Philips shines light on value of acquisitions, big and small


Royal Philips ($PHG) is doing alright for itself, per earnings discussed during a recent call. The company's Healthtech businesses saw sales grow at about 5%, driven by its Personal Health and Connected Care & Health Informatics groups.

This boost also comes in part thanks to the acquisitions Philips has made, specifically that for Volcano. Philips shelled out a cool $1.2 billion for the device maker back in late 2014. The aim was to earn some extra footing in catheter-based imaging and to boost offerings in its healthcare unit.

According to President and CEO François van Houten, the investment was worth it.

“Philips Volcano is really performing well, demonstrating again this quarter both the benefits of the acquisition and the success of the integration,” he said during the call “In the second quarter, we delivered another strong quarter of double-digit comparable sales growth and continued operational improvements driven by growth across the smart catheter product portfolio, synergies with the Image-Guided Therapy Systems business and expansion into new geographies.”

Still, Volcano isn’t the only acquisition that seems to be worth Philips’ while, and van Houten has high hopes for other recent add-ons. PathXL joined the ranks of the Philips-acquired just last month, and van Houten noted the amount of potential he feels that deal brings on.

“With this complementary acquisition, we can build on our digital pathology solutions offering and leverage PathXL's capabilities in the fast-growing image analysis and tissue pathology software field,” he said during the call. “We will be an even more attractive partner for global medical institutions as they transition to digitize pathology workflows by solving needs in computational pathology education, workflow solutions and image analytics.”

PathXL also opens up some potential by way of health informatics. “The acquisition of PathXL is a nice example of a company that is very strong in image interpretation, thereby assisting the diagnosis of, for example, cancer patient,” van Houten explained.

The CEO also noted he is looking forward to opportunities in Population Health Management, specifically those coming from Philips’ acquisition of Wellcentive.  

“This is about analytics on the one hand and care coordination, supporting doctors, nurses both in the hospital enterprise but also with primary care and ambulances to collaborate together in the cloud,” van Houten explained during the call. “The acquisition last week of Wellcentive is a nice example to boost our analytics capabilities of data mining to enable Population Health Management.”

- here's the press release
- check out the earnings call transcript

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Philips shells out $1.2B for Volcano to gain ground in imaging therapy