The additional revenue that ResMed has picked up in the wake of competitor Philips’ long-lasting ventilator recall appears to be burning a hole in the devicemaker’s pocket.
Fresh off a fiscal quarter that brought in nearly $865 million in revenue—about 5% of which came directly from picking up Philips’ slack left in the market—San Diego-based ResMed has offered up $1 billion to expand its European footprint.
That’ll buy Medifox Dan, a software developer based in Hildesheim, Germany, from its parent company in the private equity giant Hg. Medifox’s staff of 600, as well as its existing management structure and physical locations, will stay in place, while its co-managing directors, Thorsten Schliebe, Ph.D., and Christian Städtler, will retain their titles even as they begin reporting to Bobby Ghoshal, president of ResMed’s software-as-a-service division.
ResMed said it’ll use existing credit facilities to finance the acquisition, which it plans to close by the end of the second quarter of its 2023 fiscal year. Once the deal has been sealed, ResMed is expecting the move to immediately begin adding to its earnings per share.
Medifox Dan’s portfolio includes software to help medical facilities like therapeutic practices and welfare facilities manage their patients and practices, with both inpatient- and outpatient-specific offerings. It has also developed digital programs to help train and educate both professional and family caregivers.
Those tech-based offerings will slot easily into ResMed’s existing slate of out-of-hospital software solutions. In recent years, ResMed has acquired a handful of U.S.-based developers of software that helps manage patient records, customer service, scheduling, billing and more for post-acute healthcare providers like skilled nursing and senior living facilities and home health and hospice providers.
The acquisition of Medifox will build on ResMed’s existing footprint in Germany, which has so far centered on its role as a maker of CPAP machines, ventilators and other devices to treat sleep apnea and chronic obstructive pulmonary disease.
“We’re seeing greater adoption of digital solutions across Germany as its population continues to age and severe staffing shortages continue to challenge German care providers. Medifox Dan—and ResMed—are well positioned to help providers across major out-of-hospital care settings meet rising demands and ultimately help improve patient outcomes,” said ResMed’s Ghoshal.
Medifox will join—and bring its $83 million in annual net revenues to—a segment at ResMed that has consistently seen high single-digit growth for the last few quarters, clocking in at just over $101 million in the most recent fiscal period.
That same period saw the company rake in lower-than-expected sales derived directly from the Philips recall, falling somewhere between $35 million and $45 million. That led ResMed to slash about $100 million from its original post-recall earnings estimates; it’s now expecting to take in between $200 million and $250 million in those sales for all of fiscal year 2022.