Boston Scientific to Acquire Relievant Medsystems for $850 Million to Expand Chronic Pain Portfolio
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On September 19, Boston Scientific announced that it had reached a definitive agreement with Relievant Medsystems to acquire the company. The transaction includes an upfront cash payment of approximately 6.2 billion yuan ($850 million). Additional payments are contingent on sales performance over the next three years.
Relievant Medsystems has developed and commercialized the Intracept Intravertebral Nerve Ablation System for chronic pain. This minimally invasive procedure, approved by the FDA, is an outpatient treatment for chronic vertebral-origin low back pain that can be performed on the same day.
Image Source: Relievant Medsystems Official Website
This procedure uses targeted radiofrequency energy to ablate the basivertebral nerve (BVN), which stops the nerve from sending pain signals to the brain.The Intracept Intrabone Nerve Ablation System offers multiple advantages, including minimally invasive, same-day surgery, no implants, preservation of the overall spinal structure, and long-term pain relief in a single procedure, with the surgery taking only about an hour.
"We hope that this novel, clinically-supported technology will help us in our strategic layout in the neuroablation system, while expanding Boston Scientific's medical coverage for personalized populations," said Jim Cassidy, President of Boston Scientific's Neuromodulation Division. "Upon completion of the transaction, we look forward to collaborating with the Relievant team to explore providing this treatment option to more people suffering from chronic lower back pain."
More Details on the RMB 6.2 Billion Acquisition
Based on previous acquisition constraints, Boston Scientific expects to complete the transaction in the first half of 2024. Boston Scientific anticipates that Relievant's sales in 2023 will exceed $70 million, with an expected year-over-year growth of over 50% in 2024.
On an adjusted basis, the company expects the impact on 2024 earnings per share to be minimal. It plans to slightly adjust the accretive impact in 2025, with the accretive effect gradually increasing thereafter. Due to amortization expenses and acquisition-related costs, Boston Scientific anticipates a more dilutive GAAP impact.
"Today is a significant step forward for Boston Scientific as the leader in interventional chronic pain toward shaping the future of chronic low back pain," said Tyler Binney, President and CEO of Relievant. "This is a testament to the extraordinary talent of the Relievant team and the innovative engine behind the Intracept system. Together with Boston Scientific, we can accelerate our journey to provide life-changing relief for patients by transforming the diagnosis and treatment of vertebrogenic pain."
Analysts' Views on This Acquisition
BTIG analysts Marie Thibault and Sam EiberAfter learning this news, they maintained the "Buy" rating for Boston Scientific. They pointed out that Relievant has a strong influence, and its Intracept system has commercially treated more than 10,000 patients. The Intracept system is currently also included in the reimbursement options by Medicare and many commercial insurances.
Analysts analyzed that although Boston Scientific's neuromodulation business has stagnated in recent quarters, this deal will expand the business. Analysts are looking forward to gaining more details from Boston Scientific at the Investor Day event on September 20th.
Needham analysts Mike Matson, David Saxon, and Joseph ConwayResponded to BTIG's view on expanding the neuromodulation business. They noted that Intracept could complement its pain management products, including spinal cord stimulators and the Vertiflex Superion spacer.
Truist analysts Richard Newitter, Samuel Brodovsky, and Lin ZhangAlso responded positively to the acquisition.
"Strategically, we believe this type and scale of transaction is exactly what Boston Scientific excels at. This acquisition can bring high-growth, value-added assets to Boston Scientific and also expand the company's business scope," the analysts wrote.
Boston Scientific Acquisition Dynamics
Boston Scientific seems keen on boosting its growth through strategic mergers and acquisitions. The company demonstrated this by completing a series of acquisitions between 2021 and 2022, including the purchases of Farapulse, Baylis Medical, and Lumenis.
The acquisition agreement with Relievant marks Boston Scientific's third such move in the past 12 months. At the end of 2022, the company announced plans to acquire a majority stake in Acotec for approximately $523 million. In April this year, the company completed the $615 million acquisition of Apollo Endosurgery.
｜Source: Mass Device, Medical Device Innovation Network Translation
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