Business, cardiology

Philips expands into US home cardiac monitoring market with acquisition of Raytel Cardiac Services

4 October 2007

Royal Philips Electronics (NYSE:PHG, AEX:PHI) has announced that it is to acquire US-based Raytel Cardiac Services (a division of Raytel Medical Corporation) and other ancillary operations from SHL Telemedicine Ltd, for approximately US$110 million in cash.

Raytel Cardiac Services is a leading US provider of home cardiac monitoring services that doctors prescribe to heart patients. Cardiac technicians based at monitoring centres analyze patient data and provide real-time patient information to prescribing physicians.

Acquiring Raytel Cardiac Services represents a further step in Philips’ healthcare strategy of improving patient outcomes in specific care cycles, such as cardiology. It complements recent acquisitions of Lifeline and Health Watch. Philips has an 18% shareholding in SHL.

The acquisition is subject to regulatory approval and is expected to close in the fourth quarter of 2007, upon which Raytel will become part of Philips’ Home Healthcare Solutions business group. Raytel will also be rebranded under the Philips name.

“Heart disease is the number one killer in the west. So Philips has invested heavily over the years to become the top supplier to hospitals of medical equipment for managing heart disease. Patients are living longer and healthcare costs are rising, so we’re looking for innovative and effective ways to support both patients and the healthcare system. Raytel can help us extend the cardiac care cycle into the home, which is where patients prefer to stay, and where we see opportunities for addressing healthcare costs as well as quality of life issues,” said Ron Feinstein, CEO of Philips’ Home Healthcare Solutions business group.

Erez Alroy, Co-CEO of Tel Aviv-based SHL, commented: “We are very excited about the agreement with Philips. This is a major achievement for SHL, strengthening our relations with our strong strategic partner with the capacity and capability to significantly increase penetration of SHL products in the North American market. In addition, the transaction will provide SHL with significant cash resources to increase the pace of its expansion in the German market as well as development of new markets and products"

The activities Philips is acquiring are expected to have 2007 sales of approximately US$55 million. Philips aims to grow Raytel Cardiac Services by capitalizing on its existing relationships with 15,000 referring physicians and cardiologists who serve over 200,000 patients annually.

Philips aims to leverage these relationships for Philips Lifeline’s products and services as well as for Philips’ in-house line of remote patient monitoring products and services. New products and services based on Philips’ and SHL’s products and solutions, such as congestive heart failure (CHF) monitoring in the home are also expected to fuel growth.

Philips is already the leading provider of personal response services and emergency call systems in the United States and Canada through Lifeline, which has 750,000 subscribers. These often suffer from a variety of chronic illnesses, including CHF. Philips expects they too would benefit from the cardiac monitoring service supported by trained cardiac technicians that Raytel offers.

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