San Diego-based ResMed Inc. (NYSE: RMD), the world’s leading tech-driven medical device company and innovator in sleep-disordered breathing and respiratory care, has agreed to acquire Atlanta-based Brightree, a leader in business management and clinical software applications, for $800 million in cash. Brightree is privately held and majority-owned by global investment firm Battery Ventures.
Brightree’s cloud-based software helps customers improve clinical and business performance in the post-acute care industries of home/durable medical equipment (HME/DME), home health, and hospice – all areas with high prevalence of sleep-disordered breathing, chronic obstructive pulmonary disease (COPD), neuromuscular disease, and other chronic diseases.
“This acquisition furthers ResMed’s position as the leading tech-driven medical device company and gives our customers new tools to help them increase operational efficiency and improve cash-flow while delivering best-in-class patient care,” said Mick Farrell, CEO of ResMed. “ResMed is already the recognized global leader in remote patient monitoring and connected healthcare solutions. This acquisition will enable us to add to our portfolio of digital solutions to drive operational excellence and improve outcomes for patients, providers and payers.”
“The Brightree team is very excited to join forces with ResMed to help post-acute care providers navigate the inherent complexities of the healthcare system and ensure that patients get the care they need,” said Dave Cormack, president and CEO of Brightree.
ResMed will fund the acquisition primarily with debt. Brightree had net sales of approximately $113 million and EBITDA of about $43 million in calendar year 2015.
The transaction is expected to be immediately accretive to gross margins and non-GAAP diluted earnings per share after close and beyond. The transaction includes an estimated $300 million from an anticipated future tax benefit, which is expected to positively impact ResMed cash flows over 15 years. Including the present value of these expected tax benefits, the purchase price of $800 million represents a valuation multiple of 13.5 times 2015 EBITDA.
On completion of the transaction, Brightree will continue to operate as a separate entity under the Brightree brand name. The company will be managed independently, with its headquarters remaining in Atlanta. ResMed expects Brightree employees, including Dave Cormack, to continue in their current roles.
Building healthcare informatics offerings is central to ResMed’s growth strategy and its goal of helping customers improve patient quality of life, slow the progression of chronic disease and lower overall healthcare system costs.
Brightree is the leading business management and clinical software application used by ResMed customers. Its suite of products and solutions complements ResMed’s Air Solutions platform and enhances ResMed’s delivery of future products and solutions to customers and other market segments. ResMed’s potential growth opportunities as a result of the acquisition include expanding into the home health and hospice segments.
The transaction is expected to close by the end of the fourth quarter of fiscal year 2016, subject to customary closing conditions and regulatory approvals.
DLA Piper is serving as ResMed’s legal counsel. William Blair & Company is serving as exclusive financial advisor to Brightree, and Cooley LLP is serving as its legal counsel.
Brightree serves more than 2,500 organizations in the HME, home health, hospice, orthotic and prosthetic, HME pharmacy, home infusion and rehabilitation home care segments. Brightree’s solutions follow the natural workflow of providers to automate and improve how they manage their businesses, serve patients and protect reimbursements. The company is ranked one of the top 100 healthcare IT companies in the U.S. on the prestigious Healthcare Informatics 100 (HCI 100) list.
The global team at ResMed is united in the commitment to change millions of lives with every breath. With more than 4,000 employees and a presence in more than 100 countries, the company has pioneered innovative devices for the diagnosis, treatment and management of sleep-disordered breathing, COPD and other chronic conditions for more than 25 years. ResMed’s world-leading products and connected healthcare solutions improve the quality of life for millions of patients worldwide, reduce the impact of chronic disease, and save healthcare costs. ResMed Inc. was founded in 1989 and is headquartered in San Diego, California.