Sleep treatment company Resmed has made a major deal to buy Germany’s Medifox Dan for $US1 billion ($A1.45 billion)
Medifox Dan is a leader in out-of-hospital software solutions.
It is Resmed’s biggest acquisition so far. It has made two smaller buys in this area in the past few years.
Australian investors sent Resmed shares down nearly 2.5% to $29.01 on a day when the wider market dipped, then slumped in afternoon trade to be down 1.27% at the close ahead of the US Federal Reserve’s decision.
Resmed’s release said Medifox Dan’s German customer base is complementary to the customers of ResMed’s US-based software as a service (SaaS) business.
“In addition, it builds on ResMed’s existing business in Germany as a leading provider of innovative cloud-connected medical devices that transform care for patients with sleep apnoea and other respiratory conditions,” the company said in its Wednesday statement.
ResMed CEO, Mick Farrell, was happy with the deal, saying he believes it will strengthen the company’s position as a global leader in healthcare software solutions.
“With the acquisition of Medifox Dan, a fast-growing and innovative German healthcare software leader, we will expand ResMed’s SaaS business portfolio outside our current base in the U.S. market and strengthen our position as the global leader in healthcare software solutions for lower-cost and lower-acuity care.
“Medifox Dan has a strong track record of innovation, fully aligned with our teams at Brightree, MatrixCare, and beyond. Medifox Dan’s customer centricity has built strong and ongoing, growing demand for its software solutions across Germany, and we expect that momentum to continue and strengthen as we become one global team.”
Medifox had pro forma net revenue of about $US83 million last year, according to ResMed with adjusted EBITDA of about $US35 million.
Medifox provides software to over 8,000 customers and about 100,000 users.
Resmed said Medifox Dan employs over 600 people. “ResMed plans for Medifox Dan to operate under its current brand within the ResMed SaaS business – as Brightree and MatrixCare (two similar acquisitions by Resmed in the past seven years) do today.”
The deal is expected to close by the end of ResMed’s fiscal second (December) quarter.
Citi analysts were happy with the deal.
“This is RMD’s third big acquisition in SaaS space after Brightree (Apr 2016) and MatrixCare (Nov 2018). With this acquisition, RMD will be able to expand its SaaS business footprint outside US,” Citi’s analysts said in a note on Wednesday.
Analysts at US group KeyBanc Capital Markets wrote in a note on Tuesday that while the acquisition will allow ResMed to expand its SaaS business internationally, the valuation appears elevated and Medifox’s incoming revenue “seems relatively small compared to broader [Resmed.]”
“We believe investors will view the deal as a strategic positive but not as a major catalyst for the stock,” the analysts wrote.
