eResearch Technology (ERT), the US-based supplier of centralised electrocardiogram (ECG), electronic patient-reported outcomes (ePRO), eClinical and other services, has widened its palette to embrace diagnostic testing with an agreement to acquire the research services division of CareFusion Corporation (CRS) for US$81 million in cash.
The acquisition will diversify ERT’s revenue base and give it a global platform for growth in an estimated US$1.3 billion per year clinical research market, with a broad presence in both the US and Europe, the company said.
Originating in Germany as part of the Eric Jaeger healthcare device manufacturing and services operation, entering the clinical research market in 2002 under the VIASYS Healthcare banner, and eventually spun off from Cardinal Health in 2009 as one of the business that made up CareFusion, CRS services 16 of the 20 largest pharmaceutical companies and has supported clinical trials in over 75 countries.
The company is a leading provider of respiratory diagnostic services and manufacturer of diagnostic devices, as well as offering cardiac safety and ePRO services. All of these will be integrated into ERT’s existing businesses. The acquisition, which is expected to have a neutral impact on ERT’s earnings per share (EPS) in 2010 and to be accretive to 2011 EPS (excluding amortisation of acquisition intangibles and transaction costs) is slated to close in June.
Dr Michael McKelvey, president and chief executive officer of ERT, said the transaction “delivers on our stated strategy to leverage our cardiac platform and operating model to more broadly support the centralised collection, interpretation and delivery of clinical efficacy and safety information critical for all phases of clinical research”.
According to Vivek Jain, president of medical technologies and services at CareFusion, the business “is an excellent strategic fit with ERT and will be able to grow faster aligned with a leading service provider to the pharmaceutical industry”.
Specifically, the companies believe, the combination of ERT and CareFusion will:
– Establish ERT “as one of the market leaders” in respiratory core laboratory services for the clinical trial sector.
– Provide ERT with a leading diagnostic device capability: CRS has developed more than 20 proprietary devices and supporting software platforms for use in clinical trials.
– Expand ERT’s revenue base in cardiac safety through CRS’s “significant and growing” presence in that market.
– Boost the depth and breadth of ERT’s ePRO services. According to the company, the acquisition will make it one of the five largest providers in the ePRO market, supplementing ERT’s interactive voice response and planned web-based technology with CRS’s innovative hand-held device offering.
– Expand significantly ERT’s global footprint. CRS employs more than 250 people, around 230 of whom are based in Germany.
– Accelerate ERT’s movement into “healthcare solutions” through the addition of CRS’s device manufacturing and service capabilities, which provide “a platform and experience for future growth in healthcare delivery”.
First-quarter results
ERT reported operating profit of US$2.75 million for the first quarter of 2010, down by 17.8% on the three months ended 31 March 2009.
Net income was US$1.75 million, or US$0.04 per diluted share, in the latest quarter compared with US$2.07 million, or US$0.04 per diluted share, in the first quarter of 2009. The 2010 figure included a negative impact of US$0.7 million, or US$0.01 per diluted share, from transaction expenses related to the acquisition of CareFusion’s clinical research services.
Net revenues were US$21.9 million in the first quarter of 2010, down by 8.1% year on year. The US$23.8 million in net revenues recorded for the first quarter of 2009 included US$1.4 million from ERT’s electronic data capture operations, which were sold to OmniComm in June 2009.
