Medical device company Hill-rom has called off its lawyers after initially backing out of a $375 million acquisition of Seattle startup Bardy Diagnostics. The deal to acquire Bardy will now proceed, said Hill-rom CEO John Groetelaars in a call to investors July 30.
Founded in 2013, Bardy sells a lightweight non-invasive cardiac monitor patch that helps detect arrhythmia. That product made the company an attractive acquisition for Hill-rom — at least in January, when the deal was announced.
Soon after that announcement, however, Medicare reimbursement rates for Bardy’s device in a large region of the U.S. plummeted, from $365 to between $40-$50, though they have since come up to more than $100.
Days before the deal was to close, on Feb. 21, Hill-rom tried to back out, according to a report by MedTech Dive. But the publicly traded, 10,000-employee company was thwarted by a July 9 ruling in a Delaware court, after months of legal wrangling. The court ruled that the acquisition should proceed.
Hill-rom initially said it would appeal the ruling to the Delaware supreme court. But Hill-rom has now decided to proceed with the deal.
“We have now concluded that the best path forward for our company and for our shareholders is to complete the transaction under the previously announced terms,” said Groetelaars in the call. “Once we close the transaction, we will be in a better position to work directly with reimbursement decisions with CMS and Medicare administrative contractors.
Bardy’s device sits close to the skin of the chest and the company says it captures clearer and more accurate heart rhythms than competing electrocardiography (ECG) monitors. The startup, founded by Gust Bardy, a clinical professor of medicine, cardiology, at the University of Washington, won Hardware of the Year honors at the 2019 GeekWire Awards. Bardy sold his previous company, Cameron Health, to Boston Scientific in 2012.
Founded in 1915, Hill-rom originally sold hospital beds and medical devices but has expanded to software products and digital health-related services. The acquisition will add to Hill-rom’s existing cardiology products including cardiac stress exercise, Holter, and resting ECG devices.
“Although this didn’t turn out as originally contemplated, we believe there is a compelling strategic rationale for the acquisition,” said Groetelaars in the call. “Bardy’s differentiated diagnostic cardiology platform is complementary and further strengthens Hill-Rom’s existing cardiology portfolio and our connected care vision.” The deal is expected to close in the coming weeks.
The deal is among several recently in the cardiac wearables area.
Hill-rom’s stock price has increased more than 10% in the last month, though it has declined slightly in the last few days; the Wall Street Journal reported that Baxter is in early talks to acquire Hill-rom.
from GeekWire https://www.geekwire.com/2021/trying-back-hill-rom-will-proceed-376m-deal-acquire-seattles-bardy-diagnostics/