Bankrupt respiratory giant will be acquired

On August 19th, Zoll announced that it had submitted a winning bid to acquire the respiratory business of Vyaire Medical.

It is understood that this acquisition is part of Vyaire's Chapter 11 bankruptcy proceedings. The successful completion of the acquisition still requires court approval at the sale hearing. Zoll expects to have a result in the coming weeks.

It is worth mentioning that as a giant in respiratory anesthesia, Vyaire Medical announced in June this year that due to lower than expected performance in the first half of the fiscal year, it was difficult to refinance, and it had applied for Chapter 11 bankruptcy protection in the United States, planning to sell part of its business.

As a global leader in emergency resuscitation, Zoll has multiple products such as ventilators, monitors, and defibrillators. The acquisition of Vyaire Medical will enhance its medical service capabilities in the respiratory field.Several times sold off

Respiratory giant files for bankruptcy

Data shows that Vyaire Medical is a company primarily engaged in the production of ventilators and respiratory diagnostic equipment, initially established as a joint venture between BD and Apax Partners in 2016. Its product portfolio includes respiratory diagnostic equipment, ventilation devices, and consumables, such as the bellavista® series of ventilators, Vyntus® pulmonary function testing systems, and AirLife® oxygen therapy products. These products are widely used in various fields including acute care, long-term care, neonatal care, and transportation.

Vyaire Medical's ventilators and related equipment are widely recognized for their efficiency, reliability, and intelligence, meeting stringent medical standards and demands.

In the early stages of the COVID-19 pandemic, there was a surge in market demand for its products, and it became one of the three major ventilator partners with the U.S. Department of Health and Human Services (HHS), securing a contract worth $407.9 million, while producing 32,300 ventilators in the first half of 2020.However, as demand gradually declined later on, in September 2020, the U.S. Department of Health and Human Services (HHS) prematurely terminated its $407.9 million (approximately 3 billion RMB) contract with Vyaire due to the sufficient supply of ventilators in the strategic national stockpile, which had a significant impact on the company.

In fact, in May 2023, Vyaire announced the sale of its consumables business to SunMed, with the agreement including single-use oxygen delivery systems and devices used to open patients' airways, such as positive pressure ventilation masks and tubes, under brands including Salter Labs®, Ethox Medical™, and Ventlab™. The transaction amount was approximately $310 million (approximately 2.25 billion RMB), and the company netted about $134 million in cash after repaying outstanding credit.

Despite obtaining some funds through this transaction, the company's financial situation still did not fundamentally improve. Eventually, at the beginning of this year, the company fell into financial distress, preventing it from continuing normal operations.

In June of this year, Vyaire announced that due to the first half of the year's performance being below expectations, making it difficult to refinance, the company has filed for Chapter 11 bankruptcy protection in the United States and plans to sell part of its business. The bankruptcy filing documents show that the company's current total assets are between 100 million and 500 million USD, and total liabilities are between 500 million and 1 billion USD.

Vyaire emphasized that the bankruptcy filing only affects its U.S. operations and a non-operating international holding company. It also stated that it plans to continue operations during the bankruptcy protection period and to secure post-bankruptcy financing with court approval to ensure the normal operation of the business.02

Breathing Care

Is the Core Business Strategy of Zhuo'er

Public information indicates that Zoll Medical is a global leader in the field of emergency resuscitation, with a range of products including ventilators, monitors, defibrillators, and more, covering multiple areas such as cardiac defibrillation, sleep apnea, cardiac resuscitation, and therapeutic temperature management.

The founder of Zhuo'er Medical, Professor Paul M. Zoll from Harvard Medical School, can be considered the progenitor of the application of defibrillation technology. In 1952, Dr. Zoll demonstrated that external electrical stimulation of the patient's chest during cardiac arrest could produce an effective heartbeat, and he was also the first physician to successfully use external defibrillation to regulate a patient's heart rhythm.In 1980, Dr. Zoll, along with several other co-founders, established Zoll Medical. After decades of development, Zoll has built a full line of products centered around emergency medical services, with its core product in the public emergency field being the AED (Automated External Defibrillator).

In the 1990s, as the American Heart Association proposed that emergency responders should immediately use defibrillators in response to cardiac arrest, and emphasized that the most important factor in promoting patient survival is the speed of treatment, the U.S. AED market began to grow. Zoll Medical also began to enter the AED market. Prior to this, there were reports that Zoll Medical's AED market share was the highest in the world.

After years of development, Zoll has become a global leader in acute critical care, as well as related software and diagnostic tools, with its solutions used worldwide for diagnosing and treating patients with severe cardiopulmonary and respiratory diseases. Since 2014, Zoll has been manufacturing ventilation equipment and accessories specifically designed for the transport of critically ill patients.

In 2012, Zoll was acquired by Asahi Kasei, a Japanese chemical company. In recent years, Zoll Medical has been more inclined to expand its product line through acquisitions.

Regarding the acquisition of Vyaire Medical, Zoll CEO Jon Rennert stated: "For many years, respiratory care has been at the core of Zoll's business strategy. If the acquisition is successfully completed, adding Vyaire's ventilators to Zoll's product portfolio will enhance our ability to serve a broader range of clinicians and patients."Global Ventilator Market Holds Immense Potential

Medical ventilators are medical devices capable of replacing or assisting the autonomous respiratory function of the human body. They establish a pressure difference to allow air or oxygen-enriched gases to enter the patient's lungs, achieving artificial ventilation. With the aging population and the increasing incidence of chronic respiratory diseases such as chronic obstructive pulmonary disease (COPD), as well as factors such as the rising popularity and portability of products, the global demand for medical ventilators continues to rise, indicating a huge potential for the future market.

According to data from the ShangPu Consulting Group, the global market size for medical ventilators was approximately $5.45 billion in 2022, with an expected compound annual growth rate (CAGR) of 15.8% from 2022 to 2027. Invasive ventilators account for 60% of the market share, while non-invasive ventilators hold about 40% of the market share. The main players include Draeger, Philips, Maquet, GE Healthcare, and Hamilton Medical, with these five companies holding over 60% of the global market share for medical ventilators.

Regionally, the North American market currently has the largest market share, approximately 40%, while the Asia-Pacific region has a market growth rate higher than the global average, primarily due to the large population size, rapid economic development, and increasing medical demand in the Asia-Pacific region.It should be noted that, despite the promising outlook for the global medical ventilator market, Vyaire Medical has been significantly impacted by the post-pandemic demand slump. Additionally, the company is at a competitive disadvantage, especially when the major market share is dominated by international brands such as Draeger and Philips. This has directly led to the deterioration of the company's financial situation, ultimately resulting in the filing for bankruptcy protection.

So, after declaring bankruptcy, can Vyaire Medical successfully be acquired by Zoll to weather the crisis? If the merger is completed, will Vyaire Medical be able to revive its ventilator business under Zoll's operations?