Recently, Integer Holdings Corporation, the world's largest CDMO company with deep roots in cardiovascular devices, announced that it will divest its non-medical business. The company has reached an agreement to sell its Electrochem business, which focuses on the energy, military and environmental fields, to Ultralife Corporation for $50 million in cash, and the transaction is expected to be completed by the end of October. Joe Dziedzic, president and CEO of Integer, said that after the transaction is completed, Integer will be a pure medical company with additional cash to repay debt and execute our inorganic growth strategy. Ultralife is an ideal buyer for Electrochem because they are a leader in providing critical power solutions to a variety of industries including energy, defense and environmental markets.

As a global medical device CDMO leader, Integer's medical customers include large multinational medical device OEMs and their subsidiaries, including Abbott, Johnson & Johnson, Boston Scientific, Medtronic, Philips, Stryker, Smith & Nephew, Zimmer Biomet and other companies. Among them, Integer's sales to Abbott, Medtronic and Boston Scientific in 2019 all exceeded 10% of its total sales, and together accounted for 50% of its total sales; in 2019, about 56% of the company's products were sold in the United States.

Before the divestiture, Integer divided itself into two business units, medical and non-medical, based on product type. Integer's medical division consists of two medical brands-GreatbatchMedical and Lake RegionMedical, which mainly provide innovative, high-quality technology and manufacturing services to original equipment manufacturers (OEMs) in the medical industry; the non-medical brand Electrochem specializes in developing non-medical batteries for high-end niche applications in the energy, military and environmental markets.

In the medical business, continued acquisitions have been key to the company's growth strategy. According to statistics, in the past two and a half years, Integer has completed acquisitions with a total value of nearly US$550 million, and the proceeds from the sale of the non-medical business will help repay its outstanding debt. On the other hand, divesting this asset will enable management to focus on its core medical business while freeing up some balance sheet capacity to support its future M&A strategy.

Integer's business covers a wide range. The company's name, Integer, means "whole" in Latin, which means that it will provide customers with comprehensive products and services. According to the company's official website, the company's products include catheters, guidewires, guides, delivery systems, tantalum capacitors, implantable ports, neuromodulation devices, pacemaker batteries, implantable and external batteries, etc. The products designed and manufactured range from finished equipment systems to Class III medical devices, with hundreds of components distributed in more than 15 markets. In the past two years, Integer has expanded through large-scale acquisitions many times, the most well-known of which include: 1 billion yuan to take down competitors. At the beginning of this year, Integer announced that it had acquired Pennsylvania-based Pulse Technologies for US$140 million (approximately RMB 1 billion). Founded in 1993, Pulse is a leading manufacturer of precision parts that focuses on serving the medical, industrial and aviation/defense fields. It is also a global head CDMO company. Pulse focuses on complex micromachining of medical device components for high-growth structural heart, heart pump, electrophysiology, lead-free pacing and neuromodulation markets. Its proprietary technologies include hierarchical surface reconstruction (HSR), scratch-free surface treatment and titanium nitride coating.

Integer is not only committed to acquiring peers, but also continues to extend to the upstream industry chain. In April 2022, Integer announced the acquisition of Connemara Biomedical and its subsidiaries Aran Biomedical and Proxy Biomedical (collectively referred to as "Aran") for 120 million euros (960 million yuan), and paid an additional 10 million euros in contingent consideration based on revenue growth milestones in 2022. Aran from Ireland focuses on implant manufacturing, including medical textiles, high-precision biomaterial coverings, coatings, and cutting-edge metal and polymer braiding. Integer said that the addition of Aran will further enhance the company's ability to provide complete solutions for treatment devices in the high-growth cardiovascular market (including structural heart, neurovascular, peripheral vascular and endovascular, and general surgery). At the same time, Aran's headquarters in Ireland has also expanded Integer's market in the region. Recently, Integer announced the completion of its expansion project in Ireland. The European Medical Device Innovation and Manufacturing Center in Galway, Ireland, officially opened on September 20. Prior to this, Integer's 80,000 square foot production base in New Ross, County Wexford, Ireland, was officially opened earlier this month. Integer has had a branch in Ireland since 1994. In recent years, the company has continued to invest and expand production capacity in Ireland to meet customers' growing demand for guidewires, catheters, medical textiles and delivery systems.

According to reports, Integer's new factory in Parkmore East, Galway, cost $30 million and covers an area of 67,000 square feet, which can achieve a seamless transition from research and development to production of new products. Not only that, the company actually obtained planning permission for a total area of 147,000 square feet in Parkmore East, and there is enough space to expand production to 300,000 square feet in the future. In addition, Integer completed an additional investment of $60 million in its New Ross plant in County Wexford, increasing the plant's production capacity by more than 70% and adding 80,000 square feet to the existing facilities, bringing the total area to 215,000 square feet, including new advanced manufacturing equipment to support customers' long-term development. In fact, Integer's strategy of focusing on high-growth main businesses has lasted for several years.

As early as 2018, the company gradually sold a part of its advanced surgical, orthopedic and portable medical product lines. And continue to increase the high-growth cardiovascular market such as structural heart, neurovascular, peripheral vascular, endovascular and general surgery. After the 2020 epidemic, market competition and financial pressure increased the dependence of device manufacturers on CDMO, and the global medical CDMO market size accelerated expansion. Public data shows that the global CDMO market size was estimated to be US$104.5 billion in 2019, and the compound annual growth rate is expected to be 10.4% from 2020 to 2027. Foreign medical device giants such as Medtronic, Johnson & Johnson, and BD, which occupy a major share of the market, have chosen to gradually divest their own production loads and adopt a contract production model from the perspective of cost control. Against this background, Integer continues to improve its core competitiveness and expand its high-end production base in order to continue to expand its share of the target market.

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