Philips To Fund HealthTech Through Lighting Biz IPO
By Jof Enriquez,
Follow me on Twitter @jofenriq
Dutch conglomerate Royal Philips recently confirmed that it is planning an initial public offering (IPO) in 2016 for its lighting business. The company aims to use the proceeds from the IPO to jumpstart its standalone healthcare business called HealthTech.
Philips said in a recent shareholders circular that it would likely offer a minority interest in the IPO scheduled for the first half of next year, according to a New York Times report. However, the company added that it is planning subsequent secondary offerings or transactions with the ultimate goal of a full divestment of its lighting business.
The company announced last year that it is splitting into two companies — the lighting business and HealthTech, the latter focusing on higher-profit healthcare products and services. Philips said the restructuring would allow it to overcome sluggish growth and re-invent itself by refocusing on healthcare.
Philips reported a huge drop in profits last year due to operational difficulties, weakening markets, and restructuring costs. Restructuring is expected to cost the company up to €650 million in 2015.
In the shareholders circular, Philips said focusing on healthcare would yield greater value for the company, especially given the factors of increasing connectivity, as well as greater consumer engagement and demand for affordable healthcare solutions.
“Royal Philips will retain its leading portfolio of businesses addressing the health continuum, from healthy living and prevention, to diagnosis, treatment, recovery and home care, serving an addressable HealthTech market estimated at over EUR 100 billion,” the letter read. “The combined Healthcare and Consumer Lifestyle businesses are strongly positioned, with leadership in ultrasound diagnostics, cardiac care, home healthcare and personal hygiene, among others.
It urged shareholders to vote at their next meeting on May 17 in favor of the IPO to spin off the lighting business. The company also expressed confidence that its HealthTech business will be able to respond to the upheaval in the healthcare sector.
“A united HealthTech portfolio, enabled by a cloud-based digital health platform and big data analytics capabilities, will be uniquely positioned to capture the key opportunities in population health management, improved solutions for health systems and accountable care organizations, and coordinated care delivery across the health continuum,” the company stated in the letter.
Philips has already made a series of moves consistent with its health and technology refocusing strategy.
In June last year, it announced a collaboration with Salesforce.com to create a cloud-based platform to store clinical data from medical devices, hospital information systems, and remote monitoring apps for patients with chronic diseases.
In January, it announced the creation of a medtech incubator in Israel, a global center of medtech innovation.
Last month, the company completed its $1.2 billion acquisition of Volcano Corporation, a leader in intravascular imaging for coronary and peripheral therapeutic devices.