Dive Brief:
- SunMed plans to buy Avanos Medical’s respiratory health business for $110 million in cash.
- Avanos, which makes products including airway management devices, is selling the unit as part of a “product rationalization” intended to narrow its focus on to areas where it is well set to succeed. Its competitors include Stryker, Medline Industries and Smiths Medical.
- SunMed framed the acquisition as a way to strengthen its position as a provider of anesthesia and respiratory consumables and support the growth of its broader breathing care operation.
Dive Insight:
Avanos’ respiratory health revenues have fallen in each of the past two years from the pandemic-fueled high they hit in 2020, declining 13.8% to $135.9 million last year. The company expects the business to return to growth this year, forecasting a 2% uptick in sales, but revenues fell again in the first quarter as the unit failed to match the omicron-assisted start to 2022.
Against that backdrop, Avanos teased a significant deal it hoped to disclose before its investor day later this month. The company on Thursday announced it reached an agreement to sell its respiratory health business to SunMed. The takeover will give SunMed control of closed suction catheters, endotracheal tubes and oral care products sold under brand names including Ballard, Microcuff and endOclear. SunMed will take over two Avanos manufacturing facilities in Mexico.
SunMed is a privately owned U.S. medtech company that sells anesthesia products and respiratory care devices. Under the ownership of Dempsey Ventures, SunMed expanded through acquisition, merging with Salter Labs in 2019 and buying Westmed in 2020.
The inorganic growth strategy has continued since Frazier Healthcare Partners acquired a majority stake in SunMed in 2021, with the company closing the takeover of Vyaire Medical last month.
“Adding these complementary brands into our growing portfolio solidifies SunMed’s leadership as the premier manufacturer of the anesthesia and respiratory consumables. This transaction also supports our ability to drive growth and innovation, not just for the respiratory brands we are acquiring, but for our comprehensive breathing care platform,” SunMed CEO Hank Struik said in a statement.
The deal is scheduled to close in the fourth quarter.
