The Hero graft put up $7.5 million in sales for CryoLife last year, the Atlanta-based company said. The deal calls for CryoLife to continue manufacturing the device for up to 6 months, when Salt Lake City-based Merit will take over production.
“The recent acquisition of On-X Life Technologies strengthened our strategic focus on aortic and mitral valve repair and replacement surgery. The transaction more than doubled our U.S. cardiac surgery sales force. The sale of the Hero graft product line will allow our commercial organization to have a greater focus on selling our expanded portfolio of cardiac surgery products,” chairman, president & CEO Pat Mackin said in prepared remarks.
“We believe this transaction represents a positive opportunity for both companies. The Hero graft is a unique product within the dialysis continuum of care and it is proven to reduce bacteremia rates by 69% as compared to patients with tunneled dialysis catheters. Merit has a complementary portfolio of vascular access and dialysis-related products, with corresponding customer relationships, putting them in a strong position to broaden Hero graft access for patients with end-stage renal disease,” Mackin said.
COO/CFO Ashley Lee said CryoLife plans to use the proceeds to pay down some of the $75 million term loan it took out for the $130 million acquisition of On-X.
Merit chairman & CEO Fred Lampropoulos said his company has had its eye on the Hero device “for some time.”
“We believe the Hero graft will help enhance our existing presence with vascular surgeons as well as interventional radiologists. We believe other Merit product lines, such as our peritoneal dialysis catheters, which are most often implanted by vascular surgeons, and our line of chronic dialysis catheters, will be improved as well. We understand that ninety percent of the Hero graft sales have been in the United States with the balance mainly in Germany and the United Kingdom. We believe that a substantial opportunity exists in the international marketplace, especially with our global sales, marketing and clinical footprint,” Lampropoulos said in prepared remarks. “Additionally, we believe vascular surgery represents a substantial opportunity for existing product pull-through, including catheters, guide wires, access devices and a host of other products.”
Merit CFO Bernard Birkett added that the company expects the acquisition to add 2¢ to adjusted earnings per share this year, tripling to 6¢ in the 3rd year of production.