New Heritage Capital has sold medical device manufacturer Rhythmlink International to Graham Partners.
Rhythmlink is a designer and manufacturer of single-use neurodiagnostic electrodes that are used to identify, elicit, and record neurophysiological signals. Specific applications for the company’s products include intraoperative monitoring (IONM), electroencephalography (EEG), and electromyography (EMG) by hospitals, health systems, and epilepsy centers.
Rhythmlink also offers custom packaging, custom products, private labeling and contract manufacturing services. The company, led by CEO and co-founder Shawn Regan, was founded in 2002 and is headquartered in Columbia, South Carolina.
New Heritage invested in Rhythmlink in 2019 and closed the December 2020 add-on acquisition of Chalgren Enterprises, a California-headquartered manufacturer of neurodiagnostic electrodes with a specialization in EMG electrodes.
“Over the last few years, we have launched new products, entered new markets, and made acquisitions, realizing significant change and growth,” said Mr. Regan. “New Heritage was an excellent strategic and financial partner that helped us navigate through that change, all while encouraging us to hold onto the company culture that makes us who we are.”
According to Graham, medical device end users are increasingly preferring disposable products, driven by the desire to avoid hospital-acquired infections. Additionally, Graham views disposable electrodes as typically economical and efficient, saving users considerable time, money, and effort compared to reusable EEG electrodes.
“Graham was excited by Rhythmlink’s value proposition and differentiated offering, in addition to the company’s entrepreneurial heritage, as well as its commitment to continuous innovation,” said Josh Wilson, a managing principal at Graham. “Graham is looking forward to leveraging our experience in the space and collaborating with the company and management team during our ownership.”
Graham has numerous current and past investments in the healthcare sector including Kinova, a Montreal-headquartered designer and manufacturer of robotic arms for medical and industrial markets (December 2021); Medbio, a Michigan-headquartered medical device manufacturer (exited in November 2021); Velosity, a Minnesota-based medical device manufacturer (October 2020); and HemaSource, a Utah-based maker of disposable medical supplies and equipment (exited in July 2017).
“We’re excited about this next phase of Rhythmlink,” added Mr. Regan. “Graham is an excellent partner for us because of their experience in medical technology and healthcare, and we see this as a growth opportunity for us to continue to innovate beyond our current capabilities.”
Graham Partners acquires companies with EBITDA between $5 million and $50 million and will invest in smaller companies as add-on acquisitions to existing portfolio companies. The firm is sponsored by the Graham Group, an industrial and investment concern with interests in plastics, packaging, machinery, building products, and outsourced manufacturing. Graham Partners was founded in 1988 and is headquartered in Philadelphia.
“We are incredibly proud of what the company and team have accomplished during our partnership,” said Melissa Barry, a partner at Heritage. “It has been a pleasure working with them and we look forward to following their continued success.”
New Heritage invests from $15 million to $40 million of minority or majority equity in companies with $4 million to $20 million of EBITDA. Sectors of interest include business services, healthcare, and manufacturing. The firm was founded in 2006 and is headquartered in Boston.
“Our partnership with New Heritage was extremely beneficial,” added Joe Straczek, the COO and CFO of Rhythmlink. “With their support, both financially and strategically, we were able to realize significant growth, particularly with the acquisition of Chalgren. We are immensely grateful for their partnership and guidance over the last four years.”
Piper Sandler was the financial adviser to Rhythmlink and Heritage on this transaction.
© 2023 Private Equity Professional | March 21, 2023
