ICU Medical Inks Deal for Excelsior Medical Corp.

San Clemente, Calif.-based ICU Medical Inc., a maker of medical devices used in infusion therapy, oncology and critical care applications, is acquiring Excelsior Medical Corp., a manufacturer of devices used to disinfect and protect access into a patient’s bloodstream.

Excelsior has developed the SwabCap and SwabFlush products and also sells pre-filled saline and heparin flush syringes. Excelsior is owned by RoundTable Healthcare Partners, an private equity firm focused on the healthcare industry.

In addition to the $59.5 million purchase price, ICU signed a definitive agreement to sell the operating assets of SwabFlush and the pre-filled saline and heparin flush syringes to Medline Industries Inc. for $27 million. ICU Medical will become a supplier for Medline’s SwabFlush business with a long-term exclusive supply contract.

Medline makes and distributes medical supplies. Headquartered in Mundelein, Ill., the company offers more than 350,000 medical devices and support services through more than 1,200 direct sales reps.

SwabCap is a disposable cap designed to disinfect needle-free connectors with 70-percent isopropyl alcohol when attached to an intravenous (IV) catheter. The SwabCap product line complements the ICU Medical Clave line of needle-free connectors, ICU executives said.

According to ICU Medical, as the only device that combines a pre-filled saline flush syringe and disinfection cap, SwabFlush is designed to help improve compliance with disinfection protocols. SwabCap is built into the syringe plunger, making it immediately and conveniently available to nurses after they flush an IV line.

ICU officials said the addition of SwabCap will “enhance ICU Medical’s infusion therapy product offering across the company’s existing direct and OEM business lines as well as open new customer opportunities globally.” ICU Medical will sell the SwabCap product line directly to customers via its existing domestic and international distribution channels.

“The SwabCap used in conjunction with the Clave, offers a best in class solution for clinicians,” said Alison Burcar, vice president and general manager of ICU Medical’s Infusion Systems Division. “We have been studying the category for a long time and believe this acquisition is the most effective way to enter the market, where we can also leverage current and future innovations.”

“Our ability to work creatively with ICU Medical is a great outcome for all parties,” said Dante Tisci, division president of Medline Industries’ Dynacor Division. “We believe we can improve overall economic and clinical value of the flush syringe market with our entry, and we are excited about growing a product like SwabFlush. We are pleased to have a long-term supply agreement with ICU Medical for the SwabCap component of this product.”

The transaction was funded with cash on hand and is expected to be neutral to earnings in 2015. For 2016, the transaction is expected to add $18 to $20 million in revenue and contribute minimally to earnings per share. After one year, the transaction is expected to provide more than a 10 percent return on invested capital.

ICU Medical’s product line includes custom IV systems, closed delivery systems for hazardous drugs, needle-free IV connectors, closed blood sampling systems, and hemodynamic monitoring systems.