StarFish Medical and Kangaroo Group complement each other well, according to StarFish's CEO.

Nancy Crotti

A fast-growing company in western Canada is buying a smaller company in Toronto to form the country's largest medtech design and development firm.

StarFish Medical of Victoria, BC, expects to complete the purchase of Kangaroo Group on April 3 for an undisclosed sum. StarFish founder and CEO Scott Phillips will lead the combined company, which will retain the StarFish name. Kangaroo CEO Lahav Gil will serve as vice president for innovation. The company will operate design and manufacturing facilities in Victoria and Toronto, with a regional sales office in Minneapolis, MN.

Both are contract manufacturers, with StarFish focusing on technology and Kangaroo on industrial design. Both are also relatively young. StarFish is 17 years old and Kangaroo has existed for 14 years. Phillips was looking to expand StarFish's presence in the eastern portions of Canada and the United States and found Kangaroo to be a nice fit.

"We looked at quite a lot of companies that were all good companies but not really a cultural match for us in terms of solving deeper problems, making sure to get the project right," Phillips said in a phone interview. "When we met Kangaroo, we realized they were a good philosophical match for us."

StarFish works with large companies like C.R. Bard and Medtronic, but focuses on startups, small and medium-sized companies, many of which have been acquired. They include Pyng Medical (now Teleflex, Wayne, PA), Fluid Medical (now Philips Volcano, San Diego), Ultrasonix (now Analogic Ultrasound, Peabody, MA), HD Plus (now Outset Medical, San Jose), LensGen (Irvine, CA), and HemoSonics (Charlottesville, VA).

Kangaroo has worked with Minnetonka, MN-based IMRIS, and with Exact Imaging and XOR Labs, both of Toronto.

StarFish's sales are also growing rapidly, doubling to nearly $13.5 million U.S. in 2016. Kangaroo's sales reached $2.25 million U.S. last year. The combined company will have 129 employees, including 24 coming from Kangaroo.

"We do expect to grow as well," Phillips said. "We think there's a lot of potential in the East that we haven't unlocked."

Existing Kangaroo clients will experience much more robust service and offerings, Gil said in a statement.

"On the product development side, they will be able to tap into a plethora of additional expertise," he said. "In manufacturing they'll find an expanded supply chain and regulatory personnel and expertise."

Phillips sees a benefit to both companies' clients, with staff from each being able to work on projects together.

"We gain complementary skills," Phillips said. "We create a much more robust corporate platform so we can serve larger clients with more staff and larger programs."

Nancy Crotti is a freelance contributor to Qmed.

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