Avanos Medical Inc. has entered into a definitive agreement to sell its respiratory health (RH) business to SunMed Group Holdings LLC.

Headquartered in Grand Rapids, MI, SunMed is a North American manufacturer and distributor of consumable medical devices for anesthesia and respiratory care with a comprehensive product portfolio that spans the continuum of care from first responders to hospitals and home care.

The divestiture of the RH business represents a key component of Avanos’ ongoing three-year transformation process, and accelerates the company’s efforts to focus its portfolio on markets where it is well positioned to succeed.

Related: SunMed Completes Acquisition of Vyaire Medical Business Unit

“Earlier this year, we shared our strategy and intent to optimize our portfolio by focusing on higher-margin and higher-growth markets—particularly in our digestive health and pain management & recovery product categories,” says Joe Woody, Avanos chief executive officer. “We expect that divesting the respiratory health business—along with our ongoing SKU rationalization initiatives and future M&A opportunities—will allow us to meaningfully transform the financial profile of Avanos.”

“SunMed has deep experience and strong expertise in the global respiratory health consumables market, making it an ideal home for Avanos’ RH business,” says Hank Struik, SunMed’s chief executive officer. “We believe Avanos’ BALLARD closed-suction technology will be a powerful addition to SunMed’s broad and growing portfolio.”

Sale of the RH Business

The transaction includes substantially all of the assets primarily used in the RH business, including fixed assets, inventory, intangible assets—including the BALLARD, MICROCUFF, and endOclear brands—and long-term leases for two manufacturing facilities located in Mexico.

Avanos will provide transition services after closing as SunMed works to integrate its new RH business within its product portfolio.

According to the company, the net proceeds from the transaction will enhance Avanos’ balance sheet flexibility and provide additional capacity for Avanos to deploy capital in a focused and disciplined approach to M&A in the company’s core categories and markets.

The transaction is expected to close in late 2023.