Updated February 1, 2012 at 5:30 p.m.
The $372 million buyout of Navilyst Medical by AngioDynamics (NSDQ:ANGO) is a reset button that will reinforce the combined operation for the future, AngioDynamics CEO Joe DeVivo told MassDevice this afternoon.
AngioDynamics agreed yesterday to pay $372 million* for Navilyst, the vascular device business spun out by Boston Scientific (NYSE:BSX) in 2008 to Avista Capital Partners. The deal will double AngioDynamics’ share of the vascular access market, according to the company, but for DeVivo it’s a chance to put the business on a rock-solid foundation.
"It’s basically a reset button," he told us. "It allows me to create a new baseline, to structure the operations to become more efficient. This is a complete deal that, by merging these competitors which are very alike and very similar, but also have very different and complementary strengths and weaknesses, it’s a way to have a refresh for the entire combined company."
The deal, expected to close during AngioDynamics’ fiscal 4th quarter ending in May, prompted ANGO to issue new guidance for fiscal 2013. Net sales are now predicted to reach $360 million; earnings per share are slated for an 8-cent boost excluding costs related to the merger and 1-time items. The acquisition is also expected to save about $5 million to $7 million annually during fiscal 2013 "and increase to approximately $10-15 million on a run-rate basis over a 2-3 year period," according to the company.
DeVivo told us that the two companies had been talking for about 18 months about a possible deal. Once he took over the corner office in August 2011, he said, "I took it upon myself to rekindle the dialogue."
Hear more from Joe DeVivo about AngioDynamics’ path along the mergers & acquisitions trail
"On both sides, everyone is thoroughly convinced that this is a brilliant opportunity to build a great company," DeVivo said, adding that although no big deals are likely on the horizon, "over the next 12 months we have the opportunity to continue to license technologies that will now benefit from a multiple, focused sales force."
"That will continue, but we won’t be doing anything large in the near future until we’ve fully integrated and started to reap the rewards," he explained. "We’ll be generating a significant amount of cash – we may be able to pay off this debt in 3 years. I’d be looking to continue to expand on this new platform."
AngioDynamics said it plans to fund the deal with $97 million in cash and $150 million in debt and equity financing from J.P. Morgan, Bank of America and KeyBank National Assn. That will leave Avista with a roughly 27% stake in AngioDynamics.
CEO pay: $1.4M for no growth?
The trio of CEOs who traipsed through the corner office door at Angeion (NSDQ:ANGN) last year cost the cardiac diagnostic device maker $1.4 million.
ANGN shares lost 0.6% of their value last year, meaning Angeion shelled out more than a million dollars for less than zero growth.
Former CEO Rodney Young departed the Minnesota company on the last day of 2010, taking a $624,000 severance package with him. Angeion replaced Young with Philip Smith but fired him a mere 5 months later, paying out $451,000. His replacement, Gregg Lehman, earned $279,000 last year.
Angeion blamed its swing to 3rd-quarter losses last year on legal fees and severance payouts for Smith, but that wasn’t the 1st personnel snafu for the company. It announced the termination of then-CFO William Kullback in a terse SEC filing in July 2010, not naming a permanent replacement until May 2011, when it tapped Rob Wolf for the job.
Chairman Mark Sheffert told the Star Tribune that $1.4 million was a lot of money for a company that lost $200,000 on revenues of $29.1 million.
"I’m optimistic about how things are going now, and the direction we’re taking," Sheffert told the newspaper. "There’s no question that, over time, people will see these were good moves.
"Even as we’ve gone through 3 CEOs, the cash and the lack of debt have continued to be steadfast metrics," he said. "Our operating expenses are still high in relation to our revenues, but Lehman has begun processes to bring those down. … Our major focus is on continuing to grow our profit margins and to grow our revenues, both organically and through opportunities for alliances, partnerships and acquisitions."
ANGN shares were down 2.8% to $5.25 apiece as of about 12:40 today. Read more
Greenway Medical readies IPO
News of Facebook’s initial public offering may overshadow another tech IPO for Greenway Medical Technologies, which is slated to begin public trading Feb. 3.
The electronic medical records provider’s $80 million offering is a far cry from the $10 billion the social media giant is expected to raise, but it’s a sign of an increased interest in IPOs in general and medical-related offerings in particular. The economic meltdown of the past few years prompted a relatively fallow period for IPO activity.
Greenway intends to issue roughly 6.7 million shares, priced between $11 and $13, and to trade under the NYSE ticker GWAY. Read more
Exactech releases Q4 prelims, 2012 guidance
Exactech (NSDQ:EXAC) released its preliminary sales results and its guidance for 2012, saying it expects to post Q4 revenues of $53.1 million, up 2.5% compared to Q4 2010. Full-year sales are slated to be $205.4 million, an 8% increase.
For 2012, the orthopedic device maker said it expects revenues of between $215 million and $223 million and diluted earnings per share of 88cents to 96 cents. First-quarter revenues are expected to run between $54 million and $57 million, with Q1 diluted EPS of 22 cents to 24 cents. Exactech is scheduled to announce full results for the 4th quarter and 2011 Feb. 28. Read more
Analysts’ ups and downs
- Abiomed (NSDQ:ABMD): Wunderlich Securities maintains "buy" rating, $24 price target.
- Align Technology (NSDQ:ALGN): Jefferies Group affirms "buy" rating; ThinkEquity initiates coverage at "buy;" Northcoast Research upgrades from "neutral" to "buy;" William Blair initiates coverage at "outperform."
- Becton Dickinson (NYSE:BDX): Crédit Agricole cuts to "outperform" from "buy."
- Boston Scientific (NYSE:BSX): Goldman Sachs sets "sell" rating.
- C.R. Bard (NYSE:BCR): Mizuho reiterates "neutral" rating, $86 price
target; Leerink Swann maintains "market perform," raises price target to $100-$103; Jefferies Group raises target to $104, maintains "buy" rating. - Cynosure (NSDQ:CYNO): Leerink Swann maintains "outperform," 2012 estimates.
- Danaher (NYSE:DHR): Goldman Sachs raises price target to $58, boosts estimates, sets "neutral" rating.
- Edwards Lifesciences (NYSE:EW): Canaccord Genuity maintains "buy," $85 price target; Goldman Sachs maintains "conviction list buy;" Leerink Swann maintains "outperform," $90 price target; Wunderlich Securities sets $75 price target.
- Haemonetics (NYSE:HAE): Barrington Research reiterates "outperform" rating, $73 price target.
- Intuitive Surgical (NSDQ:ISRG): JMP Securities raises price target to $560 from $510.
- Smith & Nephew (FTSE:SN): Nomura maintains "neutral" rating, £5.96 price target.
- St. Jude Medical (NYSE:STJ): Canaccord Genuity upgrades from "hold" to "buy" with $50 price target; Goldman Sachs sets "neutral" rating.
- Stryker (NYSE:SYK): BMO Capital lowers rating to "market perform" from "outperform."
- Thoratec (NSDQ:THOR): Goldman Sachs maintains "neutral" rating; Canaccord Genuity maintains "hold" rating, $34-$31 target.
- Zoll Medical (NSDQ:ZOLL): Zacks Investment Research maintains "outperform" rating.
*Correction, February 1, 2012: This article originally stated that AngioDynamics agreed to a purchase price of $14.20 per share. The correct value is $372 million total. Return to the corrected sentence.
