San Diego’s ResMed expands its cloud software footprint in Europe by acquiring German firm for $1 billion

San Diego’s ResMed, best-known for its sleep apnea devices and ventilators, has inked a deal to buy German health care software outfit MediFox Dan in an all-cash deal valued at $1 billion.

The acquisition gives ResMed’s lesser known software segment a foothold in Europe. While the company generates $2.8 billion in annual revenue from the sale of respiratory devices and masks, it also has a cloud software arm that posted $374 million in sales last fiscal year. It includes Brightree and MatrixCare brands, acquired in 2016 and 2018, respectively.

To date, ResMed’s software business has been focused mostly on the U.S market, said Chief Executive Mick Farrell. It targets suppliers of home medical equipment, as well as hospice, skilled nursing, senior living and home health care providers. Among other things, the software helps with analytics, management and documentation, some of which is required for insurance reimbursement.

MediFox Dan is focused on similar markets, including nursing homes and home health providers. Its subscription software includes care documentation, personnel planning, administration, billing, and other services. It’s profitable, with 8,000 customers, 600 employees and $83 million in annual revenue.

“This is our first foray into a pure play software-as-a-service business in Europe,” said Farrell. “And we see it as a great opportunity to extend our capabilities from just being a U.S. SaaS business to truly beginning to be a global one.”

MediFox Dan is owned by Hg, a London and Munich-based private equity firm that invests mostly in technology companies. ResMed expects to continue to operate MediFox Dan under its existing brand name and retain its 600 employees, the company said. The company’s long-time co-managing directors, Thorsten Schliebe and Christian Städtler, will continue in their current roles.

ResMed is paying $950 million euros for the company, which equates to just under $1 billion in U.S. dollars at today’s exchange rates. It expects to finance the acquisition through existing cash and borrowing under its current credit lines. Upon closing, the deal is forecast to immediately increase ResMed’s adjusted earnings per share.

“This MediFox Dan acquisition fits our strategy, meets the financial returns that we’re looking for and is a great cultural fit for ResMed,” said Farrell.

The companies announced the transaction Tuesday as markets opened. ResMed’s shares ended trading down 38 cents at $202.01 on the New York Stock Exchange.