Medical device manager Agiliti sets $500M IPO to pay down debt

Hospital ER
The vast majority of the proceeds—about 98% of whatever is raised, according to Agiliti’s prospectus—is slated to pay down the company’s debts. (Pixabay)

Agiliti, one of the largest medical device management companies in the U.S., has set the terms for a $500 million IPO, potentially delivering a $2.6 billion valuation through its public debut next week.

The 82-year-old, Minneapolis-based company—which supplies about 7,000 hospitals and providers with equipment rentals, reprocessing and repairs through its 98 service centers—plans to sell more than 26.3 million shares on the New York Stock Exchange under the symbol AGTI, at a price ranging from $18 to $20 apiece, according to Renaissance Capital.

The vast majority of the proceeds—about 98% of whatever is raised, according to Agiliti’s prospectus—is slated to pay down its debt, while the company logged $773 million in revenue over the previous year.

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As of the end of 2020, Agiliti had $922.2 million in debt outstanding, including a $200 million add-on to its loans that it sought last November to help cover the cost of an acquisition, according to S&P Global Market Intelligence. That month also saw the company first propose its IPO, with a draft filing statement.

Four months later, Agiliti would pick up Northfield Medical—a Detroit-based specialist in repairing endoscopes, surgical instruments and other operating room equipment—in a $475 million deal inked this past March. 

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Agiliti estimates the size of the total U.S. medical equipment market at $14 billion, which it projects to grow at mid-single digits annually.

Though many hospitals prefer to maintain their stock of devices in-house, Agiliti said it expects to see increased demand for reprocessing and sterilization of non-critical hardware because of the rise of hospital-acquired infections and COVID-19.

This includes devices such as ventilators, monitors and infusion pumps that are often touched by caregivers and patients but do not receive as much attention as reusable surgical instruments or endoscopes.

The current IPO also comes two years after Agiliti signed its own SPAC-backed buyout, leaving it majority-owned by an affiliate of the private equity firm Thomas H. Lee Partners, though that deal waived the conditions that would have listed the company on the Nasdaq.