Bard Acquires Hemostat Supplier Medafor

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Bard Acquires Hemostat Supplier Medafor

by Zacks Equity Research
August 20, 2013 | Comments : 0Recommended this article: (0)

Medical technologies major C. R. Bard, Inc. (BCR - Analyst Report) entered a definitive agreement to acquire a leading developer and supplier of plant based hemostatic agents Medafor, Inc. C. R. Bard has agreed to purchase the privately-held company for $200 million at a closing date later this year, In addition, BCR will provide future contingent payments up to $80 million based on revenue-based milestones through Jun 30, 2015.

The transaction is formed as a merger and has been approved by boards of directors of both the companies. However, it is subject to an approval by Medafor’s shareholders and customary regulatory review.

The acquisition will help Bard gain access to a proprietary technology platform and expand its global footprint. It will boost the company’s surgical specialties portfolio (particularly surgical hemostats) in its Davol subsidiary.

Medafor has many promising future products in the pipeline. C.R. Bard expects the acquisition to contribute about 1% to revenue growth in 2014, and a few cents to adjusted earnings per share in 2013 but neutral to 2014.

Medafor is famous for its Arista MPH Hemostat agent, which controls bleeding and reduce hemorrhage when conventional means become ineffective or impractical. Arista is a plant-based platform using Microporous Polysaccharide Hemospheres technology that has been proved to be safe, effective and convenient to use in many surgical procedures.

Surgical hemostats provide greater visibility of the surgical site and reduce postoperative complications and the potential for costly transfusions. Currently, the global market for surgical hemostats is over $1.4 billion.

C.R. Bard reported adjusted earnings of $1.42 per share in the second quarter of the year and beat the Zacks Consensus Estimate by 4 cents. Revenues increased 2% (3% at constant exchange rate or CER) on a year-over-year basis to $759.9 million and surpassed the Zacks Consensus Estimate of $751 million.

BCR expects revenue growth in the range of 1%–3% at CER, excluding any royalties from the Gore litigation in the third quarter of 2013. The company expects adjusted earnings in the range of $1.37 to $1.41 a share in the quarter.
 












Bard buys Medafor at "Bargain Basement" Price
Timothy Ring needs to be congratulated for taking Medafor at $6.37 a share ($200 million) considering Bard bought NeoMend for $165 million earlier this year. NeoMend had $22 million in sales 2012 competing in $100 million market. Medafor on the other hand had $40 million in sales in 1.4 billion market. Arista is a diamond in the ruff and ProGel is a piece of coal in comparison. Nice play Mr Ring!

Medafor has never been able to realize its full potential because of inept management past and present. Just ask any Medafor Shareholder who has been waiting on a payoff for 10 + years. Thers is no doubt they will approve the sale because some of them are to old to wait any longer. The only ones who will truly benefit from this sale are the ones who got all the free shares i.e. the upper management. Make no doubt about it no matter what they say - they have been on the knees begging for a buyer. They found one in Spain last year. Now all they need to do is wipe their mouths and enjoy their money.

The best thing that can happen for the Medafor Shareholders is to let Bard run the show and get rid of all the Medafor management. Then perhaps the shareholders will be able to collect an additional $2.87 a share or $80 million. Here are some Big reason they need to be done with this team:
1. The Cryolife debacle - the current ceo makes a deal that ends up costing millions and steals the momentum the sales force had
2. European Sales have been dismal even though Arista has been approved since 2001. This was the vp responsibility
3. The national sales manager did one thing right in the beginning - he got the successful reps to share their winning strategies. After he brought in his 2 cronies dumb and dumber, things went down hill. The nsm and his brain trust had to take control of Medafor business by telling distributors who to hire and fire, taking accounts and potential accounts at will. They decided that 1 price increase in one year was not enough so they had another. They would not or could not get a contract out in timely matter. This alone cost Medafor millions and a lot of momentum. None of the above had any OR sales experience or how to sale to surgeons. Wait, they did have a training program -30 min PowerPoint and a good luck slap on the back. The nsm used his influence to make reps sell his on personal products like surgical glasses and multi level travel services for his own gains. This was definitely a conflict of interest that the upper management turned a blind eye on or more likely did not know about because of their ineptness.

