AtriCure (NSDQ:ATRC) said yesterday it bought cardiac-focused medical device developer nContact for approximately $99 million in shares of common stock and up front cash.
The sale was funded with an upfront payment of approximately 3.7 million shares of AtriCure at $24.60 per share and $8 million in cash up front. The purchase also includes up to $50 million in additional funds based on completing enrollment of its Converge IDE trial and obtaining PMA approval.
“nContact is an excellent strategic addition to AtriCure, as it expands and strengthens our presence in the Afib market. We expect the combined entity to provide improved market access and additional collaboration opportunities with cardiac surgeons and electrophysiologists. This acquisition reinforces our commitment to the Afib market, product innovation and clinical science. We are excited to be able to offer this therapy to our combined customer base, further the CONVERGE IDE trial, and continue our mission to grow the market with new solutions,” AtriCure CEO Mike Carrel said in a press release.
The acquisition will allow AtriCure to expand its addressable market with nContact’s products and intellectual property portfolio, the company said, and is a “highly strategic” buy for the company and its shareholders, according to Leerink Partner’s Danielle Antalffy.
The purchase was important for 3 reasons, Antalffy wrote in a letter to investors. It removed a potential competitive threat, shored up AtriCure’s minimally invasive business and could serve to shorten its PMA pathway for a “transdiaphragmatic approach” for AtriCure’s own minimally invasive surgical atrial fibrillation solutions.
The company has raised its long-term sales growth guidance after the buy to 18% from a previous 15%, Antalffy reported.
AtriCure shares have responded with an approximate 10% slide today, trading at $20.01 as of 1:00 p.m. EDT.
In early 2013, nContact said it received FDA clearance for modifications made to its cardiac ablation device.
The company won 510(k) clearance from the federal watchdog agency for the next generation of its VisiTrax cardiac ablation device, EPi-Sense. The company said this product includes new sensors, generating electrical feedback to assist electrophysiologists with device positioning during cardiac ablation procedures.