The 10 biggest merger and acquisition stories of 2020

December 30, 2020
by Gus Iversen, Editor in Chief
As the world grappled with COVID-19 throughout 2020, healthcare dealmaking continued.

In October, Kaufman Hall researchers reported the average size of seller by annual revenue was at historically high levels, at just under $400 million in Q3. Rather than hampering mergers and acquisitions, that report suggested the pandemic may have been a catalyst for them.

Here we take a look back, chronologically, at some of the biggest merger and acquisition headlines of the year, based on our news readership.

MXR Imaging acquires Oxford Instruments Healthcare for $15 million

One of the first major acquisitions of the year involved independent service companies. In February, MXR Imaging announced it had acquired Oxford Instruments Healthcare from Oxford Instruments for $15 million, expanding its MR and CT footprint,

"The additional resources and expertise that Oxford brings to our team will only enhance the customer experience with MXR Imaging and our portfolio of companies," Ted Sloan, president of MXR Imaging, and Jeff Root, MXR Imaging executive vice president, told HCB News.

In addition to MR and CT capabilities, the Florida-based company also provides MXR Imaging with mobile fleet rentals, coil repair, and refrigeration services. Oxford also runs additional operations in Vacaville, California and Ann Arbor, Michigan.

Formerly known as Merry X-ray, MXR Imaging has completed a number of acquisitions over the last few years. Its 2017 acquisition of Consensys Imaging, for instance, expanded its reach in the CT and MR markets, and provides its customers with access to new assets, including X-ray equipment distribution and sales of refurbished equipment.

Fujifilm acquisition of Hitachi diagnostic imaging business delayed by COVID-19

Not all deals were spurred by the pandemic, Fujifilm’s planned $1.63 billion acquisition of Hitachi’s diagnostic imaging business was put on hold in June as COVID-19 continued to spread.

The Japanese healthcare giants, which began discussing the deal back in December, had previously hoped to complete the acquisition some time in July.

"Due to the spread of COVID-19 globally, preparations for regulatory laws related to matters and clearance for anti-monopoly have been delayed," Dave Wilson, director of communications for Hitachi Healthcare Americas, told HCB News. "Government offices, legal offices and others impacted by lock downs and stay at home measures have slowed these activities,"

The decision to sell stemmed from a desire to grow the competitiveness of Hitachi's diagnostic imaging business and subsequently, its healthcare operations. Fujifilm was seen as a viable buyer due to its expertise in AI and IT, as well as its expansion in the fields of prevention and diagnosis, according to Wilson.

When the deal does go through, it's expected to boost Fujifilm’s position in the global medical imaging market, which is dominated by GE, Siemens and Philips with a combined share of 65%, reported the Nikkei Asian Review in December. The Hitachi division holds a 5.5% stake and is predicted to bring Fujifilm, which holds 2.9%, close to Canon, which holds the number four spot in the sector.

The deal would transfer Hitachi’s portfolio of CT, MR and ultrasound technology to Fujifilm.

Siemens Healthineers acquires Varian for $16.4 billion

In early August, Siemens Healthineers announced a blockbuster deal to acquire Varian Medical Systems, the market leader in radiotherapy technology. The deal, which cost Siemens $16.4 billion, brings together two medical equipment companies with a long track record of collaboration.

"This decisive moment in the history of our companies means more hope and less uncertainty for patients, an even stronger partner for our customers, and for society, more effective and efficient medical care," said Bernd Montag, CEO of Siemens Healthineers, in a statement. "Together with Varian's outstanding and passionate employees, we will shape the future of healthcare more than ever before."

Based in Palo Alto, Varian is the leader in radiation oncology technology with a market share of over 50%, according to Reuters. This market, which includes cutting-edge cancer treatment technology like linear accelerators and proton therapy systems, is poised for growth as the World Health Organization's International Agency for Research on Cancer expects the prevalence of cancer to almost double between 2010 and 2030, with most cancer patients undergoing radiotherapy.

Siemens previously had a stake in the radiotherapy market but exited the business in 2011. Starting in 2012, the company entered a strategic partnership with Varian called EnVision Better Cancer Care that brought together their diagnostic and therapeutic solutions.

“Siemens Healthineers values our talented and engaged employees and recognizes the strength of the Varian brand, our cutting-edge portfolio, and the relationships we’ve nurtured," said Varian CEO, Dow Wilson. "We are thrilled to partner with Siemens Healthineers to extend our renowned customer care, serving clinicians and patients from the very first stage in the fight against cancer."

Cone Health and Sentara Healthcare to merge into $11.5 billion system

In one of the biggest health system deals of the year, Cone Health and Sentara Healthcare announced in August that they would merge into an $11.5 billion not-for-profit healthcare system.

The two regional, community-based health systems signed a letter of intent to become an integrated organization that expands the geographic footprint of both and aims to bring patients more options for insurance plans and affordable access to healthcare.

