Inverness Medical Innovations Inc. (NYSE:IMA) inked a group of distribution-to-acquisition deals with Epocal Inc. that could lead to it paying $255 million for the of Ottawa, Canada-based blood testing equipment maker.
Waltham, Mass.-based Inverness said the arrangement starts with a deal for it to sell Epocal’s Epoc rapid blood gas and electrolyte analysis platform. The point-of-care system, which won 5210(k) clearance from the Food & Drug Administration in 2006, takes about 30 seconds to deliver lab-quality results, according to a press release. Inverness said it expects the system, which has a wireless component, to win CE Mark approval in the European Union this year.
Under the provisions of the five-year deal, Inverness paid $20 million for the right to distribute the system worldwide, except for Japan, India, Bangladesh, Nepal, Bhutan and Sri Lanka. Epocal will supply the system and its necessities free to Inverness, which will kick back 50 percent of revenues to its partner north of the border.
A second agreement calls for the two companies to collaborate in expanding Inverness’ portfolio of point-of-care testing platforms.
The third and perhaps biggest deal will see Inverness pay a base price of up to $172.5 million to buy Epocal outright, contingent on that company achieving certain gross margin and financial milestones before Oct. 31, 2014. Epocal can add another $82.5 million to the purchase price if it meets other benchmarks, including product development and gross margin goals.
Inverness, which acquired British CRO Mologic in October, put some black in back on the ledger during the third quarter. The company logged a 22.1 percent increase in revenues compared with Q3 2008, largely on a jump in sales of its influenza diagnostic tests and contributions from acquisitions.
Inverness posted net income of $14.3 million on net sales of $535.8 million for the three months ended Sept. 30, compared with a net loss of $9.1 million on sales of $438.8 million during the same period last year. The company credited strong sales of products related to Swine Flu for the improvement.