Ascom acquires GE Healthcare's Nurse Call business - 2012 full year net income for the Group expected to be in the range of the previous year
Ascom (www.ascom.com) acquired all assets pertaining to the Nurse Call business of GE Healthcare (the Healthcare division of General Electric Company) as of 18 June 2012.
GE Healthcare (www.gehealthcare.com) is one of the leading nurse call suppliers in the US and Canadian market. This acquisition gives Ascom access to the North American nurse call market and creates opportunities to combine GE Nurse Call systems with Ascom's existing mobility offering. With this acquisition, Ascom further strengthens its leading market position in healthcare communication.
As Wireless Solutions plans to continue its profitable growth and as market recovery is expected for Network Testing in the second half-year, Ascom expects to close the full 2012 financial year with a net income in the range of the previous year (2011: CHF 23.1 million). Whereas the first half year will turn in a weaker overall performance the Group is expecting a stronger second half of the year overall.
Acquisition of GE Healthcare's Nurse Call business
GE Healthcare is one of the three leading vendors of nurse call solutions used throughout North America. The GE Nurse Call business has its main office in Bradenton, FL (United States). GE Healthcare's Nurse Call business has a large installed base and overall presence in North America. GE Healthcare and Ascom have a well-established relationship given they jointly developed the Mobile Monitoring Gateway for sending alerts and alarms from GE Healthcare Patient Monitors to mobile devices of Ascom. The GE Nurse Call business showed continuous profitable growth and achieved revenues in the range of USD 20 million in 2011 with EBITDA margins comparable to the Ascom Wireless Solutions Division.
Ascom acquired all assets pertaining to the Nurse Call business of GE Healthcare as of 18 June 2012. All 34 employees will be taken over at their existing US locations and they will transfer to Ascom. The purchase price amounts to USD 22 million. In addition, Ascom has agreed to an earn-out payment of up to an amount in the middle single-digit millions dependent on future development of the business.
Patrick Van Ryzin, who has led the GE Nurse Call business for the past three years, will run this new business unit out of Bradenton, FL (United States). He will report directly to Claes Ödman, General Manager Ascom Wireless Solutions.
This acquisition will strengthen Ascom's nurse call business and allows Ascom to provide customers with the best features and functionality from the combined offering with its mobility systems. In addition, customers will benefit from improved workflow efficiency and faster response times. This acquisition also strengthens the existing partnership between GE Healthcare and Ascom and will improve Ascom's position in the growing North American market.
The Ascom Group is well positioned in two global businesses, both of which with market leadership and with a clear focus on innovative software and hardware products, systems, solutions and services. The underlying fundamental megatrends for Wireless Solutions and Network Testing support profitable growth.
Full year net income expected to be in the range of the 2011 result
Ascom assumes that the first half of 2012 will be weaker overall, but still expects a net result around the break-even point. As things stand today, Ascom is forecasting a stronger second half because it expects recovery in its Network Testing business.
Against this backdrop, Ascom expects to close the full 2012 financial year with a consolidated net income in the range of the previous year (2011: CHF 23.1 million), including restructuring costs, provided that the economic environment and currency rates remain stable.
The company plans no capital increase as the equity of Ascom is sufficient. The application of IAS 19 revised standard in 2013 will not have any cash impact.
The Swiss Pension Fund (Ascom Pensionskasse) has a coverage ratio (Deckungsgrad) of 104.5% as of 31 December 2011 according to Swiss law and as audited by Ernst & Young.
The Wireless Solutions Division, which accounts for roughly two-thirds of Ascom's business, has succeeded in continuing the previous year's positive trend during the first half of 2012 and aims to achieve further profitable growth. The Wireless Solutions business has been consistently very stable and profitable over the last years.
The Network Testing Division is still faced with a difficult market environment as mobile network operators continue their cost saving programs for investments and operational expenses. However, strong overall growth in demand for mobile broadband services will require ongoing long-term investments by network operators and Network Testing is well positioned to seize these growth opportunities as the overall market leader.
Implementation of the Enterprise Investment Program for Network Testing is running according to plan. The reorganization measures have been implemented and restructuring has already been largely completed. In addition, all six defined growth initiatives have been started. The implemented measures of the Enterprise Investment Program will reduce the Network Testing Division's annual costs by around CHF 15 million from 2013. Due to the measures initiated as well as the expected market recovery (particularly in North America and Asia), Network Testing expects the second half year to be stronger.
Fritz Mumenthaler, CEO of Ascom, says: "Ascom is very pleased to have acquired a business with such a good strategic fit. With this acquisition Ascom not only gains access to the North American nurse call market, but also opportunities to combine GE Nurse Call systems with its existing portfolio. This transaction represents the next step in building and strengthening the leading position of our Wireless Solutions Division in the healthcare communications market. In addition, Ascom is taking the right measures to counteract Network Testing's difficult market environment. From today's perspective we expect 2012 full year Group profit to be in the range of the previous year. Wireless Solutions continued to grow profitably in the first months of 2012 and the overall perspectives continue to be good while we expect market recovery for Network Testing in the second half of 2012."
Ascom will publish further information as well as the complete 2012 half-year report on 22 August 2012.
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