Boston Scientific to acquire Vertiflex for $465M upfront, milestone payments

Boston Scientific announced that it has entered into a definitive agreement to acquire Vertiflex, a privately-held company which has developed and commercialized the Superion Indirect Decompression System, a minimally-invasive device used to improve physical function and reduce pain in patients with lumbar spinal stenosis, or LSS. The procedure is expected to reach $60M in sales in 2019. The transaction consists of $465M in upfront cash and additional payments contingent on commercial milestones for the next three years. The Superion System, pproved by the FDA in 2015 for patients with moderate degenerative LSS, creates space between the spinous processes of the vertebrae. The creation of this space reduces pressure on the nerves and can thereby improve patient mobility and relieve pain, numbness and cramping in the legs. This procedure is a treatment option for patients who have not responded positively to first-line therapies, such as oral pain medication and steroid injections, but do not have severe enough symptoms to require spinal fusion or laminectomy. The transaction is expected to be immaterial to adjusted earnings per share in 2019 and 2020, and accretive thereafter. On a GAAP basis, the transaction is expected to be less accretive, or more dilutive as the case may be, due to amortization expense and acquisition-related net charges. The acquisition is projected to close late in Q2, subject to customary closing conditions.
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