Teleflex
(NYSE: TFX)
announced today that it entered into a definitive agreement to acquire Palette Life Sciences.
The deal to acquire the privately-held urology technology developer includes an upfront cash payment of $600 million at closing. It also includes up to an additional $50 million upon the achievement of certain commercial milestones.
Wayne, Pennsylvania-based Teleflex said in a news release that it expects to complete the acquisition in the fourth quarter of 2023. The company believes Palette’s offerings expand its interventional urology portfolio, which includes the UroLift system.
Palette develops a non-animalized stabilized hyaluronic acid (NASHA) spacer and tissue bulking products. The company estimates standalone revenues of approximately $56 million in 2023. Assuming a Dec. 1, 2023, closing, Teleflex does not expect the acquisition to significantly impact its revenue for the year.
Liam Kelly, Teleflex chair, president and CEO, said the transaction falls in line with the company’s strategy to acquire assets “that are accretive to Teleflex’s growth rate.” Kelly added that the company expects Palette to meaningfully contribute to growth in the coming years. In 2024, the company projects this business to achieve year-over-year revenue growth potentially reaching the low 20% range.
“As part of our strategy to deliver long-term durable growth, Teleflex is focused on deploying capital for innovative products and technologies that can meaningfully enhance clinical efficacy, patient safety and comfort, reduce complications, and lower the overall cost of care,” Kelly said. “The acquisition of Palette Life Sciences will allow us to incorporate this exciting technology into our Interventional Urology business unit and bring urologists, radiation oncologists, and other specialists more innovative technologies that can positively impact patient care.”
More about the acquisition of Palette Life Sciences by Teleflex
Teleflex said it expects a dilutive impact to its adjusted earnings per share in 2023 and 2024 by approximately 15¢ and 35¢, respectively. Beginning in fiscal 2025 and thereafter, the company forecasts an increasingly accretive impact on adjusted EPS. The company plans to finance the acquisition through borrowings under its revolving credit facilities plus cash on hand.
Palette develops the Barrigel NASHA spacer designed to reduce radiation delivered to the rectum during prostate cancer radiation therapy. It also increases tumor control and patient quality of life. The easily sculpted, highly visible spacer offers biodegradability, reversibility and one-step assembly in all sites of service. Barrigel received FDA clearance in May 2022 and also holds clearance in Australia and Europe.
Teleflex plans for the acquisition to “further its strategic vision and play a role in providing differentiated technology to urologists and related specialties.” The company added that the platform established for UroLift can offer a strong runway for the clinical adoption of Barrigel.
Palette’s portfolio also includes the Deflux and Solesta NASHA-based tissue bulking agents. They aim to treat pediatric vesicoureteral reflux and fecal incontinence, respectively.
