The Court of Chancery in the state of Delaware ordered Hillrom (NYSE:HRC) to complete its planned acquisition of BardyDx.
In March, Hillrom reversed course on the planned $375 million acquisition of Bardy Diagnostics and its Carnation Ambulatory Monitor, or CAM patch, claiming that closing conditions weren’t met.
Hillrom’s u-turn came in the wake of regional Medicare administrative contractor Novitas Solutions publishing significant rate cuts for external EKG monitoring, creating a setback for the technology, which could serve as an improvement over traditional Holter monitors.
The Delaware court’s opinion found that the Medicare rate cuts did not qualify as a material adverse event (MAE) that would allow Hillrom out of the deal. The opinion, given on July 9, noted that Hillrom did not prove that the new rates would not be changed.
Vice Chancellor Joseph Slights III ruled in favor of Bardy but did not order for Hillrom to provide compensatory damages to the company, despite Bardy’s claim that it’s entitled to such damages after Hillrom’s failure to close the acquisition represented a breach of the companies’ agreement.
In a statement published today, Hillrom said it will appeal the ruling to the Supreme Court of Delaware and will assess strategic options moving forward. The decision does not have a material impact on Hillrom’s 2021 financial guidance, the company said.
“We are disappointed by the court’s ruling and remain committed to enhancing shareholder value as we evaluate all available strategic options,” Hillrom CEO John Groetelaars said in the release.