Merit Medical Systems, Inc. (NASDAQ:MMSI), a leading manufacturer
and marketer of proprietary disposable devices used in
interventional, diagnostic and therapeutic procedures, particularly
in cardiology, radiology, oncology, critical care and endoscopy,
announced today that it has signed an asset purchase agreement with
BD (Becton, Dickinson and Company) to acquire certain assets which
BD proposes to sell in connection with its proposed acquisition of
C.R. Bard, Inc. (Bard). Merit’s proposed asset acquisition is
subject to the closing of BD’s proposed acquisition of Bard as well
as other usual and customary closing conditions.
The assets to be acquired are soft tissue core needle biopsy
products currently sold by BD under the trade names of Achieve™
Programmable Automatic Biopsy System, Temno™ Biopsy System and
Tru-Cut™ Biopsy Needles. Merit understands these products are
currently sold worldwide through a combination of a direct sales
force and distribution partners.
Additionally, Merit proposes to acquire the Aspira® Pleural
Effusion Drainage Kits and the Aspira® Peritoneal Drainage System
currently marketed by Bard. Merit understands these products are
currently sold primarily in the United States.
The purchase price for the product lines and related assets to
be acquired is $100 million, subject to adjustment for fluctuations
in the value of transferred inventory. Merit intends to finance the
acquisition at closing through borrowings which are currently
available under its revolving credit facility. After giving effect
to the proposed transaction, Merit anticipates its debt to adjusted
EBITDA (as calculated in accordance with the terms of Merit’s
existing credit agreement) will increase from approximately 2.20 to
approximately 2.70.
This transaction is expected to create value for Merit’s
shareholders and to be accretive to both GAAP and non-GAAP earnings
in 2018, including the anticipated impact of incremental interest
expense associated with financing the transaction. Merit’s
management expects the acquisition to provide incremental annual
revenues in the range of $42-48 million, adjusted gross margins for
the subject product lines in the range of 60–70%, and, over a
period of six to twelve months, to be accretive by 50–120 basis
points to Merit’s adjusted gross margins. The transaction is also
expected to expand operating margins and increase cash flow.
Merit’s management expects the acquisition to provide $0.10–$0.19
in adjusted non-GAAP earnings per share accretion ($0.01 to $0.08
in GAAP earnings per share accretion) in fiscal year
2018.
“We believe this is a perfect fit for Merit,” said Merit’s
Chairman and Chief Executive Officer Fred P. Lampropoulos. “These
products are well established with an installed base and complement
Merit’s CorVocet™ Full Core Biopsy System and our recently-acquired
bone biopsy products.”
“There are also a number of markets in which Merit has direct
representation that will be expanded to include the acquired
products, as well as new markets which we plan to develop,”
Lampropoulos said. “In summary, we believe this transaction will
provide complementary high-margin products, increased use of our
existing facilities, market expansion opportunities, accretive
margins, profits and our existing sales force utilization.”
ADVISORSPiper Jaffray acted as lead financial
advisor to Merit in connection with the negotiation of the purchase
agreement. Baker & McKenzie provided legal counsel. Merit
anticipates that financing for the transaction will be provided
through the lenders under its existing long-term credit facility:
Wells Fargo Bank, National Association, Bank of America, N.A., HSBC
Bank USA, National Association and U.S. Bank National
Association.
CONFERENCE CALL
Merit will hold a conference call (conference ID
9377629) today, November 16, 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 and slide deck will also be
available at 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 client
hospitals worldwide with a domestic and international sales force
totaling approximately 290 individuals. Merit employs
approximately 4,700 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; Tokyo, Japan; and
Yishun, Singapore.
FORWARD-LOOKING
STATEMENTSStatements contained in this release which are
not purely historical, including, without limitation, statements
regarding Merit's forecasted plans, revenues, gross margin,
operating margin, cash flow net income, financial results, facility
utilization, sales efficiencies or expectations of closing the
proposed acquisition described in this release, 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, 2016 and subsequent filings with the
Securities and Exchange Commission. Such risks and
uncertainties include the following: the dependence of the proposed
acquisition on the closing of a separate transaction to which Merit
is not a party, and regulatory and other conditions to closing
associated with that transaction; the possibility that conditions
to the closing of the proposed transaction will not be satisfied;
Merit's potential inability to successfully manage the proposed
acquisition and achieve anticipated financial results, facilities
utilization and other anticipated benefits; uncertainties as to
whether Merit will achieve sales, gross margin, cash flow and
profitability results from the acquired assets which are comparable
to the experience of BD and Bard; unknown costs and risks
associated with the assets proposed to be acquired; governmental
scrutiny and regulation of the medical device industry, including
governmental inquiries, investigations and proceedings involving
Merit or the assets proposed to be acquired; how the occurrence of
any unanticipated event or cost in connection with the proposed
transaction may affect Merit’s projected ability to comply with
debt covenants; infringement of acquired technology or the
assertion that acquired technology infringes the rights of other
parties; the potential of fines, penalties or other adverse
consequences if Merit's employees or agents violate the U.S.
Foreign Corrupt Practices Act or other laws or regulations; laws
and regulations targeting fraud and abuse in the healthcare
industry; potential for significant adverse changes in governing
regulations; changes in tax laws and regulations in the United
States or other countries; increases in the prices of commodity
components; negative changes in economic and industry conditions in
the United States or other countries; termination or interruption
of relationships with Merit's suppliers, or failure of such
suppliers to perform, in each case including acquired supplier
relationships; the effects of fluctuations in exchange rates on
projected financial results; development of new products and
technology that could render Merit's existing or acquired products
obsolete; changes in healthcare policies or markets related to
healthcare reform initiatives; failure to comply with applicable
environmental laws; changes in key personnel; work stoppage or
transportation risks; price and product competition; availability
of labor and materials; fluctuations in and obsolescence of
inventory; and other factors referred to in Merit's Annual Report
on Form 10-K for the year ended December 31, 2016 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
CommunicationsPhone:
(801) 208-4167 e-mail: awright@merit.com Fax: (801)
253-1688
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