07.23.08
$9.5 Billion ($39.4B total)
Gerard Kleisterlee, President, CEO and Chairman
Pierre-Jean Sivignon, Exec. VP and CFO
Stephen H Rusckowski, Exec. VP and CEO, Philips Healthcare
Amsterdam, The Netherlands
Much like some other companies on this year’s list of top companies, the medical device unit of Philips has gone through an organizational and brand transformation. Philips now calls its Medical Systems division Healthcare, which, according to the company, brings together Medical Systems and its growing Home Healthcare business—formerly Consumer Healthcare Solutions.
With this move, Philips Healthcare, headquartered in Andover, MA, wants to bridge both ends of the healthcare cycle.
“We believe the link bridging the hospital and the home is going to be increasingly important in delivering better patient outcomes while containing costs,” said CEO Gerard Kleisterlee. “Given the unsustainably high healthcare costs in many markets and increased emphasis on both efficiency and patient comfort, we are seeing a gradual shift towards diagnosing, treating and monitoring patients in their homes rather than in hospitals. Demand for home healthcare is also growing due to the increasing number of elderly people and the rising incidence of chronic diseases.”
But Philips isn’t just paying the move lip service. This year’s report about the company will read more like a laundry list of deals, as the company made a number of key acquisitions throughout the year to align operations with its new corporate vision.
Its blockbuster buyout for 2007 was the purchase of Murrysville, PA-based Respironics, a manufacturer of respiratory and sleep therapy products (covering both hospital and home health markets) for approximately $5.1 billion in cash. The deal was announced before the end of fiscal 2007 and closed in the first quarter of fiscal 2008.
“A core part of Philips’ healthcare strategy is to take a leading position in the high-growth sector of home healthcare,” said Steve Rusckowski, CEO of Philips Healthcare. “This acquisition, with its significant strategic and financial benefits to Philips Healthcare, is another important step in carrying out this strategy.”
John L. Miclot, president and CEO of Respironics, said partnering with Philips would “create additional growth opportunities for our company, and we believe that our company will benefit significantly by being part of a larger, growing and dynamic organization.”
For its 2007 fiscal year, Respironics reported sales of approximately $1.2 billion. Almost three-quarters of Respironics’ sales were achieved in the company’s Sleep and Home Respiratory business, which consists of diagnostic and therapeutic devices for sleep-disordered breathing and chronic respiratory diseases. The remainder is in the hospital setting and includes noninvasive and invasive ventilation, respiratory monitoring, neonatal products and respiratory drug-delivery technology for the treatment of respiratory diseases.
Philips also made a number of other important purchases.
In two more December deals, Philips announced a merger agreement with clinical IT and service provider VISICU, based in Baltimore, MD, and Emergin, in Boca Raton, FL—both companies add to Philips’ patient monitoring business. VISICU, purchased for $430 million, makes clinical IT systems that enable critical-care medical staff to actively monitor patients in hospital intensive care units from remote locations. The merger will boost the creation of products to give more clinical decision support to hospital staff, while allowing personnel to monitor greater numbers of critically ill patients, according to Philips. Emergin develops software that rapidly transmits medical alarm signals throughout hospitals. It had sales of approximately $18 million in 2007.
In October, Philips snatched up Windsor, CT-based Raytel Cardiac Services from SHL Telemedicine Ltd. for approximately $110 million in cash. Raytel develops home cardiac-monitoring systems that doctors prescribe to heart patients. The company will be integrated into Home Health within Philips.
In August, Philips bought El Paso, TX-based XIMIS, a healthcare IT company that focuses on systems to help reduce errors and streamline workflow in hospital radiology wards. Details of the transaction were not disclosed.
Finally, Brazil’s leading general X-ray manufacturer, VMI-Sistemas Medicos, was acquired in June. Philips plans to boost VMI’s Brazilian exports to other countries in Latin America, which currently represents approximately 5% of the newly acquired division’s business.
In a divestiture among all the acquisitions, Philips sold 70% ownership interest in MedQuist (a provider of medical transcription and clinical documentation technology and services) to CBaySystems Holdings Ltd. As the company restructured, Philips considered MedQuist a “non-core holding.”
For fiscal 2007, the Healthcare division reported $9.5 billion in total sales (based on conversion after at the end of the reporting period), a nominal increase compared with last year (0.3% in euros). Excluding the 2% positive impact of portfolio changes and the 5% unfavorable currency effect, comparable sales growth was 4%. Earnings before interest taxes and amortization (EBITA) were down approximately 1.3% to $1.3 billion. Particularly strong growth in Ultrasound and Monitoring and Customer Services partly was offset by a decline in Imaging Systems, which was negatively affected by the continued softening of the imaging market (partly due to the Deficit Reduction Act of 2005, which mandated imaging reimbursement cuts) in the United States, according to the company.
For the beginning of 2008 (as of press time, only first-quarter results were available), sales were up marginally (3% in euros), compared with the first quarter of 2007, to $2.3 billion. Higher earnings in Ultrasound, Patient Monitoring and Customer Services—mainly driven by margin improvements and cost reductions—partially were offset by lower earnings at Imaging Systems. EBITA for the quarter (ended March 31) was up 1.7% to $191 million. For full-year 2008, acquisition and integration charges related to Respironics, VISICU and Emergin are expected to negatively impact EBITA by approximately $158 million, the company estimated.
