Significantly advances Teleflex’s offering
of urological solutionsProvides differentiated, high-growth
and high-margin product offering with demonstrable clinical
benefitsCompelling financial profile expected to
substantially enhance Teleflex’s revenue growth, margins, earnings
and cash flow generation capabilities
Company to host conference call at 8am
ET
Teleflex Incorporated (NYSE: TFX) (the “Company” or “Teleflex”)
and NeoTract, Inc. today announced that the companies have entered
into a definitive agreement under which Teleflex will acquire
NeoTract in a transaction valued up to $1.1 billion. Under the
terms of the agreement, Teleflex will acquire NeoTract for an
upfront cash payment of $725 million at closing, and up to an
additional $375 million upon the achievement of certain commercial
milestones related to sales through the end of 2020. The Boards of
Directors of both Teleflex and NeoTract have unanimously approved
the transaction. This transaction is subject to the satisfaction of
customary closing conditions and is expected to close within the
next 30 days.
Founded in 2004, NeoTract is a privately-held medical device
company that has developed and commercialized the FDA-cleared
UroLift® System, a novel, minimally invasive technology for
treating lower urinary tract symptoms due to benign prostatic
hyperplasia, or BPH. Performed primarily through a transurethral
outpatient procedure, the UroLift® System delivers permanent
implants that hold open the urethra, reducing the prostate
obstruction without cutting, heating, or removing prostate tissue.
NeoTract had revenues of approximately $51 million in 2016 compared
to approximately $18 million in 2015, representing 178%
year-over-year growth. During 2017, NeoTract’s revenues are
expected to be between $115 million to $120 million, and we
anticipate revenues to grow at least 40% in 2018.
“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,” said Benson Smith, Chairman and Chief Executive
Officer of Teleflex. “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.”
Added Smith, "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.”
Dave Amerson, President and CEO of NeoTract, said, "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 Josh Makower, M.D., Founder and Chairman, Ted
Lamson, Ph.D., Founder and Chief Technical Officer and Joe
Catanese, Ph.D., Founder and 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."
STRATEGIC AND FINANCIAL BENEFITS AND TRANSACTION
DETAILS
Expands Teleflex’s product portfolio into large BPH market
opportunity: The addition of NeoTract will greatly enhance
Teleflex’s presence in the urological market as NeoTract’s UroLift®
System is a novel solution used to address a significant medical
issue and targets a total addressable market estimated at over $30
billion.
Accelerates Teleflex’s sales growth trajectory and provides
significant opportunity to capitalize on existing sales
channel: NeoTract, a global leader in the urological market,
has experienced robust clinical adoption and significant revenue
growth since initiating product commercialization. This acquisition
positions Teleflex to expand its presence in the urological call
point, while also enhancing NeoTract’s revenue growth by
capitalizing on Teleflex’s international presence and distribution
network.
Strong clinical data and established reimbursement: Since
receipt of CE Mark in 2010 and de novo 510(k) in 2013, NeoTract’s
UroLift® System has been the subject of a significant number of
studies, including two randomized clinical trials, seven open-label
studies and three meta-analyses. Additionally, the UroLift® System
has broad, sustainable reimbursement in place, including dedicated
category 1 CPT codes specific to the UroLift® System procedure
prostatic urethral lift and is 100% covered by Medicare
Administrative Contractors, which translates to approximately 174
million covered lives in the United States.
Transaction structure and financial rationale: The
transaction is structured as a merger in which Teleflex will
acquire NeoTract for an upfront cash payment of $725 million at
closing, and up to an additional $375 million upon the achievement
of certain commercial milestones related to sales through the end
of 2020. The transaction is expected to close within the next 30
days and is subject to the expiration or termination of applicable
waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and other customary closing conditions.
The acquisition is expected to be slightly dilutive to adjusted
earnings per share1 in 2017, however, the Company does not expect
to adjust its previously provided adjusted earnings per share range
as a result of the acquisition. During 2018, the acquisition is
expected to be breakeven to adjusted earnings per share1, with
significant accretion thereafter, including $0.35 to $0.40 of
adjusted earnings per share1 accretion in 2019. The acquisition is
expected to generate a return on invested capital that meets
Teleflex’s cost of capital in the third year after closing and
exceeds Teleflex’s cost of capital in the fourth year after
closing.
Financing: Subsequent to the release of second quarter
2017 earnings, and prior to entering in to this acquisition,
Teleflex used cash on the balance sheet to repay $475 million of
borrowings under its revolving credit facility.
