Integra LifeSciences (Nasdaq:IART) announced today that it entered into a definitive agreement to acquire Surgical Innovation Associates (SIA).
SIA develops, markets and sells the DuraSorb resorbable synthetic matrix for plastic and reconstruction surgery.
Princeton, New Jersey–based Integra said in a news release that the acquisition advances its global strategy in breast reconstruction. The deal expands plans to access the U.S. market with FDA-approved devices for implant-based breast reconstruction (IBBR) procedures.
Integra expects the deal to close by the end of the year. It plans to purchase SIA for $50 million at closing. In addition, Integra could spend up to $90 million more upon the achievement of certain revenue and regulatory milestones.
The transaction is not expected to impact Integra’s 2022 financial results materially. Integra expects a dilutive impact to adjusted earnings per share of approximately 6¢ in year one. Then, it anticipates an accretive impact in year three with a return on invested capital greater than 10% by year five. Integra expects approximately $5 million in 2022 revenue for DuraSorb. It joins Integra’s tissue technologies segment as part of its wound reconstruction and care franchise.
“The global breast reconstruction market represents an attractive growth opportunity for our surgical reconstruction business,” said Robert T. Davis, Jr., EVP and president of tissue technologies at Integra LifeSciences. “By offering two distinct product solutions, SurgiMend and DuraSorb, to plastic and reconstructive surgeons, we aim to address various clinical, contracting, and economic needs across different sites of care. We look forward to welcoming the SIA leadership and colleagues who will continue to drive the team’s success.”
How DuraSorb improves Integra’s portfolio
DuraSorb strengthens the plastic and reconstructive surgery portfolio at Integra, the company said. That portfolio includes the SurgiMend PRS xenograft surgical matrix.
Integra said it is the first and only manufacturer to submit for premarket approval for a surgical matrix for use as soft tissue support in IBBR. The PMA application for SurgiMend remains under review with the FDA. In addition, SIA is currently conducting an FDA investigational device exemption (IDE) study to evaluate DuraSorb with an eye on obtaining a PMA in IBBR.
“We are excited to work with Integra and contribute our resorbable synthetic technology to its strong soft tissue reconstruction capabilities, with a view to providing surgeons with greater access to FDA-approved devices to support breast reconstruction,” said Dr. Josh Vose, M.D., CEO, SIA. “Integra’s global reach and commercial strength will help enable us to achieve our joint mission to improve outcomes in women’s health.”
Share repurchase program
Integra shared that it plans a $150 million share repurchase as part of previous board approval. In addition, the company may repurchase shares at its discretion as part of the program. The number of shares and the timing of such transactions depends on various factors.
Additionally, the company may suspend or discontinue the program at any time. It expects share repurchases to begin in early 2023. Integra said it might utilize “various methods” to make the repurchases.
The company expects the benefit of share repurchases to adjusted EPS to largely offset the dilution of the SIA acquisition.
“The SIA acquisition will bring us another step closer to reaching our ambition of becoming a global segment leader and innovator in breast reconstruction with future FDA approvals, investment in pipeline and evidence generation,” said Jan De Witte, president and CEO of Integra LifeSciences. “Moreover, our ability to reinvest for growth and repurchase shares reflects the strength of our balance sheet and our commitment to creating shareholder value.”
