A longtime investor and board member, Ed Van Humbeck and his family, have purchased 100 per cent of the assets of Intelligent Hospital Systems with the intention of pumping even more money into the sophisticated medical device operation.
Founded in 2006 from technology originally developed at the St. Boniface General Hospital Research Centre, the Winnipeg company makes an automated, self-contained unit for filling IV bags and syringes.
Called RIVA (robotic intravenous automation), the device fills orders at speeds and with efficiency manual production could never approach delivering safe, sterile and accurate doses of medications.
While the company has succeeded in becoming an industry leader with sales worldwide, revenue has not come fast enough to keep pace with its capital demands and the transaction comes at a time when the company is losing money and needed an injection of capital.
'There is a real opportunity here. I have no doubt it will yield very good returns and that it will be great for the province'
Revenues at Intelligent Hospital Systems have slumped over the past two years, largely due to the new health-care landscape in the U.S. with the implementation of Obamacare.
The new system has imposed a tax on medical technology and caused many hospitals to divert new capital equipment spending into updating software to comply with the new regulations.
Van Humbeck, who has been a significant investor in IHS since 2008, said the new laws in the U.S. have caused much confusion in U.S. hospitals as to where their financing was going to come from.
But he is very optimistic about the future of IHS.
"There is a real opportunity here," Van Humbeck said. "I have no doubt it will yield very good returns and that it will be great for the province."
The terms of the deal were not disclosed, but Van Humbeck said his intentions are to try to raise an additional $10 million to $20 million for the company.
The sale ends an eight-year run for Kevin McGarry, the founder of IHS through his management of Western Life Sciences Venture Fund. Over the years he's raised more than $20 million for IHS from his partners, including the Business Development Bank of Canada.
Although the technology gets very good reviews from about 30 installations around the world, its $1.5 million price tag and its vulnerability to various economic cycles has meant the company has continually fallen short of its sales targets.
"I wish him (Van Humbeck) nothing but the very best and I am just delighted that he did what he did," McGarry said. "What it takes is vision and fortitude. The existing investors spent lots of time and effort but they were just tired. He is prepared to carry on and, God bless him."
Van Humbeck founded and later sold the Winnipeg company Vansco Electronics, which made high-tech electronic systems for construction machines and other heavy equipment. That company continues to operate in Winnipeg as Parker Hannifin Canada Electronic Controls Division.
The acquisition reunites Van Humbeck with Niels Erik Hansen, the CEO of IHS, who was the CEO of Vansco when Van Humbeck sold it to Parker Hannifin in 2008.
"This transaction is vital to IH Systems' ability to continue implementing its strategy for global growth," said Hansen.
The majority of RIVA installations are in the U.S. but the company has been expanding into international markets for a while. Earlier this year it announced the sale of two units to the King Faisal Specialist Hospital & Research Centre in Riyadh, Saudi Arabia, and signed a distributor based in Tel Aviv, Israel.
Hansen said the company is working on securing European distributors.
On Hansen's front burner is what he refers to as a "pretty significant" project in Latin America, which could entail the sale of multiple units.
"It looks like it could go through," he said. "We need to make sure we can supply on time."
Hansen and Van Humbeck said despite the change in ownership, it should be business as usual for customers, employees, vendors and suppliers.