Physio-Assist, a France-based, privately-held company, develops and manufactures its Simeox technology. Simeox, which currently has availability outside the U.S., is a technology-enabled airway clearance device. It treats bronchiectasis, where the lung’s bronchi become damaged and widened. It often occurs in cystic fibrosis and chronic obstructive pulmonary disease (COPD).
Pulmonary rehabilitation centers use Simeox, although it also offers in-home capabilities. The system has CE mark and other commercial availability in Asia and the Middle East.
“This acquisition aligns with our strategy to diversify our portfolio to globally improve patient lives through respiratory care,” said Nabil Shabshab, Inogen president and CEO. “Simeox imminently expands our product offering in EMEA, and potentially in the U.S. to serve COPD and other chronic disease patients who suffer from bronchiectasis with an innovative, non-invasive, and next-generation airway clearance solution.
“We believe this is a compelling transaction, as it expands our addressable market opportunity, enhances our long-term growth and profitability, and is expected to generate an attractive return on investment.”
The rationale behind acquiring Physio-Assist
Inogen says the acquisition aligns with its strategy to diversify its portfolio and expand market opportunities imminently. The deal also aligns with the company’s long-term financial goals.
According to the company, bringing in Physio-Assist leverages Inogen’s commercial infrastructure and capabilities. It also gives the company a differentiated and clinically proven airway clearance technology. Inogen said the technology produces capital sales and desirable recurring revenue from disposables.
Should the company garner clearance and bring Simeox to the U.S., it sees an addressable market of nearly half a million people.
“I am very excited about Physio-Assist becoming a part of the Inogen organization and view this as a significant milestone in the journey to scale the Simeox differentiated product offerings globally in service of bronchiectasis and cystic fibrosis patients with unmet needs,” said Adrien Mithalal, Physio-Assist CEO.
Inogen shares the financial details of the acquisition and then some
Inogen plans to pay approximately $32 million in cash net of debt, payable at closing. The deal also includes potential future cash performance-based milestone payments. These relate to the achievement of goals related to FDA clearance for the device.
The deal, in total, could reach up to $45 million, Inogen said.
Inogen expects the acquisition to prove immaterial to its revenue and immediately accretive to its gross margin in 2023. It expects the transaction to be accretive to adjustive earnings beginning in 2027. The acquisition, already approved by both companies’ boards, remains subject to customary closing conditions. They expect it to close in the fourth quarter of 2023.
In connection with the deal and to facilitate proceedings, Inogen plans to provide Physio-Assist with a short-term loan of up to $500,000. Upon close, assuming that total has been drawn, $250,000 will be used to reduce the purchase price and the remainder will be forgiven.
On top of the transaction’s details, Inogen shared preliminary second-quarter financial results. The company expects revenues to land between $83 million and $84 million. This comes in lower than expected, but Inogen said it partially offset this with growth in rental revenue.
