Dive Brief:
- BD has agreed to buy Edward Lifesciences’ critical care group for $4.2 billion in cash, ending Edwards’ plan to spin off the business.
- In a Monday announcement, BD highlighted the group’s patient monitoring technologies and artificial intelligence-enabled clinical decision products that will add to BD’s existing businesses. Edwards’ critical care unit grew revenue by 8.5% year over year to $928.1 million in 2023.
- RBC Capital Markets analyst Shagun Singh said the deal would streamline Edwards. “Notably, the transaction creates a pure-play structural heart company positioning them for strategic initiatives that could further create shareholder value,” Singh wrote in a note to investors.
Dive Insight:
Edwards announced in December it would spin off the critical care business. CEO Bernard Zovighian said the split would allow Edwards to focus on its cardiac devices and procedure-based segments, such as transcatheter aortic valve replacement and transcatheter mitral and tricuspid therapies.
At the time, the decision was part of a wave of spinoffs by medical technology companies such as Zimmer Biomet, GE and Johnson & Johnson.
Zovighian reiterated Edwards’ desire to focus on structural heart disease in a Monday statement about the proposed sale.
The critical care group develops patient monitoring products in hospital settings like the operating room and intensive care units. Its products include predictive software and monitoring platforms, sensors and catheters.
BD touted the connected care products and AI-enabled tools in its press release and presentation slides provided with the announcement. The company also noted the size of the group, saying that Edwards’ critical care offerings are used in more than 10,000 hospitals globally.
“From a strategic fit, the [critical care] portfolio expands Becton’s smart connected care solutions and can potentially allow for accelerating clinical decision-making,” William Blair analysts wrote in a note to investors. “It should also help defend and potentially grow share in areas such as medication management.”
BD said the deal is expected to be immediately accretive to key financial measures, including revenue growth, adjusted gross margin and adjusted operating margin. The company plans to fund the acquisition through approximately $1 billion of cash and $3.2 billion of new debt.
Katie Szyman, who has been corporate vice president of critical care at Edwards since 2015, will lead the unit at BD. Szyman was originally tapped to become CEO of the new company under the spinoff strategy.
BD expects the transaction to close before the end of the year, and it will operate critical care as its own business unit within the medical segment. The group, which has about 4,500 employees, will remain based in Irvine, California.
