Integra Extremity Reconstruction to Expand in Foot, Hand and
Shoulder Markets
Company to Gain Access to PyroCarbon Technology
Integra LifeSciences Holdings Corporation (Nasdaq:IART) and
Ascension Orthopedics, Inc. ("Ascension") today announced an
agreement for Integra to acquire Ascension, a provider of high
quality, innovative products for the foot, hand and shoulder
markets, for approximately $65 million in cash, subject to
adjustments. When combined with Integra's legacy business, the
products will represent approximately 45% of Integra's Orthopedics
revenues.
Ascension, based in Austin, Texas, develops and distributes a
range of implants for the shoulder, elbow, wrist, hand, foot and
ankle. In particular, Ascension will add a significant upper
extremity and shoulder portfolio, which complements Integra's
strength in lower extremity.
"Ascension is an ideal strategic fit for Integra, as it
reinforces our commitment to and presence in the fast-growing
extremities space," said Stuart Essig, Integra's Chief Executive
Officer.
Ascension will also bring to Integra its differentiated
pyrolytic carbon technology. PyroCarbon is a specific form of
carbon with specially manufactured crystalline structures that give
it excellent strength and wear characteristics. Ascension's
PyroCarbon has decades of clinical support defining its durability,
wear resistance, and biocompatibility.
"We are very excited to become a part of Integra," said Guy
Mayer, President and CEO of Ascension. "Integra's dedicated
sales force and strong balance sheet provide the stability and
infrastructure necessary for us to fuel growth and emerge as a
leader in the important extremities market."
The combination of Ascension and Integra will bring numerous
potential benefits, including:
- Complementary Product Portfolio. Ascension will bring to
Integra a strong position in upper extremity products, including
shoulder. Ascension's lower extremity offerings significantly
enhance Integra's leading line of foot and ankle products.
- New Entry Into Shoulder Market. Ascension will provide to
Integra currently-marketed leading-edge shoulder products, opening
the largest component of the extremities market, estimated at $600
million.
- PyroCarbon Technology. Ascension's proprietary PyroCarbon
material has years of clinical evidence that define its
biocompatibility, elasticity, strength and safety. Integra is
excited about the potential of this technology in its product
development program.
- Industry Experience. The Ascension management and
development teams will bring additional extremities industry
experience to Integra's organization.
"We are delighted to welcome the Ascension organization,
distributors and customers to Integra," said Robert Paltridge,
Integra's President, Extremity Reconstruction. "Through this
combination, Integra will be able to provide a broader array of
solutions that limit uncertainty for the busiest extremity
surgeons."
Ascension generated approximately $19 million in revenue in the
twelve months ended June 2011. Although Ascension has grown
its revenues each year since its inception in 1996, it has not
operated profitably.
The transaction is subject to customary closing conditions and
is expected to close by the end of this month.
Integra expects to provide detailed guidance regarding the
financial impacts of this transaction when it reports its financial
results for the third quarter of 2011. Upon closing, Integra
preliminarily expects this acquisition to add negligible revenues
to its third quarter 2011, approximately $4 million to its fourth
quarter 2011 revenues, and $20 million for the year 2012 revenues,
in each case net of potential lost business attributable to the
integration.
Excluding transaction and integration related costs and charges,
the combined organization is expected to generate significant
recurring cost savings by the third quarter of 2012. Integra
expects this acquisition to have a negligible impact on its third
quarter adjusted earnings per share and a dilutive impact of 5 to 6
cents on its fourth quarter adjusted earnings per share* in 2011,
and a greater dilutive impact on its quarterly 2011 GAAP earnings
per share. Heading into 2012, Integra expects the acquisition
to be 6 to 8 cents dilutive to full year 2012 adjusted earnings per
share, with dilution in the first half of the year followed by a
neutral to slightly accretive second half. Integra expects a
greater dilutive impact to Integra's 2012 GAAP earnings per
share.
"As Ascension has generated operating losses of about $2 million
per quarter, the transaction will be dilutive to Integra's earnings
for several quarters," said Jack Henneman, Integra's Chief
Financial Officer. "As we restructure the business, we expect
substantial savings to come from reducing redundant costs and
increasing the efficiency of the organization. The transaction
should become accretive to both adjusted and GAAP earnings by the
second half of 2012. We will provide more detailed guidance
on the scope and pace of the integration during our third quarter
conference call next month."
Integra plans to fund this transaction from cash on hand and
borrowings under its line of credit.
UBS Investment Bank advised Ascension in connection with the
transaction.
About Integra
Integra LifeSciences, a world leader in medical devices, is
dedicated to limiting uncertainty for surgeons, so they can
concentrate on providing the best patient care. Integra offers
innovative solutions in orthopedics, neurosurgery, spine,
reconstructive and general surgery. For more information,
please visit www.integralife.com.
About Ascension
Ascension develops and sells a full range of implants for the
shoulder, elbow, wrist, hand, foot and ankle. The company
offers its products to customers worldwide. Ascension was
founded in 1996 and is based in Austin, Texas.
*Adjusted earnings per share exclude acquisition-related costs
and other costs as detailed in our Current Report on Form 8-K filed
on July 28, 2011. Adjusted earnings per share is a non-GAAP
financial measure and should not be considered a replacement for
GAAP results.
Additional Information
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
that involve risks, uncertainties and reflect Integra's judgment as
of the date of this release. Forward-looking statements
include, but are not limited to, statements concerning expectations
for the strategic benefits that this acquisition will provide to
Integra, the effect of the acquisition on our results of
operations, including revenue growth and earnings per
share. Such forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from predicted or expected results. Among other things,
Integra's ability to successfully integrate the Ascension business
into its own operations could affect the extent of the strategic
benefits that Integra generates from this acquisition, and the
impact of the acquisition on results of operations, including
revenue growth and earnings per share. In addition, the
economic, competitive, governmental, technological and other
factors identified under the heading "Risk Factors" included in
Item 1A of Integra's Annual Report on Form 10-K for the year ended
December 31, 2010 and information contained in subsequent filings
with the Securities and Exchange Commission. These
forward-looking statements are made only as of the date hereof, and
Integra undertakes no obligation to update or revise the
forward-looking statements, whether as a result of new information,
future events or otherwise.
CONTACT: Integra LifeSciences Holdings Corporation
John B. Henneman, III
Executive Vice President
and Chief Financial Officer
(609) 275-0500
jack.henneman@integralife.com
Investor Relations:
Angela Steinway
(609) 936-2268
angela.steinway@integralife.com
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