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By Ernest Dela Aglanu, Benzinga
A recent merger between Applied UV Inc. (NASDAQ CM: AUVI), Puro Lighting (PURO), andLED Supply Co. (LED Supply) seems to have triggered some excitement inthe ultraviolet (UV) disinfection equipment industry.
For industry watchers,particularly investors, who are constantly on the hunt for viableinvestment opportunities, the merger could be on their radar,especially as such a deal can shape the sector’sfuture.
Address A Growing UV Disinfection market
Applied UV believes thatthe PURO merger further positions it to address a growing airdisinfection market trend that aligns with the White House CleanAir Initiatives implemented during the height of
the COVID-19 pandemic.The initiative was designed to protect consumers and businessesagainst existing and future airborne pathogens allowing economiesglobally to remain open.
In terms of the overwhelming opportunities the deal presents,Max Munn, CEO of Applied UV, explained in a pressrelease that it heightened the significant synergies betweenApplied UV and PURO.
The company's acquisition of PURO adds a powerfulmonitoring software platform that opens new opportunities tointerconnect its portfolio of UV technology solutions. Puro alreadyhas a strong presence in various sectors, such as education,government, and healthcare.
These sectors have some of the strongest growthopportunities in the category, and the company believes thatspecializations in these sectors complement the current sectors that Sterilumen serves —food Storage, food processing, cannabis and horticulture.
“These mergers expandour addressable market significantly, and PURO’s strong, strategicrelationship with Acuity and national distributors provides us withadditional opportunities to advance our growth agenda and increasereturns for our investors,” he said.
Applied UV is eyeing being a leading playerin an ever-growing UV disinfection equipment industry which also hasplayers like Xylem Inc. (NYSE: XYL), Xenon PharmaceuticalsInc. (NASDAQ: XENE), Halma Plc. (LON: HLMA) and CalgonCarbon Corp.
Currently, there is an increase in the adoption of UV inmedical care, fueling the growth of the global disinfection equipmentmarket. The market is anticipated to reach $6.17 billion by 2030 and is expected to expand at a compoundannual growth rate (CAGR) of 5.7% from 2022 to 2030.
Grand View Research observed that increased government initiatives and rising demand for UVdisinfection equipment from healthcare organizations will continue todrive the sector’s growth.
The technology and work of companies like AppliedUV can never be overlooked, especially in medical care. Increasingly,countless industries, such as healthcare, are realizing the benefits of protecting patients and preventing infection with UV lightdisinfection at health facilities.
For example, UVC radiation emitted by UV germicidallamps is known to effectively breach the cells of microorganisms,making them non-viable and unable to replicate or infect patients andmedical personnel at hospitals.
Applied UV prides itself as a global leader thatapplies the power of narrow-range ultraviolet light for surface areasand catalytic bioconversion technology for air purification to destroypathogens safely, thoroughly, and automatically.
TwoSubsidiaries And Segments
The company’s major selling point could be itstwo wholly-owned subsidiaries — SteriLumen Inc. and Munn WorksLLC.
SteriLumen offers a portfolio of technologically advanced, energy-efficient airpurifier and surface disinfectant systems: Airocide® by Sterilumen,Scientific Air™ by Sterilumen and Lumicide™ by Sterilumen.
SteriLumen’sconnected platform for Data Driven Disinfection™ applies the powerof ultraviolet light to destroy pathogens safely, thoroughly, andautomatically, addressing the challenge of healthcare-acquiredinfections.
Airocide®’s applications include healthcare, hospitality,grocery chains, wine-making facilities, commercial real estate,schools, dental offices, post-harvest, grocery, cannabis facilitiesand homes.
Targeted for use in facilities with high customer turnover,such as hospitals, hotels, commercial facilities, and other publicspaces. The Lumicide™ platform uses UVC LEDs in several patenteddesigns for infection control in and around high-traffic areas,including sinks and restrooms, killing bacteria, viruses, and otherpathogens residing on hard surfaces within devices’ proximity.
