and safety equipment. The company currently holds multiple patents on various vest designs, including a unique cut-a-way vest system that enables the vest to be removed by the wearer in seconds. MSA's principal products include self-contained breathing apparatus, gas masks, gas detection instruments, head protection, respirators, thermal imaging cameras and ballistic body armor. The company also provides consumer safety products through retail channels.

The acquisition, according to John Ryan III, MSA CEO and chairman, “enhances MSA's existing line of ballistic body armor products and strategically positions the company to seek out new sales opportunities in both the military and law enforcement markets.”

• Radiation Therapy Services (RTS; Fort Myers. Florida), an operator of radiation therapy centers, reported acquiring a radiation therapy treatment center in Beverly Hills, California, building on its presence in the Los Angeles market, which the company entered in May 2006 by acquiring a facility in Santa Monica. The facility currently has an Intensity Modulated Radiation Therapy (IMRT) program and treats about 40 patients per day. The practice generates annual revenues of about $6 million. RTS said it will begin operating the facility in early September.

• AMDL (Tustin, California), a developer of tests for the early detection of cancer and other diseases, said that stockholders' at the company's annual meeting on Sept. 8, approved the acquisition of Jade Pharmaceuticals (JPI) and its two China-based subsidiaries. The stockholders also approved other proposals increasing the authorized capital stock and approving a reverse split of outstanding shares.

AMDL said that JPI provides it access to a fast-growing pharmaceutical market and an platform to introduce its DR-70 cancer test kits and Combination Immunogene Therapy technology.

JPI has also agreed to cooperate with the gene therapy research team of the Academy of China Military and Medical Sciences (ACMMS; Beijing). AMDL said the collaboration will supports its Combination Immunogene Therapy development in China, including clinical trials leading to Chinese regulatory approval.

JPI has also entered into a research and development agreement with New Way Pharmaceuticals (Haikou, China). New Way will provide their research facilities and the Provincial government has committed to provide land and grants to build a manufacturing base for gene therapy products.

Closing of the acquisition is to occur Sept. 28, on the same date as the proposed reverse stock split. With closing of the JPI acquisition occurs, all AMDL shares will be reverse split — on a basis to be disclosed later — but on a no less than 1-for-3 and no more than a 1-for-10 basis. AMDL's stock will begin trading on the Amex on a split-adjusted basis on Sept. 28.