Philips acquires Spectranetics Corp for $2.16 billion

The $2.16 billion acquisition of Spectranetics Corp by Dutch healthcare company Philips highlights the company’s ambitions to expand its Image-Guided Therapy tools, alongside its dominance within the global health market.

According to their website, Spectranetics “provides expert tools, training and support designed to help successfully manage every cardiac lead and to eradicate restenosis and amputation, saving time, money, and most importantly, lives.”

Philips aim to commence a tender offer to acquire all of the issued and outstanding shares of Spectranetics for USD 38.50 per share, to be paid in cash upon completion. This represents a 27 percent premium to Spectranetics closing price at the end of June.

The implied enterprise value is approximately EUR 1.9 billion, inclusive of Spectranetics’ cash and debt.

The acquisition of Spectranetics will further expand and strengthen Philips’ Image-Guided Therapy Business Group. Spectranetics is a leader in vascular intervention to treat coronary and peripheral artery disease, and in lead management for the minimally invasive removal of implanted pacemaker and implantable cardioverter defibrillator (ICD) leads.

Spectranetics is currently growing double digits, with projected sales predicted to be over $300 million this year.

Spectranetics' device portfolio includes a range of laser atherectomy catheters for treatment of blockages with laser energy in both coronary and peripheral arteries; the AngioSculpt scoring balloon, helps clean the insides and remove blockages within peripheral and coronary arteries; the AngioSculptX scoring balloon, which has become the only drug-coated scoring balloon in the market, and the Stellarex drug-coated balloon, which counteracts recurring blockages and any potential lesions. All of these market segments exhibit high growth rates.

The Stellarex drug-coated balloon is a key growth driver in Spectranetics’ portfolio, as it is one of the fastest growing areas within peripheral vascular procedures.

Frans van Houten, CEO of Royal Philips said, “Spectranetics’ highly competitive product range, integrated with our portfolio of interventional imaging systems, devices, software and services will enable clinicians to decide, guide, treat and confirm the appropriate cardiac and peripheral vascular treatment to deliver enhanced care for patients with better outcomes, as well as significantly boost recurring revenue streams for Philips.”

Spectranetics’ standalone revenue growth is expected to be double-digit and adjusted EBITA to be positive by 2018

Furthermore, the transaction will enhance the geographical expansion of Spectranetics’ products and commercialisation opportunities.

The combined Spectranetics and Philips Image Guided Therapy Devices business (Philips Volcano), within the Image-Guided Therapy Business Group, is expected to grow to approximately EUR 1 billion by 2020.

Further growth

This month, Philips has also announced its acquisition of Electrical Geodesics, Inc., a US based medical device company that designs, develops and commercialises a range of technologies used to monitor and interpret brain activity, signifying an increased, diverse portfolio.

The deal coincides with Philips’ existing portfolio of imaging technologies and advanced informatics for neurological applications, for example, Parkinson’s disease and stroke.

Joe Burnett, Business Leader Neuro Diagnostics at Philips said, “This acquisition will enable Philips to provide an integrated neurology solution comprising diagnostic imaging and clinical informatics to assess brain anatomy and physiological processes, and EEG mapping tools from EGI to measure electrical brain activity. By fusing these different tools together, we will create a more comprehensive map of the brain, and unlock new computational algorithms which will help to shorten the path to a definitive diagnosis and guide some of the most complex therapeutic strategies.”