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Halyard Health declares independence from Kimberly-Clark

by Gus Iversen, Editor in Chief | November 05, 2014
Robert Abernathy
CEO of Halyard Health
As of November 3rd, Halyard Health, a major manufacturer of surgical supplies and infection prevention solutions, has spun off entirely from its parent company, Kimberly-Clark Corporation. The global medical technology company is now being publicly traded (NYSE: HYH) and will seek to expand in the market segments it already occupies.

Halyard Health's CEO, Robert Abernathy, told DOTmed News via email that the decision to spin off was related to the fundamental changes taking place in health care, and was made in the mutual interest of both Halyard Health and Kimberly-Clark. "It was an opportunity to create value for Kimberly-Clark shareholders and to better enable Halyard Health to optimize performance and flexibility to pursue our own value-creation opportunities," he said.

As part of the spinoff, one share of Halyard Health common stock was issued for every eight shares of Kimberly-Clark, the company best known for owning brands like Kleenex, Huggies, and Scott.

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"Over the next year we will be focused on decoupling from Kimberly-Clark, creating our own infrastructure and building out the capabilities they had previously provided," said Abernathy.

"We plan to transform our current portfolio to focus on our higher margin devices business over the longer term and improving margins in our cash-generating S&IP business," said Abernathy. "We're going to support this strategy by accelerating our innovation engine by increasing investment in research and development."

Halyard Health reported 2013 net sales of $1.7 billion across its Surgical & Infection Prevention (S&IP) products and Medical Devices business. The business has 16,500 employees and markets products in more than 100 countries, and Abernathy sees more room for international growth over time.

When asked if the Ebola epidemic in West Africa disrupted the spinoff in any way, Abernathy said, "As a health care company we have a history of seeing demand spikes tied to emerging public health challenges or pandemics and Ebola is the latest such challenge where Halyard Health products are making a difference." Halyard Health began the process of going independent a year ago, before the epidemic started.

"Our growth potential and our ability to deliver value to shareholders in a way that we couldn't as part of Kimberly-Clark is the most significant aspect of launching Halyard Health," said Abernathy. He also cites their leading market position, and newfound freedom to allocate capital and make strategic long-term decisions as core benefits of their new business model.

On November 7th 2014, Halyard's leadership team will ring the closing bell at the NYSE at 4:00 p.m.

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