Katie Szyman, who led Edwards Lifesciences Corp.’s Critical Care unit that was recently sold for $4.2 billion, says innovation was the key to remaining in Orange County.
Even though the unit primarily manufacturers its products in the Dominican Republic and Puerto Rico and new owner Becton, Dickinson and Co. has its headquarters in Franklin Lakes, New Jersey, Szyman said it made sense to keep its operations in Irvine. She is set to oversee 4,000 global employees with 500 based in Irvine.
“Most of our R&D talent is based here,” Szyman told the Business Journal. “We have such a strong presence here on the innovation front, so we felt it was really important for us to stay here.”
The new unit, which is being renamed BD Advanced Patient Monitoring, wasted no time in asserting its intent to stay in Orange County.
Although the sale was finalized Sept. 3., Szyman and her team moved into a 116,000-square-foot building at 17200 Laguna Canyon Road at Spectrum Terrace. The property was previously the headquarters for public software firm Alteryx Inc., which went private after being acquired by private equity firms Clearlake Capital Group and Insight Partners for $4.4 billion last December.
BD Advanced’s Spectrum Terrace deal is the largest new office lease struck this year in OC, according to brokerage data.
Szyman was appointed to lead the new unit, which makes a variety of patient monitoring products for hospital settings; she has served as corporate vice president of the unit when it was under Edwards since 2015.
Since the completion of the sale, shares of Edwards, Orange County’s second-most valuable public company, have fallen about 5.2% to $65.41 and a $39 billion market cap (NYSE: EW). Shares in Becton decreased 1.8% to $235.20 and a $68 billion market cap (NYSE: BDX).
What Becton Wants
Szyman said Edwards had the missing monitoring piece to Becton’s infusion business at Becton, which reported $19.4 billion in sales last year.
Becton will use Edwards’s advanced patient monitoring devices to track how patients are doing while receiving infusions therapies, allowing for adjustments when needed.
“We believe the combination unlocks multiple new avenues for growth and value creation through BD’s broad global footprint, increased penetration across new and existing hospital customers, new innovation opportunities across data sets and platforms, and application of the BD Excellence operating system,” Becton Chief Executive Tom Polen said in a statement.
Critical Care’s portfolio includes the Swan Ganz pulmonary artery catheter, minimally invasive sensors, noninvasive cuffs, tissue oximetry sensors and monitors.
Szyman said Michael Garrison, president of Becton’s medical segment, “always had a passion for trying to close the loop.” Garrison previously worked as manager of research and development for the surgical heart valve franchise at Edwards.
Szyman has two core strategies to grow the Advanced Patient Monitoring unit involving its AI-enabled smart recovery and noninvasive smart expansion technologies.
Critical Care’s products are mainly used by doctors in the operating room or intensive care unit. Szyman, however, sees the future of the unit in continuous monitoring within other parts of the hospital and ambulatory surgery centers.
“We want to bring more advanced patient monitoring into those environments where it hasn’t happened before,” Szyman said.
She cited recent trends of ambulatory surgery centers taking on more high-risk procedures such as hip, knee and shoulder surgeries.
“When they have an emergency, they really need to be able to convert and monitor those patients better,” Szyman said.
Edwards’ New Focus
Critical Care generated $928.1 million in sales last year with its products currently being used in more than 10,000 hospitals globally, according to officials.
The decision to sell Critical Care to Becton was a major pivot for Edwards CEO Bernard Zovighian, who announced in December that he planned to spin off the unit, which has typically been the company’s slowest growing division.
“Edwards’ underlying rationale for separating Critical Care remains the same: we are laser focused on pursuing a strategy centered on structural heart disease,” Zovighian said in a statement earlier this year. “Our goal is to serve large unmet patient needs with our differentiated innovations while extending our global leadership, delivering sustainable growth and increasing shareholder value.”
Selling the unit will also create more career opportunities under Becton, one of the world’s largest medical technology companies with 75,000 global employees, Szyman said.
“It just made a lot of sense to instead of going in two steps, to just go in one step and really go somewhere where there was such a great culture and greater opportunity to help more patients,” Szyman said.
Last month, Edwards saw its value plunge $16.5 billion in one day after unexpectedly slashing its sales outlook for its transcatheter aortic valve unit (TAVR), which contributed 65% of the company’s net sales in 2023.
It was the biggest setback for Zovighian in the 16 months since he took over as CEO from Michael Mussallem, who in May also stepped down as executive chairman.
The inconsistency of TAVR growth has led some analysts to maintain a neutral rating for the company.
“The slowdown in TAVR growth, along with the divesture of Critical Care, and various tuck-in acquisitions has raised the level of uncertainty around NT estimates,” Raymond James analyst Jayson Bedford wrote last week in a note to investors. Still, he wrote that the company’s strategy to streamline focus in addition to its R&D efforts will result in a “better long-term growth profile.”
$1.5B Share Buybacks
Edwards said it plans to use funds from the sale to finance previously announced acquisitions and additional share repurchases.
In July, the company said it’s paying a combined $1.2 billion to acquire heart structural companies JenaValve Technology and Endotronix. Both deals are expected to close by the end of 2025.
The two acquisitions will help Edwards address the unmet needs of aortic regurgitation and heart failure, according to Zovhigian.
A month prior, Edwards announced plans to buy Innovalve Bio Medical, an early stage transcatheter mitral valve replacement company, for $300 million, building on a prior investment made in 2017.
Innovalve is set to join Edwards’ transcatheter mitral and tricuspid therapies (TMTT) unit, led by corporate vice president Daveen Chopra, by the end of this year.
Edwards also announced that its board authorized an additional $1.5 billion buyback of its stock following a $1 billion repurchase authorization last December.
The company said it has $1.4 billion remaining for future share repurchases.
