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Stryker acquires patient-safety company for $120M
Stryker Corporation in Kalamazoo has reached an agreement to acquire a patient-safety company for $2.22 per share, for an aggregate purchase price of $120 million.
Patient Safety Technologies (OTC: PSTX) in Irvine, Calif., through its subsidiary SurgiCount Medical, engages in the development, marketing and sale of products and services in the patient-safety markets in the U.S.
PST revenue through the first nine months of 2013 was $14.9 million, according to Stryker.
The transaction is expected to close in the first quarter of 2014.
Stryker (NYSE: SYK) said that since its launch in 2006, SurgiCount has established a customer base of more than 300 hospitals, including several of the leading medical institutions in the U.S.
The SurgiCount Safety-Sponge System, which prevents surgical items from being left in patients, will become part of Stryker's Instruments division and will augment the portfolio of products designed to reduce hazards, streamline operations and improve patient outcomes.
"We are committed to providing solutions that result in a higher quality of care and level of safety for both patients and health care professionals," said Timothy J. Scannell, Stryker Group president, MedSurg and Neurotechnology. "This acquisition aligns with Stryker's focus on offering products and services that have demonstrated cost effectiveness and clinical outcomes."
The transaction is subject to approval by the stockholders of Patient Safety Technologies and the expiration or termination of the Hart-Scott-Rodino Antitrust Improvements Act waiting period.
PST was formerly known as Franklin Capital Corporation and changed its name to Patient Safety Technologies in April 2005. The original company was founded in 1959.
The SurgiCount Safety-Sponge System is an integrated counting and documentation system that prevents surgical sponges and towels from being unintentionally left in patients after surgery is complete. It allows for an accounting of the individual items prior to the patient being closed.
The Safety-Sponge System is a patented system of bar-coded surgical sponges, SurgiCounter scanners and SurgiCount360 software applications.
PST sells its Safety-Sponge systems to acute care hospitals directly, as well as through distribution partners.
The prevention of retained foreign objects improves patient safety and helps reduce health care costs.
Stryker said RFOs are the most common operating room "never event" in the U.S., and surgical sponges are the most common retained object, with approximately 2,300 incidents reported annually at an average cost per incident of more than $400,000.
The term never event has been in use since 2001 and is a reference to extreme medical errors, such as wrong-site surgery, that should never occur, according to the U.S. Dept. of Health & Human Services.
Over time, the list of never events has been expanded to signify adverse events that are unambiguous, or clearly identifiable and measurable, serious, or resulting in death or significant disability, and usually preventable.
The National Quality Forum initially defined 27 such events, but the list was revised most recently in 2011 and consists of 29 events grouped into six categories: surgical, product or device, patient protection, care management, environmental, radiologic and criminal.