ATS Medical Closes $20M Financing Deal, Settles CarboMedics Lawsuit

Cardiac surgery product maker ATS Medical Inc. has said it closed on $20 million in equity financing with Essex Woodlands Health Ventures, and it agreed to pay $7.5 million to CarboMedics, Inc. over the next year to settle a lawsuit related to ATS’s supply agreement with the Austin, TX-based company for mechanical heart valve components.

In connection with the financing, Palo Alto, CA-based venture capital firm Essex Woodlands is buying more than 8.5 million shares of Minneapolis, MN-based ATS Medical common stock at a purchase price of $2.35 per share. Essex Woodlands could purchase additional shares if it wants.

“With ATS Medical’s technological innovation, strong product portfolio and experienced management team, the company is positioned to be a leader in the cardiac surgery market. We are excited about the opportunity to invest in ATS Medical and share in its success,” said Martin Sutter, co-founder and managing director at Essex Woodlands. Sutter has joined ATS Medical’s board of directors.

CarboMedics, Inc., filed a lawsuit against ATS Medical in January 2007. The suit alleges that ATS failed to order valve components as required by a long-term supply agreement, which called for the purchase of about $20 million between 2007 and 2011.