Avanos Medical (NYSE:AVNS) announced today that it entered into a definitive agreement to sell its respiratory health business.
The Alpharetta, Georgia–based medtech company agreed to sell the unit to SunMed Group Holdings, LLC. SunMed, headquartered in Grand Rapids, Michigan, manufactures and distributes consumable medical devices. Its product portfolio for anesthesia and respiratory care spans the continuum of care, ranging from first responders to hospitals and home care.
Avanos Medical said its respiratory business divestiture is a “key component” of its three-year transformation process. The company aims to focus its portfolio on markets where it feels well-positioned to succeed.
“Earlier this year, we shared our strategy and intent to optimize our portfolio by focusing on higher-margin and higher-growth markets – particularly in our digestive health and pain management & recovery product categories,” said Joe Woody, Avanos Medical CEO. “We expect that divesting the respiratory health business – along with our ongoing SKU rationalization initiatives and future M&A opportunities – will allow us to meaningfully transform the financial profile of Avanos.”
Details of the Avanos Medical respiratory health business divestiture
The transaction includes substantially all assets primarily used in Avanos’ respiratory health business. That includes fixed assets, inventory, intangible assets and long-term leases for two manufacturing facilities. Those facilities are located in Mexico (Magdalena and Nogales).
Intangible assets in the deal include the Ballard, Microcuff and endOclear brands. The company plans to provide transition services after closing as SunMed works to integrate the business into its portfolio.
Avanos Medical plans to use proceeds from the transaction to enhance its balance sheet flexibility. The company also expects added capacity to deploy capital for M&A efforts in core categories and markets. Expected to close in late 2023, the deal remains subject to customary closing conditions. Avanos declined to disclose the financial terms but plans to share additional details of the transaction later this month.
“SunMed has deep experience and strong expertise in the global respiratory health consumables market, making it an ideal home for Avanos’ RH business,” said Hank Struik, SunMed CEO. “We believe Avanos’ Ballard closed-suction technology will be a powerful addition to SunMed’s broad and growing portfolio.”
