including the distribution by Philips of SHL telemedicine products in North America
Following its acquisition of Lifeline a year ago, Philips has become the leading provider
of personal response services and emergency call systems in the United States and
Canada. Philips markets its services through a network of more than 2,500 hospitals
and other healthcare providers and serves a subscriber base of 750,000 individuals.
This transaction will enable SHL’s and Raytel’s existing products and services to be
offered to Philips’ broad client base, while generating revenue synergies. SHL believes
that Philips’ strong brand recognition among healthcare professionals should allow for
the rapid introduction of new SHL products to this important market segment in the
coming years.
SHL will receive around USD 110 million as upfront cash consideration and debt
assumption for the acquisition of the current businesses of Raytel Cardiac Services
and other ancillary operations. In addition, SHL will participate on a revenue sharing
and royalty basis for up to 9 years in revenues of Raytel’s current services and certain
future services to be introduced in North America for which certain minimum payments
will be made pending achievement of agreed upon milestones. SHL will also benefit
from the sales of its proprietary telemedicine devices to Philips as well as from
revenues emanating from Philips’ access to SHL’s future R&D.
The transaction which is subject to certain regulatory approvals as well as that of
SHL’s shareholders is expected to close by the fourth quarter of 2007. On
consummation of the transaction, SHL will record a significant capital gain. Wachovia
Securities is acting as financial advisor to SHL in this transaction.
Erez Alroy, Co-CEO of SHL, commented: “We are very excited about the agreement
with Philips. This is a major achievement for SHL, strengthening our relations with our
strong strategic partner with the capacity and capability to significantly increase
penetration of SHL products in the North American market. In addition the transaction
will provide SHL with significant cash resources to increase the pace of its expansion
in the German market as well as development of new markets and products”
2
Ron Feinstein, CEO of Philips’ Home Healthcare Solutions business group added: “We
have known SHL and Raytel for many years and are optimistic that the addition of
Raytel’s cardiac monitoring capabilities to our portfolio of remote patient management
services will strengthen our position in the home healthcare market for consumers with
heart disease.”
According to a 2007 report by Frost & Sullivan called “North American Cardiac
Monitoring and Diagnostic Services Market” as well as studies by Raytel Cardiac
Services, the US market for ambulatory (outside of the hospital) cardiac monitoring
services was valued at approximately USD 1.2 billion in 2006. It is estimated that by
2011, the market Raytel Cardiac Services addresses will be valued at approximately
USD 6 billion. Demographic trends – such as an aging population and rising obesity,
plus the growing trend by hospitals and physicians to outsource remote cardiac
services – are also expected to fuel growth.
Conference call today at 10 am CET
The SHL management will be available to discuss the transaction in more detail in a
conference call scheduled for today, October 4, 10 am CET. In order to attend the call,
please use the below dial-in information. The conference call presentation will also be
available on SHL’s website at www.shl-telemedicine.com
Dial-in numbers for conference call:
Switzerland +41 (0) 91 610 5600
UK +44 (0) 20 7107 0611
US +1 (1) 866 291 4166
All other: +41 (0) 91 610 5600
