Chemdex Corp., a provider of online purchasing services for scientists, agreed last week to acquire Promedix.com, an Internet-based marketplace for specialty medical-surgical products.
The all-stock transaction, valued at about $340 million, is the first sign of consolidation in the nascent niche for online healthcare buying. Subject to shareholder approval, the companies expect the deal to close by year-end.
Chemdex Corp., Palo Alto, Calif., which went public in July, would swap about 12 million of its newly minted shares for ownership of privately held Promedix.com, Salt Lake City. Under the deal, Promedix.com would first spin off its specialty distribution business, which is not part of the transaction.
For Promedix.com, the deal promises access to technology, money and considerable experience from what passes for an old hand in the brave new world of electronic commerce.
"This deal gives us access to capital to accelerate the development and implementation of our strategy," said Barrie Keiser, Promedix.com's president and chief operating officer (Aug. 23, p. 22).
Chemdex, founded in 1997 and online since November 1998, gets the chance to expand beyond its existing business of selling chemicals and equipment to life science research laboratories at universities and pharmaceutical and biotechnology companies.
Like many Internet start-ups, Chemdex is burning cash and has reported a loss of $19.3 million on revenues of $3.1 million for the six months ended June 30. Gross margins during the same period were about 5.3%, Chemdex stated in a recent filing with the Securities and Exchange Commission.
Separately, Tenet Healthcare Corp., Santa Barbara, Calif., invested $5 million in Promedix.com and agreed to help the company develop its buying services. David Ricker, senior vice president of materiel resource management at Tenet, said in a written statement that Promedix.com's service is an impressive approach to identifying and buying hard-to-find specialty products.