Derma Sciences pays $13m for Medihoney ahead of Integra buyout

Derma Sciences (NSDQ:DSCI) said last week that it paid $13.3 million for Medihoney, on the same day that Integra LifeSciences (NSDQ:IART) agreed to pay nearly $200 million for the tissue regeneration company.

Prior to the acquisition, Derma Sciences held the exclusive global license for the Comvita-owned Medihoney brand and patents. Medihoney is eligible to receive an additional $5 million upon achievement of annual sales milestones, according to a regulatory filing.

“Under Derma’s leadership, the Medihoney brand has grown to be the largest line of medical-grade honey products for advanced wound care use in the world, totaling global sales of approximately $20.0 million in 2016,” Derma Sciences’ executive chairman Stephen Wills said in prepared remarks. “What is important to Derma Sciences and to the healthcare professionals and patients who benefit from these important products, is security of supply. Under the terms of the deal, we have a new 10-year medical honey supply agreement with Comvita, which gives Derma Sciences cost certainty for the first 2 years and priority of medical honey supply with respect to its needs. Comvita has supplied us for more than a decade, and having the backing of Comvita, its supply chain, and related partnerships gives us the confidence to continue to invest in the growth of our Medihoney business.”

Integra’s $7-per-share deal with Derma Sciences includes a portfolio of regenerative allograft products that Derma acquired with its $80 million purchase of BioD last year.

Integra also agreed to pay $32 per share Series A preferred stock and $48 per share for Series B preferred stock in Derma Sciences, according to a regulatory filing. The deal is slated to close by the end of the 1st quarter and will be funded using Integra’s existing credit line, the company said.

Integra, which released its preliminary 4th-quarter results last week, said it expects the Derma Sciences business to add about $65 million to its top line this year. Adjusted earnings per share are expected to take a -3¢ hit in 2017, but the unit is forecast to boost earnings in 2018.

4th quarter sales for Integra are pegged at $256 million, which would take full-year sales to $992 million – the low end of Integra’s guidance. Adjusted EPS are forecast to be at or above about 52¢, the company said.

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