‘At some point, it’s about the belief this will make you better’
This content is reprinted from a Pittsburgh Post-Gazette article written by Kris B. Mamula and published on July 21, 2020. Read the full article here.
The usual butterflies of acquiring a business turned into heartburn for a Strip District company earlier this year with the outbreak of the biggest pandemic in more than 100 years.
Net Health and Baltimore-based Tissue Analytics Inc., like businesses everywhere, closed their offices in the spring and sent employees packing to work remotely as COVID-19 raged. Executives from both companies re-examined the core assumptions of Net Health’s plans to acquire the Maryland operation and considered whether it still made sense in a world turned on its head by the new coronavirus.
In the end, Net Health acquired Tissue Analytics in March, absorbing its 28 employees and picking up a leading role in marrying machine-learning and medicine. “We were able to manage through it,” said Jason Baim, chief strategy and development officer at Net Health. “It worked out surprisingly well.”
Financial details of the deal were not disclosed.
In some ways, the timing of the Net Health-Tissue Analytics deal could not have been worse. Walloped by COVID-19, global merger and acquisition activity fell 28% in the quarter ending March 31 compared to a year ago, according to a report by data software platform company NXTsoft, which is based in Birmingham, Ala.
But the deal succeeded for the same reasons that any business deal works: Despite a rising tide of illness and economic turmoil caused by the disease, the fundamentals of the transaction were sound and nobody panicked and lost sight of that, executives from both companies said.
Net Health is generally seen as a Pittsburgh life sciences success story.
The company’s software crunches data on the best medical outcomes and uses them to recommend guidance to doctors and others involved with chronic wound care, physical rehabilitation and other medical specialties. In its 25 years, the firm has built up a client base of 14,000 medical facilities.
The company has been on a steep growth curve: In 2013, Net Health had 55 employees and $10 million in revenue; today, it employs 500 people, and revenue exceeds $100 million, executives said.
Three years ago, the company was acquired by a consortium consisting of the Carlyle Group, an investment firm; Level Equity, a software-focused growth equity investor; and Net Health management.
Tissue Analytics, which was founded in Baltimore in 2014 and has an office in Kansas City, developed its own treatment algorithms and added artificial intelligence-powered software to guide clinicians in the treatment of chronic wounds such as slow healing burns.
One jewel that attracted Net Health’s interest was Tissue Analytics’ smartphone app, which allows patients to photograph chronic wounds for remote evaluation by a doctor…