Friday Five - The medtech week in review

No GE Healthcare carve-out - for now - after biopharma sell-off

GE is holding off plans to IPO its healthcare unit, after the conglomerate sealed a $21.4 billion deal to sell the biopharma manufacturing business - which accounts for 15 percent of GE Healthcare’s total revenue - to Danaher.

The price tag is over seven times that of biopharma’s annual revenue of around $3 million and 17 times its EBITDA, but Danaher’s investors appeared unfazed by the hefty valuation and market reaction to the deal was positive for both buyer and GE.

Danaher expects the acquisition to be accretive to its bottom line as soon as year-one, post-completion, adding $0.45-50 to non-GAAP EPS, and for that accretion to more than double by year-five.

The influx of cash will be used to pay down GE’s significant debt.

GE had filed for an IPO of its healthcare business at the end of last year, with the view of completing the carve-out and public listing in the first half of this year. But the group’s chairman and CEO Larry Culp had said in various media reports this is very unlikely to happen in 2019 and they are exploring all options for that division.

 

[See The Wider View: Big money comes in small biopharma packages for GE]

 

Wright Medical rides onwards and upwards on extremities growth

Wright Medical not only posted Q4 and fully-year 2018 revenue and earnings that beat market expectations, the company - heartened by its performance and growth potential - went on to give an ambitious three-year financial outlook.

The company is focused on the extremities markets, namely shoulder and foot-and-ankle, and biologics. Sales of its products in 2018 brought in $836 million and the company succeeded in getting back in the black after seeing its bottom-line hit hard the previous year. With its forecasts of continued above-market-average growth - double-digit top-line increases and an EBITDA margin in the mid-20 percent region in next three years - Wright Medical looks like a good potential acquisition target.

FirstWord Medtech took a look at the top 10 orthopaedic companies, among which Wright is currently number nine, to see who might be a likely buyer.

 

[See The Wider View: Who’d be looking for a “Wright” fit to shake up ortho rankings?]

 

Bloodlines sale frees Fresenius to finally close NxStage deal, 18 months on

Fresenius Medical Care has finally completed its $2 billion acquisition of NxStage Medical, some 18 months after the companies inked the deal in August 2017.

Fresenius already commands the leadership position in the global dialysis market; the addition of NxStage will bring home dialysis capabilities to the company. The transaction was mainly held up by the US Federal Trade Commission’s review of any anti-competitive issues with the merger, although the US government’s shutdown between December and January prolonged the delay further. The FTC determined that Fresenius had to sell NxStage’s Streamline bloodline business for the transaction to go through - which the company subsequently did, to B Braun - as Fresenius and NxStage are two of the three major suppliers of bloodline tubing used in haemodialysis.

 

Medtronic bulks up pain medicine portfolio with new RF ablation system

Medtronic has added a radiofrequency ablation option in its chronic pain management portfolio, after its Accurian system got FDA clearance this week. Until now, Medtronic addressed this therapy market mainly with spinal cord stimulation systems and implantable drug infusion technologies. Accurian is designed to ablate nerve tissues that are responsible for sending pain signals. Medtronic already has a sizeable tissue ablation device offering, although these are used for other indications, including cardiac and tumour tissue ablation.

 

Liquid biopsy gets another boost with Guardant’s positive data

Positive data from Guardant Health’s NILE study has provided more backing for the use of liquid biopsy prior to conventional tissue-based testing for all newly diagnosed advanced non-small cell lung cancer. The study found that the Guardant360 assay - which analyses cell-free tumour DNA in peripheral blood samples - was able to find biomarkers linked to the disease in 77 patients, while standard-of-care tissue found the biomarkers in 60. Guardant360’s performance as a companion diagnostic was comparable to tissue testing, successfully detecting four target gene mutations for an FDA-approved product. Furthermore, the turnaround time for Guardant360 was almost half that for tissue testing; the median time to results for Guardant360 was 9 days, compared to 15 days for tissue testing.

Guardant is one of the two leading companies in liquid biopsy, the other being Foundation Medicine (acquired by Roche last year) with its FoundationOne Liquid test.

 

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