The company’s secondsubsidiary, MunnWorks , is a global company that manufactures the highestquality mirrors and case goods. From statement pieces that have theimpact of original art to meticulous high-volume production for guestrooms or multi-family projects, the company works closely withdesigners to achieve the perfect balance of aesthetics andeconomics.
Thecompany has the following reportable segments that are drivinggrowth:
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Disinfection segment:The design, manufacture, assembly and distribution of disinfectingsystems for use in healthcare, hospitality, food, wine, and commercialmunicipal and residential markets.
The disinfectionsegment addresses heating, ventilation, and air conditioning (HVAC) inpublic, government, municipal, retail spaces and buildings.
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Hospitality segment:The manufacture of fine mirrors and furniture specifically for thehospitality industry.
Applied UV’s merger with LED Supply is key here.LED Supply is a strong player in the commercial lighting space, andthe company hopes to bring expertise in design and specification forthe multifamily space. It complements the hospitality category andwill lead to synergistic revenue opportunities for Munn Works and LEDSupply.
SG&A Translating Into Cost Reductions?
Apart from the broaderaddressable market and cross-selling opportunities, includingincreasing revenues, the merger could present synergies that mightultimately translate into cost reductions.
A cursory look at Applied UV’s financialresults for Q3 2022 showed that Selling, General, andAdministrative (SG&A costs for the three months ended September30, 2022, increased to $3.5 million compared to $2.7 million for thethree months ended September 30, 2021.
This increase of approximately $822,000 wasdriven primarily by the expansion of the disinfection segment with theacquisition of KES and SciAir; the expansion of the hospitality segment with the additionof the VisionMark acquisition; and corporate segment expenses due toincreased consulting, legal, accounting and infrastructure costsrelated to the initial integration of the operations of thecompany’s strategic acquisitions.
SG&A costs decreased by $526,000 from lastquarter, and the company anticipates efficiency gains this year as itfully integrates its acquisitions and leverages synergies wherepractical.
With alarger team that will collaborate on sales and marketing strategies,new product development, and engineering now at its disposal, AppliedUV could eye new acquisitions that could lead to revenue growth forinvestors and value for customers.
For investors looking to invest in medicaltechnology companies or stocks, Applied UV’s growth potential couldbe very attractive.
This article was originally published on Benzinga here .
AppliedUV is focused on the development and acquisition of technology thataddresses infection control in the healthcare, hospitality, commercialand municipal markets. The Company has two wholly owned subsidiaries -SteriLumen, Inc. (“SteriLumen”) and Munn Works, LLC (“MunnWorks”). SteriLumen’s Airocide® air purification devices areresearch-backed, clinically proven, and developed for NASA withassistance from the University of Wisconsin. Airocide® is listed asan FDA Class II Medical device, utilizes a proprietary photo-catalytic(PCO) bioconversion technology that draws air into a reaction chamberthat converts damaging molds, microorganisms, dangerous airbornepathogens, destructive VOCs, allergens, odors, and biological gassesinto harmless water vapor and green carbon dioxide without producingozone or other harmful byproducts. Airocide® applications includehealthcare, hospitality, grocery chains, wine-making facilities,commercial real estate, schools, dental offices, post-harvest,grocery, cannabis facilities, and homes. SteriLumen’s connectedplatform for Data-Driven Disinfection™ applies the power ofultraviolet light (UVC) to destroy pathogens safely, thoroughly, andautomatically, addressing the challenge of healthcare-acquiredinfections ("HAIs"). Targeted for use in facilities that havehigh customer turnover such as hospitals, hotels, commercialfacilities, and other public spaces, the Company’s Lumicide™platform uses UVC LEDs in several patented designs for infectioncontrol in and around high-traffic areas, including sinks andrestrooms, killing bacteria, viruses, and other pathogens residing onhard surfaces within devices’ proximity. The Company’s patentedin-drain disinfection device, Lumicide Drain, is the only product onthe market that addresses this critical pathogen-intensive location.
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