The deal calls for an up-front cash payment of $725 million, plus another $375 million in milestone payments pegged to sales numbers through 2020, Wayne, Pa.-based Teleflex said. The deal is expected to close within 30 days.
The UroLift system for benign prostate hyperplasia uses tiny devices that are inserted into the urethra in a minimally invasive procedure to reopen the lower urinary tract by pushing aside tissue from the enlarged prostate. NeoTract put up sales of roughly $51 million last year, up 178% over 2015, and is expected to post sales of $115 million to $120 million this year.
“We are excited to announce this definitive agreement with NeoTract, as this combination is expected to solidify Teleflex’s ability to generate mid-single digit constant currency revenue growth for the next several years, as well as enhance Teleflex’s margin profile,” Teleflex chairman & CEO Benson Smith said in prepared remarks. “NeoTract is a truly unique company with a differentiated technology that targets a greater than $30 billion addressable market, and through their internally developed, patented UroLift system, have achieved sequential quarterly revenue growth of 20% or greater in 13 of the past 14 quarters. Importantly, while we believe NeoTract has compelling growth opportunities as they continue to penetrate the market with their existing product, we look forward to potential longer-term benefits from their second generation UroLift system, which is expected to launch in the second half of 2018, and being able to leverage our international distribution network moving forward.
“Similar to Vascular Solutions, Vidacare and LMA, this transaction represents an opportunity to acquire a company that meets our key M&A objectives, which include obtaining a product portfolio that fits into our existing strategic business unit franchises and call points; products that provide a superior clinical benefit to existing alternatives and a cost benefit to hospitals; long product life cycles that benefit from patent protection; and the ability to further improve our financial profile. This transaction increases our scale within a call point that we already know quite well, and creates value for Teleflex shareholders by generating attractive financial returns.”
“We are excited to join the Teleflex organization, which shares our vision for making UroLift the standard of care for BPH. Today’s announcement is a recognition of our focus on patient outcomes and the hard work and dedication of the entire NeoTract team. I want to especially thank Dr. Josh Makower, founder & chairman, Ted Lamson, founder & CTO and Joe Catanese, founder & VP, professional education, who took UroLift from concept to reality. We have tremendous respect for the Teleflex team and look forward to partnering with them to continue changing patient lives and delivering best-in-class revenue growth,” added NeoTract president & CEO Dave Amerson.
Teleflex said it expects the buy to dilute adjusted earning per share slightly this year, but not enough to prompt a change in guidance.
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