Dr. Gust Bardy, founder of Bardy Diagnostics. (Bardy photo)
Medical technology company Hill-rom has dismissed its attorneys after initially backing off a $ 375 million acquisition of Seattle startup Bardy Diagnostics. The deal to acquire Bardy will now continue, Hill-rom CEO John Groetelaars said in a call to investors on July 30th.
Founded in 2013, Bardy sells a lightweight, non-invasive cardiac monitor patch that helps detect arrhythmias. This product made the company an attractive acquisition for Hill-rom – at least in January when the deal was announced.
However, shortly after that announcement, Medicare reimbursement rates for Bardy’s device dropped from $ 365 to $ 40 to $ 50 in a large region of the United States, although they have since climbed to over $ 100.
Days before the deal was closed, on February 21, Hill-rom attempted to pull out, according to a report from MedTech Dive. But the publicly traded company, which has 10,000 employees, was foiled after months of litigation by a July 9 ruling in a Delaware court. The court ruled that the takeover should continue.
Hill-rom said it would appeal to the Delaware Supreme Court. But Hill-rom has now decided to proceed with the deal.
“We have now come to the conclusion that the best way for our company and for our shareholders is to close the transaction on the previously announced terms,” said Groetelaars in the conference call. “Once we complete the transaction, we will be in a better position to work directly with the CMS and Medicare administrative contractors on reimbursement decisions.”
Bardy’s device sits close to the skin of the chest, and the company says it captures clearer, more accurate heart rhythms than competing electrocardiography (EKG) monitors. Founded by Gust Bardy, a clinical professor of medicine and cardiology at the University of Washington, the startup was named Hardware of the Year at the 2019 GeekWire Awards. Bardy sold his previous company, Cameron Health, to Boston Scientific in 2012.
Bardy’s ambulatory carnation monitor. (Bardy diagnosis photo)
Founded in 1915, Hill-rom originally sold hospital beds and medical equipment, but has expanded into software products and digital health-related services. The acquisition will complement Hill-rom’s existing cardiology products, including cardiac exercise, Holter and resting ECG machines.
“Although this did not turn out as originally planned, we believe that there is a compelling strategic rationale for the takeover,” said Groetelaars in the conference call. “Bardy’s differentiated cardiology diagnostic platform is complementary and reinforces Hill-Rom’s existing cardiology portfolio and our vision of connected care.” Hill-rom expects the deal to close on or about August 6, according to an SEC filing is completed.
The deal is one of several recent ones in the heart monitoring space. In December, Philips bought BioTelemetry, which remotely monitors and diagnoses heart patients, for $ 2.8 billion, and in January, Boston Scientific bought portable heart maker Preventice for $ 1.2 billion.
Hill-rom’s share price is up more than 10% in the last month, although it has fallen slightly in the past few days; The Wall Street Journal reported that Baxter is in early talks about the Hill-rom acquisition.