AddLife acquires Healthcare 21 Group, an Irish company with sales of around SEK 1.7 billion

AddLife is continuing its expansion in Europe by acquiring Healthcare 21 Group (HC21), a leading independent Life Science distributor with operations in Ireland and the UK. HC21 has sales of approximately EUR 171 million and around 450 employees. The initial purchase price totals EUR 240 million, of which 74 percent is being paid in cash and 26 percent is being paid using newly issued class B shares. An additional consideration of a maximum of EUR 5 million may also become payable. The acquisition has taken place today on 12 April, 2021.

The acquisition of HC21 is a strategic milestone and establishes AddLife in Ireland and the UK. The acquisition is in line with AddLife’s strategy of expanding in relevant niches in Europe. HC21 gives us access to a very attractive customer base in clinical segments in which we have a high level of expertise and a portfolio of proprietary brands.

HC21 is a leading independent distributor that offers solutions and high-quality products, adds customer value with its high level of clinical expertise, and provides services to public and private customers. The Group conducts business in 15 therapeutic segments, where 50 per cent of sales pertain of products for emergency care, primary and home healthcare, diagnostics and surgery as well as services. The Group has a supplier base with strong brands. The supplier relationships are longstanding and 95 percent of the agreements are exclusive.

The corporate culture at HC21 is similar to AddLife’s. The responsibility for driving the business is decentralized and close to the customers, with common governance, financial resources and support functions. The culture is characterized by an entrepreneurial spirit and a strong customer focus, with extensive added value being provided via technical service and support. HC21 is well established in Ireland and the UK, with agreements in all relevant customer networks. The Group is led by an experienced management team, which will continue to lead the business after the acquisition. The employees have extensive experience and high clinical competence, and can thus support customers in the best possible way. As a result of the acquisition, AddLife will become an even more attractive partner for leading suppliers in our niches and product areas in Europe. The acquisition also creates a framework for selling proprietary products in new markets.  

“I am very enthusiastic about this acquisition. HC21 gives us a solid point of entry and a critical mass in two of Europe’s most attractive Life Science markets. The similarities between our and HC21’s business are striking. We have similar ranges of products and services and both businesses are run based on a decentralised business model that offers value creation and distribution of products and services within selected niches, ” says Kristina Willgård, CEO of AddLife.

“We are incredibly excited about the new opportunities, experience and investment that AddLife brings to the Healthcare 21 Group. Like HC21, AddLife is an experienced specialist provider to the Life Science market segment and offer a long-term perspective, a European presence and a complimentary portfolio of supplier and proprietary brands, which will ultimately enhance our offering to our customers,” says Tara Kearney, CEO of Healthcare 21.
 

Financial
During the 2020 financial year, HC21 recorded sales of approximately EUR 171 million, with Ireland and Northern Ireland accounting for approximately 56 per cent and UK for approximately 44 per cent of the sales. The Group has grown organically and through acquisitions. For 2020, the Group reported positive COVID-19 non-recurring revenue of approximately EUR 6 million. The Group terminated a distribution arm with sales of approximately EUR 15 million in 2020, due to low margins. Pro-forma sales excluding non-recurring revenue are estimated to be approximately EUR 153 million and pro-forma EBITA approximately EUR 18.5 million.

HC21 is being acquired from the company founders, certain senior management and H2 Equity Partners. The initial purchase price is EUR 240 million, of which approximately 74 percent is being paid in cash financed through existing and expanded credit facilities, and approximately 26 percent is being paid using 4,089,742 newly issued class B shares in AddLife. The transaction means that the total number of AddLife shares after the acquisition will be 122,450,250 (118,360,508). The B shares will be transferred and issued through a board decision with the support of authorizations from the Annual General Meeting on May 7, 2020. The transaction also means that AddLife's share capital increases from 60,276,209.62 SEK to 62,358,949.47 SEK. The existing management team will remain with the company and the shares that certain senior management receives in AddLife are subject to a lock-up until 2024 while other sellers are subject to a 12-month lock-up from the date of the takeover, with the customary exceptions

An additional consideration of a maximum of EUR 5 million may become payable by 2024, based on the financial results achieved by the business up until 2023.

HC21 will operate as a separate subgroup and will become part of the Medtech business area. In financial terms, the acquisition means that AddLife’s net sales, which amounted to SEK 5.3 billion in 2020, will increase by approximately 29 percent, totaling around SEK 6.8 billion, and that its EBITA of SEK 802 million will increase by approximately 23 percent, totaling around SEK 985 million. Together with the acquisition of Vision Ophtalmology Group, that took place on 8 April, 2021, AddLife’s net sales will increase to approximately SEK 7.6 billion and its EBITA will increase to around SEK 1.1 billion.

The above figures are to be seen as indicators, and AddLife will provide pro-forma reporting on 28 April, in conjunction with the publication of the Q1 report.
 

Conference call
AddLife will hold a short conference call on Teams at 4 p.m CEST on 12 April. This will also be recorded and made available online.
If this is your first time using Teams, you will be asked to download an app.

To attend the meeting, please click here >>
 

For further information, please contact:
Kristina Willgård, CEO, AddLife AB, +46 (0)705 10 12 23

About Healthcare 21 Group

HC21 is a leading independent distributor that offers solutions and high-quality products, adds customer value with its high level of clinical expertise, and provides services to public and private customers. The Group conducts business in 15 therapeutic segments, with products for emergency care, primary and home healthcare, diagnostics and surgery as well as services accounting for just over 50 percent of sales. HC21 achieved sales of approximately EUR 171 million in the 2020 financial year, with EBITDA of approximately EUR 20 million. The company has about 450 employees and its headquarters are located in Cork, Ireland. HC21 is run in a decentralised way, but has central functions in Ireland for finance, human resources, quality and regulatory in Cork.

AddLife is an independent player in the Life Science industry that offers high-quality products, services and advice to both the private and public sectors, mainly in the Nordic region and rest of Europe. AddLife has about 1,100 employees in some 50 operating subsidiaries. The Group currently has net sales of around SEK 5 billion. AddLife shares are listed on Nasdaq Stockholm.

The information in this press release is of the nature that AddLife AB (publ) is obliged to make public pursuant to Nasdaq Stockholm rulebook for issuers. The information was submitted for publication, through the agency of the contact persons set out above, on 12 April 2021 at 1.45 p.m (CEST).