Medicare changes imperil Hillrom-Bardy deal

When Hillrom arranged to buy Bardy Diagnostics for $375m up front in January it believed that Bardy’s extended cardiac-monitoring technology would be reimbursed by Medicare in the range of $250. 10 days after the deal was announced, however, the Medicare contractor Novitas cut the reimbursement rate for the four codes covering Bardy’s devices to $40-80. Having taken some time to evaluate the likely consequences of this, Hillrom yesterday concluded that it constituted a material adverse effect; it is not clear whether Hillrom intends to renegotiate terms or call the deal off completely, but Bardy has filed a complaint in Delaware’s Chancery Court so it seems that litigation will be part of the puzzle. Cardiac monitoring has recently been a hot area for deal making, with Philips buying Biotelemetry for $2.8bn in December and Boston Scientific acquiring Preventice for $925m a month later. Biotelemetry and Preventice offer similar heart monitors, and Evaluate Vantage understands that they too will be affected by this pricing change, though to a lesser extent thanks to their more diverse product ranges. The Hillrom-Bardy deal is the eighth-largest medtech acquisition announced so far in 2021.