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Stryker Pays Nearly $3 Billion on Hospital Products Maker

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Sage Prevalon Liftaem Mobile Patient Transfer System

Sage Products' portfolio includes the Prevalon Liftaem mobile patient transfer system. (Image courtesy of Sage Products)

Sage Products makes and distributes disposable products for everything from skin preparation and protection products to devices that position and move patients.

Qmed Staff

Stryker said Monday that it will acquire Cary, IL-based Sage Products, which manufactures a host of products meant to prevent so-called "never events" in ICUs and hospitals, including hospital-acquired infections.

The all-cash transaction, valued at $2.775 billion, is expected to close in the second quarter of 2016, pending the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions.

Founded in 1971, Sage Products is a growing, $430-million-a-year business that makes and distributes products for oral care, skin preparation and protection, patient cleaning and hygiene, and turning and positioning of patients, as well as heel care boots.

Sage Products sales were up 13% in 2015.

"The company's established leadership team and innovative products that help prevent hospital acquired conditions have driven consistent double-digit sales growth," Stryker CEO Kevin Lobo said in a news release.

Lobo sees Sage providing tremendous value.

"The double-digit growth has been organic, and it has been well over a decade. ... The size of the opportunity is still very significant," Lobo told analysts during a Monday conference call.

Sage's portfolio of disposable products also complement Stryker products including ICU and hospital beds. Stryker executives see a great deal of potential in expanding Sage sales around the world, and leveraging Stryker's existing relationship in hospitals.

The Sage acquisition goes along with Stryker's growth strategy, which Lobo recently described as being based on a diversified sales footprint bolstered by "healthy R&D investment and a focus and disciplined M&A effort."

Other recent developments by Stryker include plans to build a brand new, state-of-the-art 3-D printing manufacturing facility this year. Stryker has not yet disclosed where the 3-D printing plant will be built, or how much it will cost. The 3-D printing is used for new, innovative products including revision cones with geometry that can only be made with 3D printing, and a soon-to-be-launched 3-D printed titanium interbody device for spine.

"For the foreseeable future, at least the next three, four years or so, our focus is really on innovative new products and not replacing our existing products with -D printed products. The pipeline of innovative new geometries that can't be made without 3-D printing is the area of focus," Stryker chief financial officer Bill Jellison told analysts in January 26 conference call transcribed by Seeking Alpha.

Next: Medtronic Announces First Acquisition of 2016

Learn more about cutting-edge medical devices at MD&M West, February 9-11 at the Anaheim Convention Center in Anaheim, CA.

Chris Newmarker is senior editor of Qmed and MPMN. Follow him on Twitter at @newmarker.

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