Maybe our 15 is related to this:

?? Acquires remainder of VTS Medical

STE acquired the remainder (50%) of VTS Medical Systems for $19 million in

cash, strengthening its presence in the surgical solutions segment (currently 26%

of revenues). STE entered the operating room integration space in 2008 through

its initial joint venture with VTS, a developer of high-definition video, touch-screen

integration, and communication technology used in hospital operating rooms. It

invested an incremental $17 million in 2011, upping its stake to ~50%. Through its

investment with VTS, STE has evolved from a one-off provider surgical beds and

lighting technology solutions, to a more comprehensive integrated solution within

the operating room, boosting its average revenue opportunity/room to $250,000+

(from $75,000). STE is now the third largest player behind Stryker and Karl Storz.

We are maintaining our current 2013 EPS estimate on limited expected accretion

from the transaction, although our conviction in our forecast is higher.

Value proposition of operating room integration solutions

STE's fully integrated operating room technology solution, which offers workflow

management, communication, and surgical capital equipment products and

services, is now one of its fastest growing segments. Within the segment, STE

does not sell medical devices specifically, and unlike its primary operating room

infrastructure competitors (Stryker & Storz), it can offer open architecture, not tied

to any specific equipment manufacturer, giving hospitals greater options on what

instruments and high-tech equipment they want to install. Its fully integrated

operating rooms can increase case load by two surgeries/day. There are six

operating rooms in an average hospital, and an incremental two cases/room could

add $160,000+ in revenue for the hospital/day, based on our estimates.

Still playing offense, with room to run

With SYSTEM1 (S1) issues increasingly in its rear-view mirror, STE’s portfolio has

become vastly more diversified, closing four differentiated deals in the past six

months with likely more to come. Its recent deals should bolster top-line growth in

a synergistic fashion and further deemphasize S1, now only 5% of revenues.

Total debt/EBITDA now stands at 2.0x, but it has capacity for additional deals (up

to $100-$150 million), targeting tangential businesses primarily in the healthcare

arena. It remains committed to its dividend with double-digit hikes over the past

seven consecutive years, a trend we do not expect to abate. At 7.6x our forward

EV/EBITDA, it trades at a substantial discount to its historical high, despite its

rebounding growth prospects.