Edwards OKs Sale of Surgical Division
Edwards Lifesciences Corp., shedding under-performing businesses and paying down its debts, said Monday that it has agreed to sell a surgical-services unit to a German company for $45 million.
The Irvine maker of artificial heart valves said it is selling the medical-services business to Fresenius Medical Care to focus on its faster-growing heart valve business and other cardiovascular products.
Most of the proceeds from the sale, which is expected to close at the end of the month, would go toward reducing the company’s $414-million debt.
Edwards’ so-called perfusion unit, Cardiovascular Resources Inc. in San Diego, provides hospitals with clinicians who operate heart-lung machines during open-heart surgery.
The unit posted sales of $30 million in the first quarter and expects to report similar quarterly revenue throughout the year. The division employs 800 of Edwards’ 5,300 workers, and Edwards said no layoffs are expected.
Andrew T. Jay, a doctor and medical technology analyst at First Union Securities in Boston, applauded the deal. He said the company will shave $750,000 off its quarterly interest payment of $7 million, which should give it flexibility in seeking financing for future acquisitions.
Edwards, which has sold two other units in the last year, said it would take a pretax charge of $100 million in the second quarter, mostly related to the pending sale.
In September, Edwards sold its unprofitable Bentley line to Germany’s Jostra for about $30 million. That line of products supports the heart when it is stopped during open-heart surgery. But the business floundered as surgeons embraced a procedure that works while the heart is beating.
Earlier, Edwards sold its Novacor unit to World Heart Corp. in Ottawa in a stock deal worth $59 million. The unit makes a cardiac device for patients with congestive heart problems.
Edwards Chief Executive Michael A. Mussallem said the company’s earnings are on track to grow 20% this year over last year. In November, Edwards reduced its profit target from a 30% growth rate largely because of weak European currency, which caused its products to become more expensive abroad.
Shares of Edwards, the former cardiovascular division of Baxter International Inc., gained 21 cents Monday to close at $24.07 on the New York Stock Exchange.
