SunMed Group Holdings LLC, a Walker, Mich.-based maker of anesthesia and respiratory medical devices, plans to buy the respiratory health business of Avanos Medical Inc., a medical technology company based in Alpharetta, Ga.
The two companies said June 8 they have signed a definitive agreement for SunMed to acquire Avanos's Ballard, Microcuff and endOclear brand of closed suction catheters, endotracheal tubes and oral care products.
SunMed will also buy two Avanos manufacturing facilities in Mexico and R&D expertise supporting the brands.
"Adding these complementary brands into our growing portfolio solidifies SunMed's leadership as the premier manufacturer of the anesthesia and respiratory consumables that define product excellence and serve patients across the continuum of care," SunMed CEO Hank Struik said in a statement. "These products are the standard bearers of closed suction and endotracheal consumables and we deeply admire the clinical results that these exceptional products provide for patients in critical care and the trust they have built with practitioners."
The deal 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" that allows SunMed to "serve more clinicians around the world so they can provide the best patient outcomes," Struik said.
The proposed acquisition of the Avanos brands should close in the fourth quarter. An announcement about the deal did not include a purchase price.
A subsequent filing by Avanos to federal securities regulators listed the total purchase price a $110 million in cash, an amount that is "subject to certain adjustments as provided in the purchase agreement based on the indebtedness and inventory transferred to buyer at the closing."
SunMed has manufacturing and distribution locations in the U.S., Mexico, China and Europe that produce anesthesia and respiratory care products. SunMed most recently acquired Mettawa, Ill.-based Vyaire Medical Inc.'s consumables unit that makes products used in airway management and operative care.
The latest deal comes after the publicly traded Avanos in January initiated a three-year transformation initiative that included transforming the company's product portfolio.
In May, Avanos reported it generated $191.7 million in revenue, down 3 percent from a year earlier. Sales for the respiratory business declined more than 14 percent to $32.4 million, a result that CEO Joe Woody told analysts in a May conference call stemmed from a spike a year earlier in products from the Omicron coronavirus case surge.
The company expects the respiratory business to grow 2 percent in 2023.
"Divesting our Respiratory Health business is a key element of Avanos' ongoing three-year transformation process," Woody said in the announcement. "We're confident that SunMed is an excellent fit for our RH brands … and that these products will be strong additions to the company's robust portfolio."
Since 2021, SunMed has been a portfolio company of Frazier Healthcare Partners, following the sale of a majority ownership interest by Dempsey Ventures, the Grand Rapids-based family office of entrepreneur Dan Bowen, the former president and CEO of Aspen Surgical. Dempsey Ventures remains a minority partner in SunMed.