Navamedic acquires Swedish medtech company Observe Medical
Navamedic ASA announced today that the Company has acquired Observe Medical International AB (OM). The initial purchase price is NOK 35 million, with additional payments dependent on performance in the coming years.
Patients in intensive care need constant medical attention to keep the body functioning. Pulse, blood pressure and urine production are key parameters being monitored. Almost all patients receiving intensive care have a urinary catheter inserted, and the production of urine is closely monitored in order to detect potential organ failure. Today's methods for monitoring the urine production are manual, time consuming and might provide inaccurate readings. Observe Medical has developed an automated, digital urine meter Sippi® for use in intensive care wards. The product was launced in March 2015 in the German and Nordic markets and has been well received by initial users, and a strong sales growth is expected.
Sippi® saves time for health care personnel, while also improving accuracy and patient safety. Sippi® has been under development since 2009, and has received approval for hospital use in Europe and the United States. OM estimates that 20 million traditional urine monitoring kits are sold annually, representing a global market of approximately NOK 2 billion. Sippi® represents a new patent pending technological solution to urine monitoring with improved user friendliness and accuracy
"Navamedic's strategy is to expand the product portfolio in areas where our commercialization capabilities in specialized healthcare adds value, building on our strong relationships with hospitals throughout the Nordic markets. The acquisition of Observe Medical is an important milestone in achieving this, while adding substantial market opportunities in other geographies, positioning our company for continued growth" said CEO Tom Rönnlund. "The acquisition of OM also creates a new business area for Navamedic where we are the product- and IPR-owner for a product with global reach", CEO Rönnlund continued.
Navamedic aims at establishing OM's product line as the global niche leader, through building a network of distributors in key markets. The global intensive care capacity is more than 360,000 hospital beds. Germany is the largest single market in Europe, with 24,000 intensive care beds,and Sippi® was launched there earlier this year. Navamedic will continue the launch in other European markets and also eventually develop the business into other global markets.
Navamedic is acquiring 100% of the outstanding shares in Observe Medical AB, key investors are the Danish venture fund Seed Capital and the Company's founders. Of the NOK 35 million initial payment, NOK 25 million is a cash consideration, while NOK 10 million will be paid through the issue of new Navamedic shares. According to the agreement, the share price for the new shares will be the volume-weighted average price in the 30 days period from 15 days prior to the announcement of the transaction until 15 days after the announcement. The number of new shares issued is expected to be within the Board of Director's mandate to increase share capital.
Furthermore, a seven per cent sales royalty based on annual Sippi® sales above NOK 7.5 million, increasing to 15 per cent on sales exceeding NOK 100 million per year, will be paid to the former shareholders of OM for the years 2016-2023.
Finally, six milestone payments based on set sales targets for the product. Sales targets need to be reached within end of 2026. Total possible milestone payment will over the next 11 years potentially reach a maximum of NOK 125 million, in addition to sales royalties. The six potential milestone payments will be triggered as follows:
a) NOK 6 million upon accumulated sales in excess of NOK 50 million
b) Additional NOK 6 million upon accumulated sales in excess of NOK 75 million
c) Additional NOK 6 million upon accumulated sales in excess of NOK 100 million
d) Additional NOK 13 million upon accumulated sales in excess of NOK 300 million
e) Additional NOK 34 million upon accumulated sales in excess of NOK 600 million
f) Additional NOK 60 million upon accumulated sales in excess of NOK 900 million
Navamedic has secured bank financing of the initial cash consideration. Upon completion, Observe Medical will be a wholly owned subsidiary of Navamedic. OM's founders and management will remain with the company. OM is expected to provide a positive cash flow from 2017. Until then, Navamedic's cash flow and established credit lines will secure sufficient working capital for the development of OM.
Key figures Observe Medical AB
| SEK 1,000 | 2014 | 2013* | 2012 |
| Sales | 89 | 254 | 0 |
| Operating result | -16 360 | -14 860 | -13 862 |
| EBT | -16 543 | - 14 991 | -13 896 |
| Net result | -16 622 | -14 991 | -13 896 |
| Fixed assets | 4 062 | 3 366 | 3 224 |
| Current assets | 2 027 | 5 759 | 5 356 |
| Equity | 830 | 4 250 | 5 338 |
| Long term debt | 815 | 1 169 | 642 |
| Short term debt | 4 444 | 3 706 | 2 600 |
| Total balance | 6 090 | 9 125 | 8 580 |
*) Sales 2013 includes test sales of the beta version of the product.
Management Observe Medical AB
Magnus Emmoth (b. 1966), CEO
MBA from Kellogg School of Management, Chicago, Illinois, USA. Broad experience from the finance industry and medtech companies. One of OM's three founders.
Mikael Charléz (b 1962), Marketing and Sales Manager
Business graduate from the University of Gothenburg's School of Business, Economics and Law, Sweden.16 years of marketing and business development experience in the health care industry. One of OM's three founders.
Mikael Löfgren (b.1974), Development Manager
University degree in electrotechnical engineering from the Faculty of Engineering at Lund University, Sweden. Long experience from the medtech industry with particular expertise in sensor technology. One of OM's three founders.
Annette Colin Lövgren (b.1965), Finance manager
Educated in finance, marketing and law at Lund University, Sweden. Broad experience from the biotech and medtech industry.
Arctic Securities AS acts as financial advisor in connection with the acquisition.
This is an Extended Release in accordance with Oslo Børs' Continuing Regulations of Stock Exchange Listed Companies, section 3.4. An Information Memorandum, presenting the acquisition in further detail as required by Oslo Børs, will be published at a later date.
For further information, please contact CEO TomFor further information, please contact CEO Tom Rönnlund, telephone +46 727 320 321 or CFO Bjørn Lindholt, telephone +47 9300 6601.
Navamedic ASA is a Norwegian pharmaceutical products company, delivering products to hospitals, pharmacies and health products stores in the Nordic and Benelux markets. The Company operates three business areas; Pharma Products, Medical Nutrition and Consumer Care based on its relationship with a number of pharmaceutical products manufacturers. Navamedic is listed on the Oslo Stock Exchange (ticker: NAVA).