Halyard Health, Inc. (NYSE:HYH) Files An 8-K Costs Associated with Exit or Disposal ActivitiesItem 2.05Costs Associated with Exit or Disposal Activities
On December 14, 2017, the Board of Directors of Halyard Health, Inc. (the “Company”) approved the initial phase of a multi-year restructuring plan (the “Plan”) in conjunction with the Company’s previously announced anticipated divestiture of its Surgical and Infection Prevention (“S&IP”) business, as was described in the Company’s Current Report on Form 8-K filed on December 20, 2017.
to the agreement providing for the sale of the S&IP business, the purchase price the Company will receive upon closing includes the sale of the Company’s information technology (“IT”) systems. The sale of the IT systems enables the Company to migrate to an IT platform that is more appropriate for its business and size. Accordingly, on March 15, 2018, the phase of the Plan to restructure and enhance the Company’s IT systems (the “ITS Plan”) was approved.
The Company expects to incur between $40 million and $50 million to implement the ITS Plan, of which $30 to $35 million is expected to qualify for capitalization and the remainder, primarily consulting and other costs, will be expensed as incurred. The Company expects to substantially complete the ITS Plan by the end of 2019, and once completed, the Company expects savings from the ITS Plan of between $15 million and $19 million on an annualized basis. In addition, the Company expects other IT-related costs to be reduced by approximately $13 million to $17 million per year following the separation of the S&IP business and the reduced scale of the Company following the separation. Overall, upon completion of the ITS Plan, the Company expects that annually, total direct costs to support the enhanced IT system will be approximately half of the costs incurred during 2017 to support its existing IT system.
The Company will disclose the details of any additional phases of the Plan, including potential supply chain and go-to-market restructurings, when those additional phases are approved.
About Halyard Health, Inc. (NYSE:HYH)
Halyard Health, Inc. seeks to advance health and healthcare by preventing infection, eliminating pain and speeding recovery. The Company operates through two segments: Surgical and Infection Prevention (S&IP) and Medical Devices. Its S&IP business provides healthcare supplies and solutions that target the prevention of healthcare associated infections. The Medical Devices segment provides a portfolio of product offerings focused on pain management and respiratory and digestive health. The S&IP segment’s product portfolio includes sterilization wrap, surgical drapes and gowns, facial protection, protective apparel and medical exam gloves. The S&IP segment is also a provider of education to prevent healthcare-associated infections. The Medical Devices segment provides a portfolio of product offerings focused on pain management and respiratory and digestive health. Its products include QUICK CHECK, SMART-FOLD, POWERGUARD, MICROCOOL and FLUIDSHIELD.