Shares of Halyard Health are up more than 12 percent after the company announced it was selling its S&IP business to Owens & Minor for $710M.
Shares of Halyard Health, Inc. are up more than 12 percent after the company announced it was selling its Surgical and Infection Prevention (S&IP) business to Owens & Minor, Inc. for $710 million.
Halyard said the divesture of S&IP will accelerate the company’s transformation into a “pure-play medical device business” with key assets in pain management and chronic care. The S&IP business provides healthcare supplies and solutions that target the prevention of healthcare-associated infections. Having a singular focus on medical devices, Halyard will be “well-positioned to succeed in its higher growth and higher margin categories,” the company said.
Halyard said it intends to pursue a dual-track growth strategy through R&D and M&A, with a focus on maintaining and extending its leadership positions in its core franchises and expanding into attractive adjacencies.
The S&IP purchase includes the Halyard Health brand as well as the company’s current information technology platform, Halyard said. Halyard’s remaining business is expected to undergo a phased restructuring to address dis-synergies and corporate costs associated with the divestiture. The company expects these dis-synergies to be eliminated through a multi-year transformation.
“The S&IP business and its employees will have an exciting future as part of Owens & Minor - an ideal buyer with strong expertise in marketing and distributing these products in our major markets,” Halyard Chief Executive Officer Joe Woody said in a statement. “This divestiture will begin the next chapter for our company, one that is defined by a high-performance culture focused on developing innovative solutions for our customers and addressing our industry’s most pressing healthcare needs.”
Virginia-based Owens & Minor said the acquisition of S&IP will increase scale and profitability across Owens & Minor’s global business. Additionally, the company said it will expand the company’s “owned-brand product portfolio” and also expanding Owen & Minor’s global network into new markets and channels. The S&IP division will fold into Owens & Minor with an experienced global sales force that has “direct channel access to both acute care and non-acute care markets” throughout the world, the company said.
“Halyard’s S&IP business is a market leader in the prevention of healthcare-associated infections, and its portfolio of products and services is highly complementary to the innovative solutions we currently provide to our customers,” Owens & Minor CEO P. Cody Phipps said in a statement. “In today’s rapidly changing healthcare industry, Owens & Minor is taking aggressive steps to strengthen and diversify our business model, and this transaction supports and enhances our ability to execute our strategy and provides significant opportunities for growth.”
With the S&IP transaction, Owens & Minor said expects to acquire approximately $1 billion in revenues.
After news of the sale was announced, shares of Halyard hit a morning high of $50.63 before settling back to the current price of $47.14 as of 11:49 a.m. Shares of Owen & Minor though have plunged more than 17 percent this morning, falling from $24.51 to $20.37 as of 11:49 a.m. The drop in Owens & Minor stock reflects disappointing third quarter financial reports, which were also released today.
