San Clemente-based ICU Medical Inc. has gone on quite a bumpy ride since it acquired the Hospira Infusion System business from New York-based Pfizer Inc. in February. The bumpiness has included an antitrust investigation “regarding the manufacturing, selling, pricing and shortage of intravenous solutions,” according to a company filing with the Securities and Exchange Commission by the U.S. Department of Justice.
ICU Medical said the company has now started full integration with Hospira and anticipates to enhance margin next year. It reported revenue of $332 million for the quarter ended June 30 and a loss of $37 million, or $1.87 per share.
Chief Executive Vivek Jain said the company has previously engaged in cost reduction and has only recently started to create a fully integrated company with a focus on its infusion consumables market, which includes its legacy infusion therapy and oncology businesses.
Part of the bumpiness has been losing revenue ICU previously got from Hospira as a customer.
“It’s like ICU took a time out from selling anything to Hospira as we became our customer,” Jain said, referring to ICU Medical’s purchase of Hospira. He said the company will create cash flow by selling “orphan businesses associated with Hospira” and that he anticipates Hospira losses to “bottom out by the end of this year and be positioned for some growth by 2018.”
The company recently traded at $167 per share for a $3.41 billion market cap. It employs about 7,900 people worldwide, approximately 2,700 of them in the U.S.
Despite challenges, buying Hospira enabled ICU Medical to increase in scale and product portfolio. Before the acquisition, its businesses were approximately 85% infusion consumables and 15% critical care products. The combined company has restructured to include infusion systems, infusion consumables, intravenous solutions and critical care, no segment making up more than 40% of revenue.
“We’ve said in January that we expect losses will go into 2018, around $15 [million] to $20 million. We can achieve 30% to 35% [or] $85 million dollars in savings moving away from the Pfizer model,” Jain said.
Funding
Irvine-based Velox Biosystems secured preseries A financing with Decheng Capital in Shanghai, which has a U.S. office in Menlo Park, on undisclosed terms. Proceeds are intended to support research and development.
“I wouldn’t say it’s typical for Chinese investors to go in at the preseries A [stage], but all investors have different appetites, and that just depends,” said JC Ruffalo, director of LaunchPad, Aliso-based OCTANe’s startup accelerator platform. He said he connects investors with opportunities ranging from late seed to series B.
Ruffalo said Velox secured Decheng Capital’s financing on its own.
Velox develops the IC3D Integrated Comprehensive Droplet Digital Detection system designed to process samples and deliver fast analytical results. Traditionally, “suspected samples must be cultivated and enriched before any analysis can be performed,” Velox says. The company said its system detects and monitors pathogens, biomarkers and other abnormalities without enrichment, eliminating the need for “manual work-flow steps that can create contamination risks and produce unreliable results.”
Decheng invests in early-stage life science companies.
Bits & Pieces
The University of California-Irvine received $150,000 from the Elisabeth Severance Prentiss Foundation in Cleveland, Ohio, to study the feasibility of using saliva rather than blood to monitor patients’ lithium medication levels. Lithium is prescribed to treat a variety of severe psychiatric and mental health conditions, including bipolar disorder and schizophrenia. Dosage levels must be closely monitored: if the dosage is too low there is no benefit, and if too high, it can be toxic. … U.S. News & World Report LP named UC Irvine Medical Center in Orange and Hoag Memorial Hospital Presbyterian in Newport Beach among America’s Best Hospitals for the 17th and 28th consecutive years, respectively. UCI Medical Center, ranks No. 11 in California and No. 6 in the Los Angeles metro area and is strongest in geriatric medicine and senior health services. Hoag, ranks No. 8 in California and No. 3 in the L.A. metro area, and excels in areas such as orthopedics, gastroenterology and gastrointestinal surgery, pulmonology and geriatrics. The list also recognized Kaiser Permanente Orange County and MemorialCare Health System in Fountain Valley. … Six urgent care centers in Southern California filed for Chapter 11 bankruptcy, including Hoag Urgent Care-Anaheim, Hoag Urgent Care-Huntington Harbour in Huntington Beach, Hoag Urgent Care-Orange, Hoag Urgent Care-Tustin and Laguna Dana Urgent Care in Dana Point. Four of the facilities are leased from Hoag in Newport Beach. Robert Amster, founder of Your Neighborhood Urgent Care LLC in Tustin, owns the facilities. Amster’s lawyer told several media outlets the Chapter 11 is a financial restructuring and unrelated to any changes in reimbursement models.
