Surgical Innovations acquires NHS medical products supplier in £9.4m deal

KEYHOLE SURGERY instruments maker Surgical Innovations is to buy Elemental Healthcare, an NHS medical products supplier, for £9.4m.

Leeds-based Surgical said Elemental is already well known to the firm as the exclusive distributor of the SI brand in the UK. It said that the acquisition of a profitable and cash generative distributor is expected to have an immediate positive impact on Surgical’s profitability.

Nigel Rogers, executive chairman of Surgical, said: “Coming together was the natural next step for two businesses that have had such a long-standing and fruitful partnership. Adam and David, the principals at Elemental, have a great pedigree in the medical device section and we look forward to benefiting from their insights into our new product initiatives and business development here and abroad.”

Elemental is owned by cofounders Adam Power and David Marsh.

They will both join the board of Surgical Innovations as group development director and group commercial director.

Surgical announced a placing and subscription to raise £5.5m at a placing price of 3p through stockbroker WH Ireland to help fund the deal.

The proceeds will be used to fund the acquisition, alongside existing cash resources and a new £2.5m debt facility with Yorkshire Bank.

Eric Burns, director of research at WH Ireland, said: “We have argued for some time that Surgical Innovations offers investors a platform for building a much larger healthcare business on AIM and the Elemental deal is a major first step in this direction.

“With the substantial resources of a PLC owner behind it we think there’s good scope for Elemental to significantly increase its product portfolio as well as bringing a direct sales force to Surgical from day one.”

In March, Surgical announced an 11 per cent increase in annual sales to £6.1m.