The latest deal for C2Dx Inc., a serial acquirer of niche medical device products, followed a large private equity investment from a Chicago-based firm that injected much more than capital into the company.
The investment from Shore Capital Partners LLC recapitalized C2Dx, which is based in Schoolcraft, about 13 miles south of Kalamazoo. Beyond capital, the deal provides the company access to expertise in operations, M&A, human resources, deal sourcing and other areas that strengthen C2Dx as the company scouts globally for products that large medical device companies want to divest.
The investment from Shore Capital Partners “gives us a longer runway to look for and acquire new opportunities to grow the business,” CEO Kevin McLeod told Crain’s Grand Rapids Business.
“What Shore has done, and is phenomenal with, is support these micro-cap companies like ourselves, knowing that we need resources as much as or more than we need cash,” McLeod said. “Our systems are more robust, and our communication is so much better, and they’ve set up our system so we can be in cadence with the rest of their platform companies.
“That resource, the operational and the business knowhow, is really what we’re benefitting from with Shore. They’re helping us run our business in a way that you keep things moving forward and keep investing, and ultimately driving value.”
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C2Dx closed late in September on the investment from Shore Capital Partners. McLeod and Ann Arbor-based investment firm Plymouth Growth Partners, who together formed C2Dx in January 2019, retained minority stakes.
C2Dx acquires niche product lines that “don’t fit any longer” with large medical device manufacturers and can benefit from greater sales and marketing attention, McLeod said. The company focuses on mature products that generate $10 million or more in annual revenue.
In January, C2Dx bought the otolaryngology and head and neck surgery line of products from Bloomington, Ind.-based Cook Medical. Ear, nose and throat surgeons use the company’s products in minimally invasive procedures to treat obstructive salivary disease; chronic ear disorders; nasal, sinus and skull base reconstruction; and dysphagia.
The Cook Medical acquisition, a deal that Shore Capital Partners brought to C2Dx’s attention, “was a perfect fit for the direction that we’re headed” with a focus on medical devices used in operating rooms, specifically for head and neck procedures, McLeod said.
The deal was the latest for C2Dx, which has completed two prior product acquisitions from Kalamazoo-based Stryker Corp., where McLeod previously worked for 17 years.
“Kevin McLeod and his high-caliber team have built an incredible company with an excellent reputation in the medical device space,” said Don Pierce, a partner at Shore Capital Partners and chairman of the board of C2Dx. “We are well-positioned to build on their reputation as an industry leader through both acquisitions and organic growth, and the initial acquisition from Cook Medical complements and differentiates the platform’s product offerings.”
Shore Capital Partners invests in microcap companies in the health care, food and beverage, business services, industrial, and real estate industries. The firm has more than $6 billion in assets under management.
C2Dx’s first acquisition came in 2019 for Stryker Corp.’s STIC Intra-Compartmental Pressure Monitor used to diagnose and treat acute and chronic compartment syndrome, a condition that typically results from severe injury where pressure in the muscles constricts blood flow. C2Dx subsequently acquired Stryker’s T/Pump in January 2021, a product line that provides localized temperature therapy for pain relief in patients with orthopedic conditions, acute injuries, chronic pain and muscle strains.
In January 2022, C2Dx bought a thermal scalpel from Memphis, Tenn.-based Hemostatix Medical Technologies that simultaneously cuts and coagulates blood.
After the investment from Shore Capital Partners, C2Dx seeks “bigger opportunities and more opportunities” to acquire divestitures from large medical device makers and add to its product portfolio, McLeod said. He expects that the company will make one or two acquisitions a year, “depending on what they are and what the lift is in bringing them in-house.”
Shore Capital Partners’ network greatly expands C2Dx’s ability to pursue acquisitions.
“It ultimately puts us in a position so we can continue to look for these products that fit our strategy going forward, and you have Shore that’s looking with us,” McLeod said. “So, it’s not only more capital to do so, but more eyes to help look and more expertise to continue to vet.”
McLeod describes C2Dx’s current deal pipeline as “robust.”
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