HemCon Medical, bolstered by high-tech bandage sales, hits the acquisition trail

HemCon Medical Technologies, a Portland, Ore., startup that makes and sells high-tech bandages, said it will acquire Alltracel Pharmaceuticals, a publicly traded but barely profitable Irish healthcare conglomerate that also has a wound-care focus. The release is here.

HemCon was only founded in 2001, but hit it big almost immediately with a new type of bandage, based on chitin found in shrimp shells, that binds to even the most severe wounds. As the Iraq War loomed, the company won FDA approval for its bandage in just 48 hours, and claims that it is now carried by every member of the U.S. Army in Afghanistan and Iraq. I wrote about them for the WSJ back at the time; a copy of that article is here.

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The companies didn’t release financial details — Alltracel apparently didn’t even put out a release, which is odd for a public company — but Thomson Financial reports that HemCon will pay £20.8 million ($40.9 million) in cash for Alltracel. HemCon claims that the combined companies will post 2008 revenues in excess of $100 million.

That’s a pretty staggering estimate, since it looks like Alltracel barely cleared €20 million ($29.7 million) in revenue last year, and suggests that military sales and the ongoing war in Iraq have been very, very good to HemCon. The company says it’s expanding into consumer markets as well, and plans to launch an over-the-counter version of its bandage called KytoStat later this year.

HemCon last raised $12 million in March 2007; its investors included Camden Partners Holdings and Torch Hill Partners, two private-equity firms in the Washington, D.C.-Baltimore axis. The company didn’t say how it will finance the Alltracel acquisition, although HemCon is presumably taking on debt, as it named Bank of America the lead institution in the financing.

The Portland Business Journal has more here.