Orthofix (NSDQ:OFIX) said it inked an agreement to potentially pay at least $65 million for eNeura and its home migraine treatment device, even as it restates 3 years of financial results in a bid to address past accounting discrepancies.
Lewisville, Texas-based Orthofix, which is domiciled in Curacao, also reported a swing to 3rd-quarter profits last year on sales growth of 10%, compared with Q3 2013.
The deal for eNeura includes an 18-month option to acquire and a $15 million loan, Orthofix said. Maryland-based eNeura makes the SpringTMS device, a portable transcranial magnetic stimulation device designed to treat migraines. Spring TMS won 510(k) clearance from the FDA in May 2014.
If Orthofix pulls the trigger on the eNeura deal, it will pay $65 million and eNeura will repay any unused principal from the $15 million loan. Potential milestone and royalty payments are also on the table, Orthofix said. eNeura closed on a $6.6 million equity round last September.
Separately, Orthofix restated its financial results for 2011, 2012 and 2013 and filed a slew of delayed quarterly reports with the SEC. The company revealed in mid-2013 that an audit had prompted the need to restate financial results after it discovered improperly recognized revenues. Shareholders later sued, accusing the company of failing to warn them that the action would be necessary. An investigation into the financial results also revealed problems with inventory controls.
"We are pleased to have completed the extensive technical accounting work reflected in the restated financial statements we filed today," president & CEO Brad Mason said in prepared remarks.
For the 3rd quarter last year, Orthofix posted profits of $452,000, compared with losses of -$18.8 million, on sales growth of 10% to $101.0 million, versus the same period in 2013.
OFIX shares closed up 14.6% at $35.89 yesterday on the news.
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