Dive Brief:
- Contract manufacturer Integer Holdings has agreed to sell its Electrochem power business to Ultralife for $50 million to better focus on the medical device market.
- Integer’s medtech markets include cardiac rhythm management, neuromodulation, structural heart, electrophysiology and vascular. The company’s Electrochem business specializes in custom battery products for the energy, military and environmental sectors.
- “Following the transaction, Integer will be a pure-play medical business with additional cash to pay down debt and execute our inorganic growth strategy,” CEO Joe Dziedzic said in a statement Monday.
Dive Insight:
As a contract development and manufacturing organization, Integer supplies systems and components such as catheters, guidewires and implantable batteries to a range of medical device brands.
“Integer effectively services the entire medical device industry, including large incumbents like Abbott, Boston Scientific, and Medtronic,” Citi analyst Joanne Wuensch said in a Monday note to clients.
Smaller-sized acquisitions in targeted medtech markets have been key to the company’s growth strategy. Integer has completed a series of deals worth almost $550 million in 2 ½ years, Dziedzic said on an earnings call in July, and continues to “have a very robust pipeline of opportunities.”
Integer said proceeds from the sale of Electrochem will help pay down its outstanding debt.
The company is working to shift its business to faster-growth areas through portfolio management, Truist Securities analyst Richard Newitter said in a report after the Electrochem deal was announced. Paying down higher interest debt in an easing interest rate environment should give Integer greater flexibility in its capital structure, Newitter wrote.
The Electrochem sale makes more capital available for future acquisitions, analysts said. “We believe divesting this asset enables management to focus exclusively on its core medical segments, while also freeing up some balance sheet capacity to resume its M&A strategy,” KeyBanc Capital Markets analyst Brett Fishbin wrote in a report.
Integer expects the Electrochem deal to close by the end of October.