“We have a keen focus on expanding upon our successful value-based care models, increasing our robust integrated health insurance options, building innovative technology platforms to increase patient access points — both digitally and virtually, growing our community impact to create meaningful change, and ultimately tackling the toughest challenges in healthcare,” Howard Kern, president and CEO of Sentara Healthcare, told HCB News.

Sentara Healthcare and Cone Health plan to invest capital into facilities, programs, tools, and technologies for greater care and increased access. Its health plans and clinically integrated networks will also continue to promote better health outcomes and target reduced healthcare costs and improved access.

Kern will lead the combined organization from the Norfolk headquarters, while Greensboro will serve as the regional headquarters for the Cone Health division. Cone Health CEO Terry Akin will serve as president of the Cone Health division, and health insurance plan headquarters will be set up in both Greensboro and Norfolk.

626 Holdings becomes parts supplier with PhiGEM acquisition

Another major deal impacting the parts and service industry involved 626 Holdings, a provider of healthcare technology management services, acquiring diagnostic imaging parts supplier PhiGEM PARTS in August.

PhiGEM PARTS joined 626’s team of more than 100 employees nationwide — including over 85 field engineers — with the goal of streamlining its imaging system repairs processes.

"PhiGEM has been a successful, steadily growing, high-quality parts supplier to the HTM space for more than 10 years," Josh Glas, president of PhiGEM Parts, told HCB News. "We see this alliance as a means to expand our breadth and depth of inventory and customer base. As we fill coverage gaps in the product mix, we will become an even more valuable supplier to our current customers and attract new customers. Also, as 626 grows we, too, will grow. And the icing on it all, is that it brings us 'closer' to the patient rather than simply providing the hardware to continue patient care."

The acquisition by 626 followed that of ISS, a third-party injector service and support supplier in the HTM space, and Innovatus’ DR-CR service business earlier this year. Back in 2017, the company purchased Walsh Imaging.

Founded in 2014 by Revien and Michael Fischer, 626 is a third-party maintenance company servicing modalities from all medical technology manufacturers.

Since 2010, PhiGEM PARTS has been a provider of multi-modality, multi-manufacturer, high-quality parts as an original equipment manufacturer alternative. Glas will continue to head the company, which will be integrated as the parts division for 626.

RLS acquires GE Healthcare's radiopharmacy network

RLS (USA) Inc., (Radioisotope Life Sciences), acquired GE Healthcare’s U.S. radiopharmacy network in September, making it the largest pure molecular imaging-focused firm in the country.

“Completing the sale of our 31 radiopharmacies to RLS will enable the molecular imaging unit of our Pharmaceutical Diagnostics business to focus on its core portfolio of SPECT and PET imaging agents — which help doctors make more informed diagnoses and enable the development of therapies — while continuing to invest in new branded agents,” a GE spokesperson told HCB News.

The pharmacies of the now privately-owned radiopharmacy network are spread out across 18 states, including its current headquarters in Tampa, Florida. It includes a minority ownership by Perceptive Advisors, a healthcare specialist investment firm in New York worth $7 billion.

Radiopharmacies, however, are only a small part of GE Healthcare’s Pharmaceutical Diagnostics business, which develops and supplies imaging agents to support around 100 million procedures worldwide each year. The operation of the radiopharmacy network is not core to the company’s U.S. business, according to the spokesperson. “We believe that a change in ownership will allow the radiopharmacies, our customers, and patients to benefit from further investment from RLS.”

The radiopharmacies will continue to supply GE Healthcare molecular imaging products as part of a 10-year distribution partnership overseen by RLS. RLS plans to invest $2 billion over the next decade in expanding the footprint of pharmacies, as well as continue to invest in scientific and technological advancements. Nearly five hundred former GE employees across the U.S. have already been integrated into the RLS family.

Vizient acquires Intalere from Intermountain Healthcare

In November, Vizient announced it is set to acquire Intalere from Intermountain Healthcare to strengthen its stake in the healthcare supply chain market.

“This acquisition builds on the strengths of both Vizient and Intalere and furthers our ability to meet the growing needs of the increasingly diverse range of members and customers we serve," said Byron Jobe, Vizient’s president and chief executive officer, in a statement at the time.

The acquisition expands Vizient’s non-acute footprint to create more opportunities through the Vizient subsidiary, Provista, and increases its presence in smaller and rural acute facilities. This will garner greater support for these communities with local healthcare services, while aligning cost, quality and market performance.

It also is partnering with Intermountain Healthcare in a collaboration that builds on their relationship in clinical and cost analytics. “Intermountain Healthcare looks forward to continuing to work together with Vizient in our common goal of providing patients access to high-quality care at the most affordable cost,” said Bert Zimmerli, chief financial officer and executive vice president at Intermountain. “This aligns very well with our aspiration of executing a population health strategy by providing value-based care and services to an increased number of patients, families, and communities.”

