A Medical Device Daily

OSI Systems (Hawthorne, California) reported that its subsidiary, Spacelabs Healthcare (Issaquah, Washington), completed the acquisition of Del Mar Reynolds and Del Mar Reynolds Medical (together, DMR; Irvine, California), representing the Cardiac Division of Ferraris Group (Birmingham, UK).

In the deal, first unveiled in June (Medical Device Daily, June 30, 2006), Spacelabs paid Ferraris about $25.5 million (GBP 14 million) in cash, subject to an adjustment of plus or minus $1.8 million, based upon revenue and EBITDA for the 13-month period ending Sept. 30. In addition, Spacelabs has agreed to pay Ferraris additional milestones of up to $9.1 million, based on 2007 revenue targets.

Spacelabs said it financed the deal through a senior credit facility.

Deepak Chopra, CEO of OSI, said that the acquisition “allows us to expand our product portfolio to the hospital market [and] strengthen our geographic presence in both the UK and German markets, while also allowing us to essentially double the geographic presence and revenue of our Core Lab business for clinical trials.”

Spacelabs is comprised of several healthcare businesses: patient monitoring, anesthesia, pulse oximetry, osteoporosis diagnostics, clinical trials and now cardiology.

The cardiology business will be headed by Gary Grenter, current president of DMR.

OSI is a manufacturer of security and inspection systems, medical monitoring and anesthesia delivery products, and optoelectronic-based components, as well as a provider of engineering and manufacturing services.

Del Mar manufactures diagnostic cardiology monitoring solutions for hospitals and clinics worldwide and provides ECG laboratory services to pharma companies undertaking clinical trials, whereby patient ECG data are recorded, analyzed, tabulated and interpreted. It specializes in Holter monitoring products, stress systems, ECG machines, trans-telephonic ECG monitoring, ambulatory blood pressure monitoring, event recording, apnea monitoring and information management systems. The business employs about 233 personnel in its five offices in the UK, Germany and the U.S.

Hanger Orthopedic Group (Bethesda, Maryland) reported that it has acquired Regional Artificial Limb & Brace Company (Fargo, North Dakota). Financial terms were not disclosed

Ivan Sabel, CEO and chairman of Hanger, said, “The acquisition of this practice strengthens our market position in Fargo, ND and is accretive to earnings. The transaction continues our initiative of focused, opportunistic growth consistent with our market-based strategies.”

Hanger is a provider of orthotic and prosthetic services. It bills itself as the market leader in the U.S., owning and operating 621 patient care centers in 46 states and the District of Columbia, with about 3,390 employees.

Hanger is organized into four units: its two key operating units are patient care, consisting of nationwide orthotic and prosthetic practice centers, and distribution which consists of distribution centers managing the supply chain of orthotic and prosthetic componentry to Hanger and third-party patient care centers. Linkia is a provider network management company for the orthotics and prosthetics industry and Innovative Neurotronics introduces emerging neuromuscular technologies developed with industry suppliers.

In other dealmaking activity:

• Medical instrument developer and distributor Fukuda Denshi (Tokyo) yesterday reported that it intends to sell the units of Kontron Medical based in Plasir Cedex, France, and Postfach, Switzerland, by the end of 2006, intending, it said, to refocus on its core business strategy.

Kontron Medical says it is one of France's leading manufacturers and distributors of ultrasound devices. It claims the largest market share for its ultrasound products among France's physicians in private practice. The company turned the French and Swiss businesses into wholly owned subsidiaries in May 2005.

Fukuda Denshi has retained Daiwa Securities and Daiwa Securities America to facilitate the sale of Kontron.

• Young Innovations (St. Louis) said it has agreed to acquire “substantially all” of the assets of Microbrush and Microbrush International (Grafton, Wisconsin), a manufacturer of dental microapplicators used to apply materials to oral surfaces, including sealants, disclosing products, bonding agents, restorative materials, whitening products and orthodontic brackets.

The price is expected to be about $32 million in cash, with another $3 million in milestones earned by the seller if for performance targets achieved over the next two years. Young said purchase of the U.S. assets has been completed, with purchase of Irish assets completed on or before Aug. 31. Microbrush has operations in Grafton; Orlando, Florida; and Dungarvan, Ireland.

Young Innovations said the transaction is expected to add about $11 million to its annual sales. About 60% of Microbrush's sales are outside the U.S. The transaction is expected to be accretive to EPS in 2007.

Alfred Brennan, CEO of Young Innovations, said, “The Microbrush line of high-quality microapplicators is an excellent addition to our consumable product offering.”

Young Innovations manufactures supplies and equipment, saying it believes it is the leading manufacturer of prophy angles and cups (used in cleaning and polishing procedures) and the leading provider of panoramic X-ray equipment and dental surface disinfectants in the U.S.