Medical devices maker Integra LifeScience Holdings (IART) has recently acquired SeaSpine, a California based spine fusion product provider for $89 million in cash. With this purchase, the combined orthobiologics product portfolio will become the key component under Integra’s orthopedic revenue category.
SeaSpine, with $50 million of revenue in fiscal 2010, makes and distributes a comprehensive set of innovative spinal fixation products, including both hardware and biologics. The company has access to huge and under penetrated spine hardware market of the US and selective parts of Europe. Thus the deal is expected to add more colors to Integra’s business by effectively doubling its distribution footprint and customer base.
Integra expects revenue contribution from SeaSpine acquisition to be $2−$3 million in the second quarter of fiscal 2011 and $18−$20 million in the second half of 2011. The company expects this acquisition to have a neutral impact to its 2011 adjusted EPS and a dilutive impact to its 2011 GAAP EPS.
Apart from substantial boost in Integra’s revenue in spine hardware and expanding its customer base, this combined team is also expected to bring efficiency as well as enhance Integra’s resources by delivering successful product development team.
Integra develops and markets surgical implants and medical instruments for Orthopedics (spine, orthobiologics and reconstructive surgery), Neurosurgery (including neurotrauma) and instruments (general surgery). During the first quarter of 2011, the company witnessed balanced sales growth across its segments – Orthopedic ($72.2 million, up 3% year over year), Neurosurgery ($68.4 million, up 6%) and Instruments ($40.4 million, up 7%).
Moreover, the company exited the quarter with $104.3 million in cash and cash equivalents compared to $128.7 million at the end of December 2010. Also it generated $21.3 million of cash flow and used up $5.9 million as capital expenditures in the quarter.
Apart from strategic acquisitions, the company has also taken several other initiatives to boost its sales. Presently Integra is splurging all resources to support the new product development and sales distribution. During the quarter, the company reported a 7.5% rise in research and development cost and a 10.4% hike in selling, general and administrative expenses.
However, tighter capital spending continues to challenge the surgical instruments market. Moreover, Integra faces direct competition in the medical instruments & supplies industry from major players like Medtronic (MDT) and Stryker Corp. (SYK).
INTEGRA LIFESCI (IART): Free Stock Analysis Report
MEDTRONIC (MDT): Free Stock Analysis Report
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