Vizient caters to more than 50% of acute care providers in the U.S., including 95% of the nation’s academic medical centers, and more than 20% of ambulatory providers.

GE acquires Prismatic Sensors

Shortly after the news that GE Healthcare was selling off its radiopharmacy network, the company announced it acquired Prismatic Sensors AB, with plans to develop a clinical photon counting CT (PCCT) system in the near future using Prismatic Sensors AB's Deep Silicon detector technology.

“Silicon-based detectors will enable superior spectral resolution without compromising on count rate or spatial resolution,” said Mats Danielsson, CEO of Prismatic Sensors, in a statement.

PCCT enables clinicians to view minute details of organ structures, improves tissue characterization, provides more accurate material density measurement (or quantification) and lowers radiation dose for adult and pediatric patients. Prismatic Sensors’ silicon sensors can be positioned in a way that makes PCCT detectors deep enough to absorb very high-energy photons and fast enough to count hundreds of millions of CT photons per second.

GE began studying PCCT in 1993. It released the first PCCT prototype in the world in 2006, using cadmium-based detectors. Cadmium-based detectors, however, are limited as X-ray detector materials due to their imperfect crystal structure and contamination. Silicon, in contrast, is the purest material produced for use in detectors.

The technology shows potential in oncology, cardiology, neurology, as well as for low-dose acquisitions and for applications that benefit from tissue specificity. It offers higher spatial resolution and contrast that help with imaging small blood vessels and vascular pathologies, and monitoring changes in cancer at an earlier stage.

“From the first X-ray machines to the first photon-counting CT prototype, GE Healthcare is committed to pioneering next generation technologies to achieve precision health and improve lives. We are excited about this cutting-edge approach with Deep Silicon and its clinical potential,” said Kieran Murphy, president and CEO of GE Healthcare.

Butterfly Network to merge with Longview Acquisition in $1.5 billion deal

Butterfly Network announced in November it would be merging with Longview Acquisition, a special purpose acquisition company, in a deal valued at $1.5 billion. The combination of the two is expected to increase adoption of Butterfly’s handheld ultrasound solutions.

“Ultimately, this is a strong partnership that will drive further adoption of Butterfly Network’s breakthrough solutions and accelerate our future pipeline of innovative technologies as we continue our work to make high-quality ultrasound affordable, easy-to-use, globally accessible and intelligently connected," Laurent Faracci, chief executive officer of Butterfly, told HCB News.

Butterfly is the developer of Butterfly iQ, the only transducer using semiconductor technology to perform “whole-body imaging” with a single handheld probe, and AI to generate quality images. It connects to a mobile phone or tablet, and is powered by Butterfly’s proprietary Ultrasound-on-Chip technology. The company launched the solution in 2018 and a follow-up solution, Butterfly IQ+ in 2020.

The deal is anticipated to bring in $589 million of gross proceeds, including up to $414 million of cash held in Longview’s trust account, assuming no redemptions are effected. Further supporting it is a $175 million private investment in public equity (PIPE) at $10 per share, The merger has been unanimously approved by the boards of directors for Butterfly and Longview, and Butterfly is projected to have approximately $584 million in cash on the balance sheet after closing.

Once the merger is complete, Butterfly will become a wholly-owned subsidiary of Longview, and Longview will be renamed Butterfly Network. Faracci will continue as CEO of the combined company and Dr. Rothberg will serve as chairman of the board.

Olympus to acquire Veran Medical Technologies for $340 million

Olympus Corporation announced in December that it would acquire Veran Medical Technologies, a developer of interventional pulmonology solutions, for $340 million.

The acquisition will be carried out through Olympus’ subsidiary, Olympus Corporation of the Americas (OCA) and is expected to position Olympus as a leader in the field of respiratory devices.

"The most significant part of this deal is that we will secure immediate access to VMT's unique Electromagnetic Navigation system with proprietary devices to build a stronger future respiratory product portfolio,” said Nacho Abia, global chief operating officer and CEO of OCA, in a statement.

VMT's SPiN Thoracic Navigation System offers 3D maps based on inspiration and expiration CT scan protocol and the ability to switch from navigated bronchoscopy to navigated transthoracic needle aspiration in the same procedure. Other features include respiratory gating technology for tracking moving nodules and electromagnetic instrumentation for unprecedented access, visualization and control.

Increased awareness and a greater number of low-dose CT screenings have increased the need to definitively diagnose lesions in the peripheral regions of the lungs through tissue biopsies. Through the deal, Olympus plans to use its endoscope technologies alongside VMT’s navigation systems to form solutions that can help providers more accurately make such diagnoses.

The agreement also includes immediate incremental revenue and an experienced sales team within the U.S. market.

"Olympus has a clear strategy to become a global medtech leader, and we're excited to contribute our unique capabilities and become part of this journey,” said Jason Pesterfield, CEO of VMT.