March 1, 2016

Questionable merger deal in the medical tech industry

How will the ResMed-Brightree deal play out over the coming months?

The technology-focused medical device organization ResMed recently announced its move to purchase the business management and clinical software applications company, Brightree, in a deal valued at $800 million. ResMed's main marketplace is in respiratory and sleep-disorder breathing care, while Brightree's software solutions help hospice and home-healthcare facilities manage their clinical and business operations with ease.

These markets tend to overlap, making this monumental merger beneficial for future industry growth. As part of the deal, Brightree will continue to operate separately from ResMed, while President and CEO Dave Cormack and other essential employees will still have their current positions.

"This acquisition furthers ResMed's position as the leading tech-driven medical device company and gives our customers new tools to help them increase operational efficiency and improve cash-flow while delivering best-in-class patient care," Mick Farrell, CEO of ResMed, said in a prepared statement. "This acquisition will enable us to add to our portfolio of digital solutions to drive operational excellence and improve outcomes for patients, providers and payers."

Others, however, aren't as supportive of the merger, such as Intelligent Investor's Graham Witcomb, who wrote that the high merger cost seven times Brightree's 2015 revenue, and this makes him skeptical about the merits of such a large-scale acquisition. Furthermore, ResMed already is creating its own cloud-based software platform, Air Solution, which would be the primary focus of buying out a clinical cloud-based organization.

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