Now the big question for Synovis Life Technologies Inc. is: What's next?
On Tuesday, the St. Paul-based medical device company shed its interventional business, which primarily makes components for heart defibrillators and pacemakers, for $29.5 million in cash.
The buyer is Heraeus Vadnais, the Vadnais Heights division of German-based equipment supplier Heraeus Group.
Synovis CEO Richard Kramp said Synovis now can concentrate on building its core surgical-products business, particularly in the area of soft-tissue repair.
"As the two businesses grew over the past 10 years they became increasingly diverse," he said. "We live with both divisions every day and it doesn't seem too complicated, but investors had a hard time grasping it."
About 220 employees will be affected. Kramp said all will be offered jobs at Heraeus operations in the Twin Cities area or in Puerto Rico. About 180 to 190 employees will remain with Synovis' surgical business in St. Paul, perhaps best known for its Peri-Strips, surgical staples used in obesity surgery.
The interventional business, which reported $30.2 million in sales last year, has been battered by recalls and product safety and insurance reimbursement concerns in the overall heart defibrillator and pacemaker business.
"The volatility associated with market changes, often beyond the control of the business, has been problematic, particularly for a public company," Kramp said in a Tuesday call with analysts.
"Now, in my mind, they're a 100 percent proprietary medical device company that is growing nicely, is profitable, with high gross margins and with some cash to spend," said Ernest Andberg, an analyst with Feltl & Co. "The question now is how will they spend it?"
Synovis is expected to reap about $23 million in after-tax proceeds from the deal. Coupled with $54 million in cash left on its balance sheet at the close of 2007, it will now look to buy promising companies and invest in developing existing products.
Synovis' stock closed Tuesday at $20 a share, up 90 cents.
Janet Moore • 612-673-7752
