Fresenius closes $2B NxStage buyout, settles FCPA case for $255m

Fresenius Medical Care said today that it closed the $2 billion acquisition of NxStage Medical and settled self-reported violations of the U.S. Foreign Corrupt Practices Act for nearly $255 million.

The $30-per-share deal for the Lawrence, Mass.-based home hemodialysis pioneer, first announced in August 2017, was initially slated to close by the end of that year. But it was delayed several times by the government shutdown this year and by the U.S. Federal Trade Commission, which only cleared the transaction last week. To mollify the anti-trust regulators, NxStage last July agreed to deal its Medisystems bloodlines business to B. Braun.

“The closing of this transaction is an important milestone in enhancing our patients’ choice of dialysis treatment modality,” CEO Rice Powell said in prepared remarks. “By combining NxStage’s capabilities with our broad product and service offering, we can help patients to live even more independently. In addition to broadening our product portfolio, this acquisition positions Fresenius Medical Care to benefit from the growing trend toward home-based therapies.”

“It’s a great pleasure to welcome our new NxStage colleagues. With their strong culture of innovation and transformation, they will help us to realize our vision of delivering access to superior patient care and outcomes in a lower-cost-of-care home setting to all the patients we care for. We are excited to execute on a strategy that is good for patients, the healthcare system and us,” added Fresenius Medical Care North America CEO Bill Valle.

Fresenius lowered its estimation of the deal’s integration costs, initially tabbed at $150 million, to $56.8 million to $85.2 million (€50 million to €75 million) over the next three years. Excluding those numbers, NxStage is expected to deliver net losses of -$85.2 million to -$73.9 million this year and -$45.5 million to -$34.1 million in 2020, on sales of $272.8 million to $295.5 million and $352.4 million to $375.1 million, respectively.

SEC, DoJ FCPA charges settled for $255m

The German dialysis giant also said that it had booked charges of $254.6 million (€224.0 million) as of Dec. 31, 2018, to cover the settlement of FCPA charges leveled by the Securities & Exchange Commission and the Justice Dept.

Fresenius said it voluntarily reported potential FCPA violations to the agencies after a whistleblower’s email in 2012 and cooperated with the ensuing government investigations.

“In the course of this dialogue, the company identified and reported to the government, and took remedial actions including employee disciplinary actions with respect to, conduct that resulted in the government seeking monetary penalties and other remedies against the company and disgorgement of related profits revolving principally around conduct in the company’s products business in a limited number of countries outside the United States,” Fresenius said in a Feb. 20 regulatory filing.

The settlement is an agreement in principle and must still be approved by the SEC and the Justice Dept., the company said.

Mass Device | February 26, 2019

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