Philips moves into home healthcare
23 January 2006
Amsterdam, The Netherlands & Framingham, Mass., USA. Royal Philips
Electronics (NYSE:PHG, AEX:PHI) is to take over the US company Lifeline
Systems, Inc. (NASDAQ: LIFE), the leading provider of personal response
services and emergency call systems in the United States and Canada.
Lifeline supports nearly half a million subscribers to its services and
also supplies emergency response equipment and services to owners and
developers of independent and assisted living and continuing-care retirement
communities across North America. In October last year, it was also
selected for the fourth consecutive year by Forbes
magazine as one of Forbes' 200 Best Small Companies.
Philips has agreed to acquire Lifeline for US$47.75 per share or a total
equity value of US$750 million (equalling an aggregate value of US$690
million net of US$60 million cash and cash equivalents) in a transaction
that has been unanimously approved by the Board of Directors of Lifeline.
Completion of the transaction is subject to the terms and conditions of the
merger agreement, which contains customary closing conditions and is subject
to the approval of Lifeline's shareholders.
The acquisition is one of the first moves for Philips' new Consumer
Health and Wellness business, which is part of the Domestic Appliances and
Personal Care division.
"The acquisition of Lifeline is an important step on our roadmap for
growth in healthcare," said Gerard Kleisterlee, President and CEO of Royal
Philips Electronics. "By targeting seniors and other people who want to
continue living independently and exerting more control over their health
and lifestyle," he added, "we aim to become a global player in the evolving
home healthcare market."
The aging of the population provides strong underlying market growth for
home healthcare solutions such as those offered by Lifeline. Today, seniors
represent around 15% of the population in the developed world and are
expected to almost double in size over the next 25 years. At the same time
they are becoming increasingly active in managing their own health and
wellness. Personal response services are already the largest category of
home healthcare solutions purchased out-of-pocket by older adults and their
caregivers. Still, penetration in the age group 65 years and older is just
2-3%, allowing for significant future growth.
Lifeline's revenues in 2005 are expected to be approximately US$150
million, representing a 15% increase over 2004. A large part of the revenues
are recurring in nature. Lifeline's operating margins in 2005 are expected
to be approximately 15%. The company has a broad market presence in the
United States and Canada. The company markets its services through a network
of more than 2,500 hospitals and other healthcare providers and serves a
subscriber base of nearly 470,000.
Lifeline's twenty-four hours a day service gives independently minded
seniors the confidence to maintain an active life at home, knowing if they
suddenly need help, they can send an alert to a monitoring centre that
indicates that they need assistance. Two-way communication allows a caring
and professionally trained operator — who has instant access to the
pertinent health history and personal profile of the caller — to establish
the nature of the problem. Appropriate action can then be taken, including
notifying a neighbour or family member, or summoning emergency services.
"Our many years of understanding consumers and their needs have led us to
identify 'healthcare at home' as a key sector for us," stated Ivo Lurvink,
CEO of Philips Consumer Health & Wellness. "Lifeline is a market-leader that
offers us a platform for other home healthcare products and services. As
such it complements our existing presence in telemedicine, showcased in
Motiva, our advanced interactive healthcare system. We believe our brand,
global presence, technology and innovation capabilities will accelerate the
growth of the company and we're very much looking forward to working with
their experienced management team and talented employees."
Lifeline President and CEO, Ron Feinstein said: "Philips' acquisition of
Lifeline represents the next phase in the continued evolution and growth of
our company. This combination of two industry leaders opens up numerous
product and technology synergies, as well as growth opportunities designed
to both further and broaden Lifeline's founding mission of providing
personal emergency response and support services to the at-risk elderly and
their families to enhance their independence and quality of life."