Merit Medical Acquires DFINE, Inc.
July 06 2016 - 9:00AM
Merit Medical Systems, Inc. (NASDAQ:MMSI), a leading manufacturer
and marketer of proprietary disposable devices used primarily in
cardiology, radiology and endoscopy, today announced that it has
acquired DFINE, Inc. headquartered in San Jose, California, in a
merger transaction through which DFINE has become a wholly-owned
subsidiary of Merit.
The purchase consideration was approximately
$97.5 million in cash and was financed by a group of banks led by
Wells Fargo and included Bank of America, HSBC and U.S. Bank.
DFINE produced revenues of $33.4 million in
2015, with approximately 75% of revenues generated in the United
States and 25% outside the United States. DFINE’s products
are directed to vertebral augmentation (kyphoplasty and
vertebralplasty), as well as targeted radiofrequency ablation of
metastatic spinal tumors. DFINE’s product lines have 510(k)
clearance and CE
marking.
“We are delighted to have DFINE join Merit,” said Fred P.
Lampropoulos, Merit’s Chairman and Chief Executive Officer.
“Our relationship began a few years ago when Merit was asked to
provide key device components for DFINE’s StabiliT® and StabiliT
MX® products. In addition to the spinal compression fracture
segment, we believe DFINE’s Star™ Tumor Ablation Kit complements
and enhances Merit’s oncology business.”
“We plan to combine Merit’s oncology segments,
including embolics, microcatheters and biopsy products into a newly
created interventional oncology and spine division (IOS),”
Lampropoulos said. “We believe the restructuring of the sales
divisions – cardiovascular, peripheral and IOS – will enable us to
devote greater focus on Merit’s broad portfolio of products, align
our sales and marketing efforts with Merit’s goal of achieving a
more therapeutic and disease state centered product offering, and
enhance opportunities for future growth.”
“We believe the opportunity for growth with
these best-in-class products is substantial in the United States
and also in international markets where Merit already has a broad
footprint,” Lampropoulos continued. “Although DFINE has a
presence in Germany and Austria, as well as limited distribution
partners, we believe there are many opportunities in Australia,
Canada, Japan, China, the Nordic countries and other regions.
We anticipate that DFINE’s IP portfolio of approximately 110 U.S.
and international patents will provide substantial coverage for
many years ahead.”
The effect of the DFINE acquisition on Merit’s
non-GAAP earnings for the balance of 2016 is expected to be neutral
due to business restructuring and consolidation expenses and is
expected to be dilutive on a GAAP basis by $0.24-$0.26 per share
due to intangible amortization and one-time reorganization costs.
In 2017, Merit anticipates the effect of the acquisition on
Merit’s non-GAAP earnings to be $0.05-$0.08 per share and to be
dilutive on a GAAP basis by $0.05-$0.07 per share. Merit
believes the acquisition will increase its gross margin by
approximately 80 basis points on a non-GAAP basis and 55 basis
points on a GAAP basis.
Canaccord Genuity acted as Merit’s financial
advisor for this transaction. Piper Jaffray acted as DFINE’s
financial advisor.
CONFERENCE CALL TODAYMerit invites all
interested parties to participate in its conference call discussing
the acquisition (conference ID 41983902) today, Wednesday, July 6,
2016, at 11:00 a.m. Eastern (10:00 a.m. Central, 9:00 a.m.
Mountain, and 8:00 a.m. Pacific). The domestic telephone
number is (844) 578-9672, and the international number is (508)
637-5656. A live webcast of the call and a slide deck
showcasing the products and details of the DFINE acquisition are
available at www.merit.com.
ABOUT MERITFounded in 1987, Merit Medical
Systems, Inc. is engaged in the development, manufacture and
distribution of proprietary disposable medical devices used in
interventional, diagnostic and therapeutic procedures, particularly
in cardiology, radiology and endoscopy. Merit serves
hospitals, acute care facilities and clinics worldwide, with a
domestic and international sales force totaling approximately 200
individuals. Merit employs approximately 4,000 people
worldwide with facilities in South Jordan, Utah; Pearland, Texas;
Richmond, Virginia; Malvern, Pennsylvania; Rockland, Massachusetts;
San Jose, California; Maastricht and Venlo, The Netherlands; Paris,
France; Galway, Ireland; Beijing, China; Tijuana, Mexico;
Joinville, Brazil; Markham, Ontario, Canada; Melbourne, Australia;
and Mannheim, Germany.
Statements contained in this release which are
not purely historical, including, without limitation, statements
regarding anticipated revenues, earnings or other financial items;
Merit’s plans and objectives for future operations; proposed
products or services; integration, development or commercialization
of the DFINE operations and assumptions underlying any of the
foregoing , are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 and are
subject to risks and uncertainties such as those described in
Merit's Annual Report on Form 10-K for the year ended December 31,
2015. Such risks and uncertainties include risks relating to
Merit’s acquisition of DFINE; Merit’s efforts to integrate, manage
and develop DFINE’s operations and products; expenses associated
with the integration, management and development of those
operations and products; product recalls and product liability
claims; expenditures relating to research, development, testing and
regulatory approval of Merit’s products (including the DFINE
products) and risks that such products may not be developed
successfully or approved for commercial use; regulation of the
medical device industry; Merit’s need to generate sufficient cash
flow to fund its debt obligations, capital expenditures, and
ongoing operations; restrictions on Merit’s liquidity or Merit’s
ability to operate its business in compliance with its debt
agreements; possible infringement of its technology (including the
DFINE technology) or the assertion that such technology infringes
the rights of other parties; changes in the prices or supply of
commodity components; changes in economic and industry conditions
in the United States and other countries; termination or
interruption of relationships with suppliers, or failure of
suppliers to perform; fluctuations in exchange rates; development
of new products and technology that could render Merit’ products
(including the DFINE products) obsolete; changes in key personnel;
potential healthcare regulatory and policy changes; and other
factors referred to in Merit's Annual Report on Form 10-K for the
year ended December 31, 2015 and other materials filed with the
Securities and Exchange Commission. All subsequent forward-looking
statements attributable to Merit or persons acting on its behalf
are expressly qualified in their entirety by these cautionary
statements. Actual results will likely differ, and may differ
materially, from anticipated results. Financial estimates are
subject to change and are not intended to be relied upon as
predictions of future operating results, and Merit assumes no
obligation to update or disclose revisions to those estimates.
Contact: Anne-Marie Wright, Vice President, Corporate Communications
Phone: (801) 208-4167 e-mail: awright@merit.com Fax: (801) 253-1688
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