$55-Million Deal Continues Urohealth Buying Binge

NEWPORT BEACH — Urohealth Systems Inc., continuing its rapid expansion through acquisitions, has agreed to purchase a privately held medical products firm in Michigan for $55 million in cash and stock.

Richard-Allan Medical Industries Inc. in Richland, outside Kalamazoo, is the ninth acquisition for Urohealth in the past year.

“Current cost containment trends in health care dictate the need for offering minimally invasive, cost-effective treatments with shorter recovery times,” Charles A. Laverty, Urohealth’s chairman and chief executive, said in a prepared statement.

Executives weren’t available for comment.

Richard-Allan makes and distributes disposable products for gynecological and general surgery; Urohealth produces disease-specific products for urological, gynecological and general surgery.

Urohealth is paying $27.5 million in cash and the rest in stock to buy Richard-Allan, which had $21 million in sales for the fiscal year that ended June 30.

Urohealth has been on a buying spree since Laverty took over the small biomedical firm two years ago when it was called Davstar Industries Ltd.

Last year, in a $60-million stock deal--its largest purchase--it acquired Osbon Medical Systems Ltd., an Augusta, Ga., firm that manufactures devices for treatment of impotence.

Urohealth agreed this year to acquire Intermed Inc., a New Jersey manufacturer of urological products, and to buy three product lines of Ximed Medical Systems.

Urohealth, which lost $18.5 million for its fiscal year that ended June 30, 1995, and $18 million for its first nine months in fiscal 1996, is relying on a recent public offering to fund its expansion.

In May, investors led by former Drexel Burnham executive Leon Black and an affiliate of Chase Manhattan Bank injected $50 million into the company for new stock that gave them a 25% stake in the company.