Vyaire Medical this week announced it filed for Chapter 11 bankruptcy protection.
The Chicago-based ventilator maker said it filed to obtain sufficient financing to continue business operations while it markets its business units for a “value-maximizing sale.” The decision follows a below-plan performance in the first half of its fiscal year.
“Chapter 11 protection will offer us the breathing room we need to explore selling our businesses to capable, well-financed buyers that have the financial ability and stability to execute on the Respiratory Diagnostics (RDx) and Ventilation business strategies delivering our vital products to customers and patients in need,” CEO John Bibb said in a news release. “Our lenders continue to support our business, and we are working together to go through this process with as little disruption as possible to our customers and trusted partners.”
Vyaire will remain open and, with court approval, have post-petition financing to continue operations while in Chapter 11.
The company plans to focus on supporting the continuity of services to customers and honoring partner and employee commitments while complying with the terms of the U.S. Bankruptcy Code. According to a news release, it also wants to sell Vyaire business units to stable, well-capitalized buyers that will support its growth and development of the company’s RDx and Ventilation portfolios.
“We remain committed to the success of our customers, our partners, and our employees and will continue to live out our core values in the work we do,” Bibb said. “Our plan is to maintain the team needed to operate safely and deliver effective healthcare solutions.”
Vyaire’s Chapter 11 filing only applies to its operations in the U.S. and one non-operational international holding company.
The company’s role during the first COVID outbreak
Vyaire played a major role during the COVID-19 pandemic. It was one of three companies with the largest ventilator contracts from the U.S. Department of Health and Human Services in April 2020.
The contracts, which also named Hamilton Medical and Zoll Medical recipients, totaled $1.44 billion and followed previously announced deals with Philips, which received $646.7 million, and General Motors and Ventec Life Systems, which received $489.4 million.
Vyaire received $407.9 million in the contract to manufacture 32,300 ventilators in the first half of 2020.
The company also partnered with Spirit AeroSystems on ventilator production in May 2020 to build critical care ventilators. In the temporary partnership, Vyaire ramped up production of its ventilators at Spirit’s Wichita, Kansas-based converted manufacturing facility.
Vyaire joins Medtronic in bowing out of the ventilator market
Ventilators played an incredible role at the height of the COVID-19 pandemic as healthcare providers wrestled with shortages of the necessary tech. However, the need for the devices are returning to pre-pandemic use, signaling a shift in business models for some companies.
For example, Medtronic announced in February that it would exit what it described as its increasingly unprofitable ventilator product line. The move came a year after it announced it wanted to spin off its Patient Monitoring and Respiratory Interventions businesses that are part of its Medical Surgical portfolio.
Instead of spinning them off, the company ended the ventilator business and combined the two other businesses into one unit called Acute Care and Monitoring.
According to Medtronic CEO Geoff Martha, exiting the ventilators business enables Medtronic to invest more in its patient monitoring business to stay competitive against Masimo and leverage data- and AI-based innovations.
Many ventilators from other companies, including GE HealthCare, Smiths Medical, Draeger Medical, Philips, Getinge, and more, are still on the market.
