On February 1, Haemonetics (NYSE:HAE) announced that it will acquire Global Med Technologies (OTC:GLOB), a Lakewood, Colorado based provider of medical software related to blood management in hospitals and blood banks. The company recorded $23 million in revenues in the first nine months of 2009, with net income of $1.70 million over the same time period, and cash flow from operations of $3.87 million. Global Med has a healthy balance sheet, with $7 million in cash and $8 million in total debt, as of September 30, 2009. In that September quarter, Global Med had a gross margin of 61 percent and operating profit, excluding depreciation and amortization, of 20 percent, both above Haemonetics’ levels for that September quarter of 52 percent gross and 17 percent operating margin.

The acquisition was announced in conjunction with Haemonetics’ December quarter earnings announcement. Haemonetics agreed to pay $1.22 per share for all outstanding common stock and $1,694 per share for preferred stock, for a total of $60 million. Haemonetics will fund the transaction from current cash reserves, which totaled $170 million at the end of December. The transaction is expected to close before the end of March.

In the past year, Haemonetics has been pursuing an acquisition strategy that does not drain its cash reserves or saddle the company with debt. They made three such acquisitions in calendar 2009: Neoteric, Altivation, and SEBRA. These were all small, tuck-in acquisitions that complement the company’s focus on shepherding the collection and transfusion of blood. Global Med is an acquisition in the same vein as the calendar 2009 acquisitions, but with a larger price tag.

In this particular case, Haemonetics already has a sizable software business that generated $40 million of revenues in calendar 2009. This was essentially flat with 2008. It was expected during 2009 that this division would be an important growth driver for the Haemonetics. The segment has been hindered by liquidity conservation by hospitals. With the new acquisition, Haemonetics will be able to offer a more complete software package to hospitals and blood banks.

In summary, we believe this acquisition will have a positive effect on Haemonetics. The company saw a method of improving their software offerings to make them more attractive to potential customers. In addition, management purchased a company that is generating solid profits and operating cash flow, and is not heavily in debt. We expect that the integration of Global Med into Haemonetics will proceed smoothly, and that the acquisition will improve the company’s top and bottom lines.