Global medical technology company Smith & Nephew plc plans to acquire Integra LifeSciences Holdings Corporation’s extremity orthopedics business for $240 million.
Smith & Nephew Buys Integra’s Extremities Business for $240 Million
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The acquisition will bolster Smith & Nephew’s existing orthopedics portfolio. Notably, the addition includes a new shoulder replacement system that is expected to commercially launch in 2022.
Smith & Nephew Global Orthopaedics President Skip Kiil believes the acquisition will strengthen Smith & Nephew. “Integra’s Extremity Orthopaedics business is an established global player in the rapidly growing extremities segment, including total shoulder replacement, and has a well-regarded specialized sales channel and a strong pipeline of new products.”
Kiil continued, “This strategic acquisition represents a significant opportunity to strengthen Smith & Nephew’s position in a high-value area and allows us to offer a leading extremities portfolio to customers.”
Integra’s extremity orthopedics business includes locations in Austin, Texas and Lyon, France. Its Austin location has a surgeon training facility. According to the press release, around 300 employees will join Smith & Nephew when the deal closes. The parties anticipate that this will occur by the end of 2020.
Integra LifeSciences Extremity Orthopaedics SVP Peter Ligotti is excited to join Smith & Nephew. In the press release, Ligotti said, “We are looking forward to joining an organisation that is committed to growing and expanding its orthopaedic product portfolio.”
Ligotti continued, “We are excited for the opportunities ahead as we continue to advance orthopaedic innovations for our customers and improve patient outcomes.”
The transaction will be financed from existing cash and debt facilities. The press release reported that in 2019 the extremity orthopedics business “generated revenue of $90 million” and “traded at a small loss.” It is expected to “deliver double-digit revenue growth and be slightly dilutive to trading profit in 2021 and 2022.”
Canaccord Genuity is the global capital markets division of Canaccord Genuity Group Inc., a financial services firm. Canaccord Genuity analyst Kyle Rose viewed Smith & Nephew’s acquisition positively.
In a note to investors, Rose wrote, “We view the tuck-in positively given it represents a reasonable valuation, appears synergistic to the outlined ASC/outpatient strategy, and immediately provides SNN [Smith & Nephew] the ability to compete in the total shoulder and ankle markets, both of which were notable portfolio gaps.”
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This is a fascinating development. In my practice we've seen similar outcomes with the revised protocol. The key differentiator seems to be patient selection criteria. Has anyone else noticed the correlation with BMI thresholds?
Great point. I'd push back slightly on the conclusion, the sample size in the cited study is too small to draw population-level inferences. That said, the directional signal is compelling and worth a larger RCT.
We implemented a similar approach last year. Early results are promising but we're still gathering 12-month follow-up data. Happy to share our protocol if anyone is interested.
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