A Medical Device Daily
Healthtronics (Austin, Texas) said it has withdrawn its $2.28 a share offer for Endocare (also Austin) that was initially proposed in early August (Medical Device Daily, Aug. 8, 2008), saying it has heard nothing from Endocare's board since that company rejected its offer as "inadequate" in mid-August.
The offer, valued at $26.9 million, would have merged the two companies' efforts in urology and prostate cancer treatment and would have given Healthtronics both broader and deeper presence in these markets.
The offer represented a 20% premium above Endocare's closing stock price on Aug. 6.
"Because there has been no dialogue with Endocare regarding HealthTronics' proposal, and because HealthTronics has no insight into Endocare's performance since the end of second quarter 2008 other than the visibility we have as the largest purchaser of Endocare's products, we believe it prudent to withdraw our proposal," said James Whittenburg, president/CEO of HealthTronics.
Earlier this month, after Endocare's board had rejected the original offer, Healthtronics restated its commitment to acquire the company. Though not sweetening its original offer, HealthTronics said in its letter that it was willing to modify its proposal to allow each of the Endocare shareholders to receive either cash or shares of HealthTronics common stock, "provided that the total stock portion of the purchase price does not exceed a negotiated percentage of the total purchase price.
The two companies have an ongoing partnership.
In other dealmaking news:
• Hanger Orthopedic Group (Bethesda, Maryland) reported that it has acquired Advanced Prosthetics of America (Tampa, Florida), Manhasset Orthotics-Prosthetics (Hicksville, New York), and Custom Design Orthotic & Prosthetic (Kirby, Ohio). These acquisitions add patient care centers to existing markets in Florida, New York and Ohio, Hanger said.
"We are very pleased to welcome the professionals of these acquisitions to our team. These transactions further our acquisition strategy of targeted densification in our existing markets," said Hanger President/CEO Thomas Kirk. "As with our previous acquisitions, we financed our purchase with internally generated cash flows and expect them to be accretive to earnings after the completion of the initial integration period."
Hanger provides orthotic and prosthetic patient care services.
• OmniSonics Medical Technologies (Wilmington, Massachusetts), a developer of devices for use in the treatment of vascular disease, reported that it has entered into a licensing and development agreement with Boston Scientific (Natick, Massachusetts) for technology to treat thromboembolic acute ischemic stroke. Treatment of this type of stroke represents a significant unmet clinical need, as only 10% of the more than 600,000 stroke patients in the U.S. receive therapy each year, the companies said.
The two companies will work jointly to develop an application of OmniSonics' OmniWave technology for the treatment of acute ischemic stroke. The OmniWave technology, which delivers low-power ultrasonic energy to remove thrombus (or a blood clot), recently launched in the U.S. for the treatment of clots in the peripheral vasculature. Boston Scientific will provide funding based on the achievement of development milestones and has an option to acquire the technology as well as exclusive rights to the intellectual property for the treatment of acute stroke.
• Kindred Healthcare (Louisville, Kentucky) reported its plans to dispose of two unprofitable long-term acute-care hospitals.
Last week, the company signed a definitive agreement to acquire for resale the real estate associated with the 79-bed Kindred Hospital Northeast-Braintree (Braintree, Massachusetts) from the current lessor, Health Care REIT (Toledo, Ohio), for about $22.3 million. Upon completion of the transaction, the company said it intends to close the hospital and sell the related real estate as soon as practicable.
The company also is currently marketing Kindred Hospital Modesto (Modesto, California). The hospital operations have been closed, but the company continues to operate a co-located 64-bed skilled nursing unit.
These two facilities reported aggregate revenues of about $37 million and $18 million for the year ended Dec. 31, 2007, and the six months ended June 30, 2008, respectively, while aggregate pretax operating losses associated with these facilities (including an asset impairment charge related to the Modesto facility of about $5.1 million recorded in 2Q08) approximated $8 million and $9.3 million for the same respective periods.
In the aggregate, the company said it expects to report a pretax loss ranging from $35 million to $40 million in connection with these divestitures, including the write-off of about $15 million of intangible assets. Dependent upon the timing of certain events, Kindred said it expects to report a substantial portion of the loss on sale in 3Q08 and the remainder, if any, in 4Q08.