CANTEL MEDICAL CORP. (NYSE: CMN), through its Minntech subsidiary,
has acquired the business and substantially all of the assets of
Byrne Medical, Inc. Byrne Medical, privately-owned and based
outside Houston, TX, designs, manufactures and sells an innovative
array of disposable infection control products intended to replace
the necessity of sterilizing and reusing numerous components used
in gastrointestinal (GI) endoscopy procedures.
For the twelve months ended June 30, 2011, Byrne Medical
generated revenues of approximately $38.6 million and pre-tax
income of $8.6 million. After adjusting for the shareholders'
compensation and other non-recurring expenses, the pre-tax income
would be approximately $11.5 million for the twelve-month period.
Capitalizing on Byrne Medical's 20%+ historic growth profile,
Cantel expects an increase in overall corporate gross margins and
anticipates the acquisition to be accretive in Cantel's first
fiscal year ending July 31, 2012 (inclusive of the expenses
resulting from purchase accounting, financing, and deal-related
costs).
The purchase price was $100.0 million, comprised of $90.0
million in cash and 401,123 shares of restricted Cantel stock
(valued at $10.0 million) that is subject to a multi-year lock-up
and three-year price floor. In addition, there is a contingent
earnout of up to $10 million payable over two years based on gross
profit growth targets of the acquired business. Cantel will also be
purchasing certain land and buildings utilized by the Byrne Medical
business for $5.9 million so as to further develop a world-class,
disposables manufacturing operation in Houston. The founder and
principal owner, Don Byrne, has entered into a three-year
employment agreement and separate non-compete agreement.
In purchasing Byrne Medical, Cantel has greatly expanded its
hospital and outpatient center-based GI endoscopy business, which
includes its market leading Medivators® post-procedure cleaning
business. With this acquisition, the company has entered into the
market for infection prevention and control products in the
endoscopy procedure room itself. Cantel's collective endoscopy
business, with approximately 80 sales consultants and clinical
specialists, now offers the GI professional an unparalleled level
of expertise and solutions to mitigate infection risks across the
full endoscopy procedure cycle.
With the respective mottos of "Infection Control Matters™" and
"Dedicated to Infection Prevention and Control," Byrne Medical and
Cantel have built their businesses around a shared commitment.
Byrne Medical's initial products, the Endo SmartCap® and the
EndoGator®, pioneered the movement to disposable alternatives for
reusable water bottles and irrigation tube sets used in GI
endoscopy procedures. The company now offers an extensive suite of
universally applicable infection control solutions including
sterile, single-use air/water, suction and biopsy valves.
According to Andrew Krakauer, Cantel Medical's President and
CEO, "This is the largest transaction in Cantel's history and
clearly an important event. It is very exciting to have two leading
endoscopy product businesses as a part of Cantel. Building upon the
tremendous growth and momentum in our Medivators endoscope
reprocessing segment, Byrne Medical perfectly complements our
strategic vision of expanding our presence in the hospital with
higher margin, innovative disposables that greatly improve
infection prevention and control. We see a growing trend by
healthcare providers in GI Endoscopy to minimize risks and reduce
the complexities associated with manual cleaning and disinfection
of reusable items. The successful debut of our new Medivators
endoscope reprocessors and single-use high-level disinfectants,
along with the robust demand experienced for the Byrne Medical
products, attest to this growing world-wide movement."
Krakauer continued, "I am particularly impressed with Byrne
Medical's distinctive understanding of the issues faced by the
frontline GI medical personnel and the ability to translate that
into ingenious products that solve real problems. Don Byrne has
created an outstanding, customer-focused company with great
products, excellent manufacturing capabilities, a very effective
consultative sales force and an impressive management team."
Don Byrne, President of Byrne Medical, commented, "With so many
opportunities in our sights, we believe Cantel is the perfect
partner to aid us in accelerating our growth plans. There is an
excellent cultural fit between our companies, and we share an
uncompromising commitment to assist healthcare providers in
mitigating infection control risks. I am so proud of what we have
accomplished, and I am very thankful to the entire Byrne Medical
team. We are all excited to take this business to the next level in
our partnership with Cantel and Minntech."
To finance the transaction, Cantel Medical initiated a new,
five-year $150.0 million credit facility ($100.0 million revolver
and $50.0 million term loan) with its existing syndicate comprised
of Bank of America, Wells Fargo and PNC Bank.
In accounting for the transaction, both the $10 million of
restricted stock-with-a-floor and the potential $10 million in
additional contingent consideration will result in mark-to-market
fluctuations in future reported earnings of Cantel Medical. Any
such significant movements will be highlighted in the announcement
of those results.
The Company will hold a conference call to discuss the
acquisition of Byrne Medical on Wednesday, August 3, 2011 at 11:00
AM Eastern time. To participate in the conference call dial (877)
407-8033 or (201) 689-8033 approximately 5 minutes before the
beginning of the call. If you are unable to participate, a digital
replay of the call will be available through midnight on August 17,
2011 by dialing (877) 660-6853 and using passcode #286 and
conference ID # 376814.
The call will simultaneously be broadcast live over the Internet
at http://www.investorcalendar.com/IC/CEPage.asp?ID=165439. A
replay of the webcast will be available until November 3, 2011.
About Medivators Business Group
Medivators is a Business Group of Minntech Corporation, a
subsidiary of Cantel Medical Corp. Minntech, founded in 1974, has
its headquarters and major manufacturing operations in Minneapolis,
Minnesota. Medivators assists healthcare professionals in
minimizing endoscopy-related nosocomial infections through the
design, manufacture, and marketing of a comprehensive range of
endoscope reprocessing equipment, high-level disinfectants,
detergents, flushing aids, neutralizers, leak and fluid detection
systems, and a broad array of accessories. For further information,
visit the Minntech website at http://www.minntech.com or
http://www.medivators.com.
About Cantel Medical Corp.
Cantel Medical Corp. (NYSE: CMN) is a leading provider of
infection prevention and control products in the healthcare market.
Our products include water purification equipment, sterilants,
disinfectants and cleaners, specialized medical device reprocessing
systems for endoscopy and renal dialysis, disposable infection
control products primarily for the dental industry, dialysate
concentrates and other dialysis supplies, hollow fiber membrane
filtration and separation products for medical and non-medical
applications, and specialty packaging for infectious and biological
specimens. We also provide technical maintenance for our products
and offer compliance training services for the transport of
infectious and biological specimens. For further information, visit
the Cantel website at http://www.cantelmedical.com.
About Byrne Medical, Inc.
Byrne Medical is fully committed to the pursuit of delivering
infection prevention solutions that will reduce potential risks to
caregivers and patients in GI Endoscopy. Don Byrne, Founder and
President, started the company in 1997 in Conroe, Texas with a
single, disposable product and a vision to improve infection
control practices. Today, with a full-range of unique product
solutions, Byrne Medical has become a recognized leader at the
forefront of patient care and safety in GI Endoscopy. Ernst &
Young LLP recently honored Don Byrne with the Entrepreneur Of The
Year® 2011 Gulf Coast Area Award in the Manufacturing and
Distribution category. For further information, visit the Byrne
Medical website at http://www.byrnemedical.com.
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements involve a number of risks and uncertainties,
including, without limitation, the risks detailed in Cantel's
filings and reports with the Securities and Exchange Commission.
Such forward-looking statements are only predictions, and actual
events or results may differ materially from those projected or
anticipated.
Contact: Andrew A. Krakauer President and CEO Cantel Medical
Corp. Phone: (973) 890-7220 Richard E. Moyer Cameron Associates,
Inc. Email Contact Phone: (212) 554-5466
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