The 80/20 rule ruled at Medafor. The top 10 distributors accounted for well over 80% of the business. The top five distributors were responsible for 80% of this business. They are holes in Medafor business thru out the US. The Medafor management could not penetrate multi major metro areas because they did not have the talent or ability to train reps to be the successful. They were able to get a Novation contract at a significant discount but could not leverage it to gain any significant business. All it did was erode their existing business. Their price increases were justified by a belief that there would be a upfront savings of 20% because there is no open and unused with Arista. This is true to a degree but what they did not understand is the OR review committees did not look at soft savings no matter how much this was emphasized. The price point was now 10 to 30% above the competitors and was shut down before a trial could get started. The existing customers had so much ill will against Medafor because of their increases and strong arm techniques, they limited the reps ability to sell. The price increases were supposed to induce contracts. If handle properly, this would have happened. It did not. Medafor did not get contracts out in timely matter causing further turmoil and painted a big target on their reps. New accounts were lost before they could bring in revenue because Medafor would not change some wording in their contract. Hospitals refused to sign costing millions in lost revenue. Its is true that sells have increased in the last few years but not at a rate that Medafor enjoyed before Dumb and Dumber and the rest of Medafor middle management came a board. In fact this year growth has only been 12% dismal compared to years past. The writing was on the wall - everyone was on the hot seat. Medafor was able get to where there at by riding the backs of their top Distrubutors. They managed to break them!

Thus we have the reason for the bargain basement deal. The window was closing and the board knew it. The hopes and dreams of a $400 million sale had dried up. Medafor shareholder will accept $200 million. The only chance for the extra $80 million is to get rid of the current management and reverse some of their market moves. Davol would be wise to bring aboard some of Medafor top Distrubutors who know how to sell Arista.
 






Pretty spot on analysis of Medafor and Arista. I was with one of the first distributorships and we were doing well and Medafor was about to crush it until the Cryolife fiasco. Medafor needed cash and took the deal from Cryolife. No doubt me and many other reps felt betrayed and did not push this as much as other products.

Still a great product. It will stop bleeding and do it safely. Great pickup for Bard.
 






Dumb and dumber, well put. Let them dig a hole and put every shot we had into the ground. Bard would be wise to do away with medafor upper management and combine the arista distributors with pgel as its own division. Good opportunity to make or break this if they can figure out the market and utilize the sales force without the b.s. medafor management.
 


















Bard will not be retaining any distributor reps on this product. They have a clear roadmap for the new sealant / hemostat division and already have plenty of manpower (and skill) to staff it.

Sorry if you are a distributor, but this is the risk you take accepting a distributor gig.
 






LOL skill . Independent Principle here ...Have no desire or interest to work for Bard or any other company. Some of us have a portfolio of products and we earn income stream from each line. Of course you will loose lines either by selling too much , not enough , or through acquisition. Why do you think we were paid at %40 on dollar one..yep do the math. They needed market share to get sold , thats the game and thats how companies grow. Oh where did neomend come from If Arista was the main product in Independent bag well ..thats the way Medafor wanted it. They wanted all of our time dedicated to Arista ..What the guy before is saying in code is yes that was his only product and he probably earned 300-400k , poof it's gone. So do the math again, his taxes were more than you will earn in your best year. My taxes are more than you will earn in several years, and I payout to my sub reps more than you will earn . Great product , have fun kicking JnJ and Baxter. I have already filled my bag with new technology,that will get bought by a big company again. This company only pays %30 but hey, my bag is a little to full..but its fun.
 






