Kodak’s health group makes switch to Carestream

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The creation of Carestream Health Inc. became official Tuesday with the completion of the $2.35 billion sale of Eastman Kodak Co.’s former health group to Onex Corp.
Carestream products include advanced medical imaging systems and software that allow for transmission of images from radiology suites to clinical settings, such as physicians offices.
Carestream CEO Kevin Hobert formerly headed Kodak’s health group. The new company, which employs more than 900 in Rochester and 8,100 worldwide, is to have its headquarters here, officials said. In line to get substantial economic development cash from the state and the benefits of Empire Zone status, Carestream projects adding 500 jobs locally over the next six years.
Carestream logged $2.5 billion in sales in 2006, down from $2.66 billion a year ago. Earnings from continuing operations of $278 million—excluding interest, taxes and other income or charges—was down 25 percent from 2005. Still, the unit was Kodak’s second most profitable group.
“We have a terrific opportunity for global organization to meet the growing imaging and information needs of our customers now and into the future,” Hobert said. “Onex has a long track record of acquiring businesses and working with them to achieve superior growth and operational excellence.”
Founded in 1983 and operating for the last three years through investment funds totaling some $5.2 billion, Onex owns a collection of companies in disparate industries globally. Those firms collectively employ 167,000 and generate some $19 billion a year in revenues.
The Canadian firm’s holdings include a U.S. nursing home chain, a cosmetics research and development firm, a contract electronics manufacturer, a commercial aircraft component supplier and the largest chain of multiplex movie theaters in Canada.
Onex shares trade publicly on the Toronto Stock Exchange.
Kodak has received $2.35 billion in cash and see up to $200 million in additional future payments if Onex achieves certain returns. Primarily because of tax-loss considerations, Kodak expects to retain the majority of the initial cash proceeds. The company plans to use a portion of the proceeds to fully repay its approximately $1.15 billion of secured term debt.
“We are now studying options for the cash that will remain after we pay off the secured term debt. Through this rigorous process with our board of directors, we are focusing on financially attractive ways to drive profitable growth and enhance shareholder returns,” Kodak chairman CEO Antonio Perez said in a statement.

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