MGC Diagnostics Corporation, formerly known as Angeion Corporation, has sold assets of its New Leaf business to Chanhassen-based Life Time Fitness, Inc.
Under the terms of the deal, Life Time paid Vadnais Heights-based MGC Diagnostics $1 million at the close of the transaction, and it will pay an additional $235,000 over the next 18 months.
The New Leaf brand provides metabolic assessment data. Its products, which are used in health clubs, test and provide data about a customer’s breathing and heart rate.
The New Leaf sale didn’t come as a surprise, although the buyer was previously undisclosed. In May, when announcing plans to change its name from Angeion Corporation, MGC Diagnostics said that it had signed a letter of intent with a “non-affiliated third party” regarding the sale of its New Leaf health and fitness product line, saying that the agreement was subject to negotiations.
The company said at the time that its name change and the sale of the New Leaf product line are part of its effort to focus on its primary brand—MedGraphics—under which it sells various cardiorespiratory diagnostic systems.
Life Time acquired MGC Diagnostics’ New Leaf-related software and support materials, product inventory, trademarks, and websites. MGC Diagnostics also licensed some health- and fitness-related patents and other intellectual property to Life Time, but it retained its rights to medical-related intellectual property.
Life Time Fitness spokesman Jason Thunstrom told Twin Cities Business that the company has already been using New Leaf products for metabolic testing, and “this acquisition made sense, therefore, because it’s now in-house.” Owning the product line will allow Life Time Fitness to conduct new tests with the system and discover new uses for the technology, which can then be rolled out to members, he added.
MGC Diagnostics said it will “wind down” the portions of its New Leaf business that were not sold to Life Time, although it will continue to meet contractual obligations with customers through June 2014.
MGC Diagnostics is among Minnesota’s 100-largest public companies based on revenue, which totaled $29.1 million for the fiscal year that ended in October—roughly flat with the prior year. For the second quarter that ended April 30, MGC Diagnostics reported a net loss of $409,000; sales, meanwhile, slid about 8 percent to $6.3 million. For the third quarter, which ended July 31, revenue climbed 8 percent to $6.9 million. But the company reported a net loss of $133,000, larger than the loss of $81,000 from the same period a year ago.
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