Philips, the Dutch health technology conglomerate, said Monday it would buy Respiratory Technologies Inc., a St. Paul-based provider of electronic-pulsating vests used to fight respiratory diseases.
Dr. James Ehlen, chief executive of the firm known as RespirTech, told employees that he expects Philips to grow the business significantly.
RespirTech, with 220 employees, manufactures vests initially developed at the University of Minnesota that improve circulation for patients with chronic breathing conditions, such as chronic obstructive respiratory disease and cystic fibrosis. The vests inflate and deflate rhythmically, helping patients clear their lungs.
The company has been growing sales by about 30 percent annually and is heading toward $50 million in revenue this year.
The transaction price was not disclosed.
"With this transaction, we will broaden our portfolio with a proven therapy to enable patients with chronic respiratory disorders manage their condition and receive the care they need in the home," John Frank, who leads Philips' respiratory care business, said in a statement.
"RespirTech's vest therapy can be applied to a range of respiratory conditions and various neuromuscular diseases, where patients' compromised abilities to cough often leads to serious respiratory complications and associated higher care costs," he said.
Studies by independent researchers have found that RespirTech's inCourage vest system, which costs $12,000 to $15,000, is a low-cost alternative to extended hospital stays.
Ehlen said a small number of administrative jobs may be cut as a result of the deal. However, he said the overall plan is for growth after the cash transaction is consummated within several months. "Philips intends to build around RespirTech in Roseville a [respiratory] center of excellence," Ehlen said.
Ehlen, who is 72, said he plans to stay on for an indefinite period.
"I like the people so far with whom I am working at Philips," he said. "I like walking in here every day and they said they would like me stay as long as I wish. I will as long as I enjoy the work. I'm not going to work forever. For sure, I want to see a high-class transition."
Ehlen, an endocrinologist at the University of Minnesota Medical School, left the ranks of practicing physicians in the 1980s to take over then-flailing Medica, and was a top executive at Allina Health System in the 1990s.
Ehlen was asked by RespirTech's lead investor, Bill Brown of White Cliff Capital, to join the company's board more than a decade ago. He took over as chief executive in 2007, amid technology and management challenges.
His mandate was to polish up the outfit and sell it for the best price.
Ehlen and key employees eventually created a health-and-commercial winner with the patented airway-clearance vest.
Philips said Respirtech's inflatable inCourage at-home vests and ClearChest in-hospital vests offer a broad range of care solutions to manage COPD, asthma and other respiratory conditions, and round out its airway-clearance devices, oxygen and ventilation systems.
Philips' health technology businesses had sales exceeding $20 billion last year. The company employs 70,000 in more than 100 countries.