Teleflex plans to finance the acquisition at closing through
borrowings under its revolving credit facility. Following
consummation of the transaction, Teleflex may look to
opportunistically term-out revolving credit facility borrowings
through a note offering. Over the long-term, Teleflex intends to
maintain its debt to adjusted EBITDA (as calculated in accordance
with the terms set forth in the Company’s existing Credit
Agreement) at approximately 3.0x.
ADVISORS
Guggenheim Securities is acting as financial advisor to Teleflex
and Simpson Thacher & Bartlett LLP is serving as legal
counsel.
J.P. Morgan Securities LLC is acting as financial advisor to
NeoTract, Inc. and Wilson Sonsini Goodrich & Rosati, is serving
as legal counsel.
CONFERENCE CALL & WEBCAST
Teleflex will host a conference call and webcast today,
September 5, 2017 at 8:00 AM Eastern Time to discuss the
transaction. The call will be available live and archived on the
company’s website at www.teleflex.com and the accompanying
presentation will be posted prior to the call. The conference call
can be accessed live by dialing 855-385-6236 (U.S./Canada) or
503-343-6058 (International), Passcode: 79859449. An audio replay
will be available until September 12, 2017 at 11:59pm (ET), by
calling 855-859-2056 (U.S./Canada) or 404-537-3406 (International),
Passcode: 79859449.
ABOUT TELEFLEX INCORPORATED
Teleflex is a global provider of medical technologies designed
to improve the health and quality of people’s lives. We apply
purpose driven innovation - a relentless pursuit of identifying
unmet clinical needs - to benefit patients and healthcare
providers. Our portfolio is diverse, with solutions in the fields
of vascular and interventional access, surgical, anesthesia,
cardiac care, urology, emergency medicine and respiratory care.
Teleflex employees worldwide are united in the understanding that
what we do every day makes a difference. For more information,
please visit teleflex.com.
Teleflex is the home of Arrow®, Deknatel®, Hudson RCI®, LMA®,
Pilling®, Rusch® and Weck® - trusted brands united by a common
sense of purpose.
ABOUT NEOTRACT, INC.
NeoTract, Inc. is dedicated to developing innovative, minimally
invasive and clinically effective devices that address unmet needs
in the field of urology. The company’s initial focus is on
improving the standard of care for patients with BPH using the
UroLift System, a minimally invasive permanent implant system that
treats symptoms while preserving normal sexual function. Learn more
at www.NeoTract.com.
(1) Adjusted earnings per share exclude specified items such
as amortization of acquired intangibles, inventory step-up,
restructuring costs and other costs incurred to execute the
transaction. Adjusted margins and adjusted earnings per share are
non-GAAP financial measures and should not be considered
replacements for GAAP results.
CAUTION CONCERNING FORWARD-LOOKING INFORMATION
This press release contains forward-looking statements,
including, but not limited to, statements related to NeoTract’s
expected 2017 and 2018 revenues; expected benefits to Teleflex from
the acquisition, including incremental revenue growth, anticipated
impacts to adjusted margins and adjusted earnings per share and
longer-term benefits resulting from NeoTract’s second generation
UroLift System and Teleflex’s international distribution network;
expectations with respect to the launch of NeoTract’s second
generation UroLift System; expectations with respect to return on
invested capital resulting from the acquisition; Teleflex’s
expectations with respect to its constant currency revenue growth
and long-term debt to adjusted EBITDA levels; and anticipated
timing for closing of the transaction. Actual results could differ
materially from those in the forward-looking statements due to,
among other things, the possibility that the acquisition does not
close; unanticipated costs and length of time required to comply
with legal requirements and regulatory approvals applicable to the
transaction; unanticipated difficulties and expenditures in
connection with integration programs; customer and shareholder
reaction to the transaction; risks associated with the financing of
the transaction; disruption from the transaction making it more
difficult to maintain business and operational relationships;
significant transaction costs; unknown liabilities; the risk of
regulatory actions related to the proposed acquisition; changes in
general and international economic conditions, including
fluctuations in foreign currency exchange rates; and other factors
described or incorporated in our filings with the Securities and
Exchange Commission (“SEC”), including our Annual Report on Form
10-K for the year ended December 31, 2016.
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version on businesswire.com: http://www.businesswire.com/news/home/20170905005566/en/
Teleflex IncorporatedJake ElguiczeTreasurer and Vice President
of Investor Relations610-948-2836
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