KEY EXECUTIVES:
Gerard Kleisterlee, President, CEO and Chairman
Pierre-Jean Sivignon, Exec. VP and CFO
Stephen H Rusckowski, Exec. VP and CEO, Philips Healthcare
NO. OF EMPLOYEES:
27,441 (118,098)
GLOBAL HEADQUARTERS:
Amsterdam, The NetherlandsMuch like some other companies on this year’s list of top companies, the medical device unit of Philips has gone through an organizational and brand transformation. Philips now calls its Medical Systems division Healthcare, which, according to the company, brings together Medical Systems and its growing Home Healthcare business—formerly Consumer Healthcare Solutions.
With this move, Philips Healthcare, headquartered in Andover, MA, wants to bridge both ends of the healthcare cycle.
“We believe the link bridging the hospital and the home is going to be increasingly important in delivering better patient outcomes while containing costs,” said CEO Gerard Kleisterlee. “Given the unsustainably high healthcare costs in many markets and increased emphasis on both efficiency and patient comfort, we are seeing a gradual shift towards diagnosing, treating and monitoring patients in their homes rather than in hospitals. Demand for home healthcare is also growing due to the increasing number of elderly people and the rising incidence of chronic diseases.”
But Philips isn’t just paying the move lip service. This year’s report about the company will read more like a laundry list of deals, as the company made a number of key acquisitions throughout the year to align operations with its new corporate vision.
Its blockbuster buyout for 2007 was the purchase of Murrysville, PA-based Respironics, a manufacturer of respiratory and sleep therapy products (covering both hospital and home health markets) for approximately $5.1 billion in cash. The deal was announced before the end of fiscal 2007 and closed in the first quarter of fiscal 2008.
“A core part of Philips’ healthcare strategy is to take a leading position in the high-growth sector of home healthcare,” said Steve Rusckowski, CEO of Philips Healthcare. “This acquisition, with its significant strategic and financial benefits to Philips Healthcare, is another important step in carrying out this strategy.”
John L. Miclot, president and CEO of Respironics, said partnering with Philips would “create additional growth opportunities for our company, and we believe that our company will benefit significantly by being part of a larger, growing and dynamic organization.”
For its 2007 fiscal year, Respironics reported sales of approximately $1.2 billion. Almost three-quarters of Respironics’ sales were achieved in the company’s Sleep and Home Respiratory business, which consists of diagnostic and therapeutic devices for sleep-disordered breathing and chronic respiratory diseases. The remainder is in the hospital setting and includes noninvasive and invasive ventilation, respiratory monitoring, neonatal products and respiratory drug-delivery technology for the treatment of respiratory diseases.
Philips also made a number of other important purchases.
In two more December deals, Philips announced a merger agreement with clinical IT and service provider VISICU, based in Baltimore, MD, and Emergin, in Boca Raton, FL—both companies add to Philips’ patient monitoring business. VISICU, purchased for $430 million, makes clinical IT systems that enable critical-care medical staff to actively monitor patients in hospital intensive care units from remote locations. The merger will boost the creation of products to give more clinical decision support to hospital staff, while allowing personnel to monitor greater numbers of critically ill patients, according to Philips. Emergin develops software that rapidly transmits medical alarm signals throughout hospitals. It had sales of approximately $18 million in 2007.
In October, Philips snatched up Windsor, CT-based Raytel Cardiac Services from SHL Telemedicine Ltd. for approximately $110 million in cash. Raytel develops home cardiac-monitoring systems that doctors prescribe to heart patients. The company will be integrated into Home Health within Philips.
In August, Philips bought El Paso, TX-based XIMIS, a healthcare IT company that focuses on systems to help reduce errors and streamline workflow in hospital radiology wards. Details of the transaction were not disclosed.
Finally, Brazil’s leading general X-ray manufacturer, VMI-Sistemas Medicos, was acquired in June. Philips plans to boost VMI’s Brazilian exports to other countries in Latin America, which currently represents approximately 5% of the newly acquired division’s business.
In a divestiture among all the acquisitions, Philips sold 70% ownership interest in MedQuist (a provider of medical transcription and clinical documentation technology and services) to CBaySystems Holdings Ltd. As the company restructured, Philips considered MedQuist a “non-core holding.”
For fiscal 2007, the Healthcare division reported $9.5 billion in total sales (based on conversion after at the end of the reporting period), a nominal increase compared with last year (0.3% in euros). Excluding the 2% positive impact of portfolio changes and the 5% unfavorable currency effect, comparable sales growth was 4%. Earnings before interest taxes and amortization (EBITA) were down approximately 1.3% to $1.3 billion. Particularly strong growth in Ultrasound and Monitoring and Customer Services partly was offset by a decline in Imaging Systems, which was negatively affected by the continued softening of the imaging market (partly due to the Deficit Reduction Act of 2005, which mandated imaging reimbursement cuts) in the United States, according to the company.
For the beginning of 2008 (as of press time, only first-quarter results were available), sales were up marginally (3% in euros), compared with the first quarter of 2007, to $2.3 billion. Higher earnings in Ultrasound, Patient Monitoring and Customer Services—mainly driven by margin improvements and cost reductions—partially were offset by lower earnings at Imaging Systems. EBITA for the quarter (ended March 31) was up 1.7% to $191 million. For full-year 2008, acquisition and integration charges related to Respironics, VISICU and Emergin are expected to negatively impact EBITA by approximately $158 million, the company estimated.