Devices & Diagnostics, Health IT, Patient Engagement

Covidien makes wearables acquisition with Zephyr Technology deal

Covidien, the medical device manufacturer, has acquired Zephyr Technology Corp. for an undisclosed amount. Rhonda […]

Covidien, the medical device manufacturer, has acquired Zephyr Technology Corp. for an undisclosed amount. Rhonda Luniak, a vice president of communications at Covidien, confirmed the deal, originally reported by MobiHealthNews.

Luniak told MedCity News in a phone interview that Covidien (NYSE: COV) acquired the business in March. The company’s first wearables acquisition will fit into the medical device company’s patient monitoring division, which includes devices such as pulse oxymeters, as well as devices that monitor oxygen saturation and consciousness.

A quarterly earnings report by Covidien said it acquired three businesses for a total of $128 million.

“The total consideration was comprised of upfront cash payments totaling $94 million ($92 million, net of cash acquired); debt assumed of $1 million, which was subsequently repaid; and the fair value of contingent consideration of $33 million. The contingent consideration, which could total a maximum of $192 million, consists of milestone payments related to the achievement of sales targets.”

She said it wants to help hospitals use the technology to lower costs, increases patient safety and reduce hospital re-admissions.

“Our initial focus is really around bringing remote patient monitoring technology to the general care floor in the hospital,” said Luniak. “Our initial interest is how we can help physicians, clinicians and other caregivers with remote patient access in healthcare facilities and the home.”

Luniak said its goal is to integrate Zephyr’s staff and operations with minimal disruption into the business, although she cautioned that it was early on in the integration phase. The plan is for Zephyr’s operations to remain in Annapolis, Maryland.

Zephyr Technology has evolved quite a bit as a wearables company since its start in 2003. Its tracking technology was originally developed for the military and for athletes to gain insights on their performance. But it later added healthcare. Its ZephyrLIFE platform is designed to help hospitals with remote patient monitoring. It has been used in hospitals to help them reduce hospitalization costs in situations such as fall and bed sore prevention and enhanced sepsis detection. The technology is also being tested to monitor congestive heart failure patients.

Although the wearables market is set to grow from $14 billion in 2014 to $74 billion in 2024, healthcare currently represents a relatively small portion of wearables applications. But that could change if clinical trials can show they’re effective.

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