Sounds like the Bard mamagers/reps on here are a bunch of arse kissing cheerleader. This was a terrible move for Bard. First of all, Bard reps want nothing to do with Progel and Arista is a terrible product. The only reason there are sales with Arista is due to distributors. The product sucks and there are other products on the market that actually work. You bought a 280 million potato. It's amazing how Bard is building this inferior biosurgery department. Now I know why most people would never work for Bard.
 






Arista is a good product . The issue is going to be having it used properly. NOT ONE PERSON WILL EVER WASH IT AWAY , All the reps never told them to irrigate , it will now be off label use if it is left in . So lets see how you can dance around that one. Medafor never really promoted it then all of sudden new marketing pieces came out showing very clearly it has to be irrigated out .
 






Anonymous said:
Arista is a good product . The issue is going to be having it used properly. NOT ONE PERSON WILL EVER WASH IT AWAY , All the reps never told them to irrigate , it will now be off label use if it is left in . So lets see how you can dance around that one. Medafor never really promoted it then all of sudden new marketing pieces came out showing very clearly it has to be irrigated out .
Click to expand...

I curious about this poster's recent post. Most of these types of hemostatic agents, in the "flowable" catergory, requiring irrigation after application. Floseal, and Surgiflo, the two leading "flowables" require this. First keep in place for 2 minutes, then irrigate. Right there in the IFU. So my question to this poster is whether the nature of the post was trying to indicate that Arista will lose its hemostatic effect after irrigation. I have not seen this product used in the OR yet so just trying to understand the poster's opinion of the hemostatic efficacy of this product. If still effective after irrigation, then don't see much issue as this is pretty much standard practice for the two big products Floseal and Surgiflo. If it ruins the "clot" after irrigation then this is a different story. Arista's mechanism of action is enhanced platelet aggregation, whereas Floseal and Surgiflo provide this from the gelatin particles, but also the addition of high concentration thrombin is employed to also help form a clot (two different pathways on the coagulation cascade).
If the clot forms after platetet aggregation with using Arista, not sure why irrigation would disrupt this unless it is uneffective in supporting platelet aggregation and simply is acting as a mechnical plug...but again not likely this is the case. But appreciate your perspective.
 






if the ifu says irrigate why would you leave in . Has nothing to do with the clotting cascade . Simple if the doc leaves in it is off label . just like the genzyme slushy it is off label
 












ok, then what is the issue #11 is posting. reps don't tell them to irrigate today, so they tell the doc to irrigate tomorrow. now up to the docs. case closed. unless #11 is saying it wont work if you irrigate it. that was my question
 












Dear Bard Sales Reps

Over the years I have seen how stupid and unprepared you are. Arista is a hemo static agent. That means it stops bleeding. It stop bleeding dumb asses. Go back to the pool and hit on you VP's girl friend and get in a fight over it loser
 






Floseal cost $182. Surgiflo cost is a few bucks cheaper. 650 for arista??? Distributors are the only ones that can sell this product. Arista will fall to $10 million in sales after the first year. Just like Actifuse with Baxter.

Who made this deal? Groetelaars?? Another under the table deal.

Groetelaars= Kenneth Lay(Enron)
 






Anonymous said:
Floseal cost $182. Surgiflo cost is a few bucks cheaper. 650 for arista??? Distributors are the only ones that can sell this product. Arista will fall to $10 million in sales after the first year. Just like Actifuse with Baxter.

Who made this deal? Groetelaars?? Another under the table deal.

Groetelaars= Kenneth Lay(Enron)
Click to expand...

Refer to POST 17 - Sales will drop to $10 million because of reps like you. Bard - Davol should fire all of you and replace them with Distribitors who can sell.
 






where you getting your Arista prices?? Its about $50 per 1x 5 gram and $40 per 1x 3 gram..not +$600. A box is sold with 5 kits so adjust your prices accordingly. One 5ml Floseal about $160 on contract.
 






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