Recently, Merit Medical announced that it has agreed to acquire Cook Medical's lead management business for $210 million (approximately RMB 1.5 billion).

Merit expects to provide funding for the transaction through a combination of cash on hand and borrowing under its long-term credit line. The proposed transaction is expected to be completed in the fourth quarter of 2024, subject to obtaining or waiving (in accordance with the provisions of the asset purchase agreement) approval for certain closing conditions, including antitrust laws and other customary closing conditions.

It is understood that Cook Medical's lead management business has a 34 year operating history, providing a comprehensive end-to-end medical device and accessory product portfolio for patients who need to remove or replace pacemaker or implantable cardioverter defibrillator (ICD) leads for lead management procedures.

01. Breaking through industry difficulties
Cook Medical's lead management business provides medical equipment and accessories for potential customer management programs. These surgeries occur in patients who require the removal or replacement of pacemakers or implantable cardioverter defibrillator (ICD) leads.

Merit Medical stated that Cook Medical generated approximately $37 million in revenue during the 12-month period ending December 31, 2023. The company expects to contribute revenue of $4 million to $6 million from the expected closing date of October 31, 2024 to December 31, 2024. During the same period, it expects non GAAP operating profit margin, non GAAP net income, and non GAAP earnings per share to be diluted.

If the acquisition is completed, the company expects to have a diluted impact on GAAP net income and earnings per share in the first full year after the transaction is completed, and expects to have a neutral impact and additional impact in the second year.

Merit, headquartered in South Jordan, Utah, is expected to provide funding for the transaction through a combination of cash on hand and borrowing under long-term credit lines. It is expected to complete the transaction in the fourth quarter of this year.

Merit Chairman and CEO Fred P. Lampropoulos stated that the transaction will strengthen the company's electrophysiology and cardiac rhythm management businesses.

We believe that the financial situation of this acquisition is very attractive and in line with our goals of achieving sustainable and constant monetary growth, improving profitability, and generating strong free cash flow. We look forward to discussing this acquisition and our latest outlook for 2024 in the third quarter earnings report on October 30, 2024, "said Lampropoulos.

Fred P. Lampropoulos believes that this transaction will enhance its position in the cardiac intervention market and estimates that the potential opportunities for this market in the United States, Europe, Middle East and Africa (EMEA), and Asia Pacific region exceed $900 million annually. Specifically, starting from fiscal year 2025, Cook's leadership management business will increase Merit's annualized electrophysiology and rhythm management revenue to over $100 million, serving the global cardiac intervention market.

02. Cook Medical sold its reproductive health business
Cook Medical is a medical device company from Indiana, USA, founded by Mr. Bill Cook and his wife in 1963. At present, Cook Medical's business covers 135 countries and regions worldwide, with products mainly including vascular intervention and medical surgery products, covering multiple fields such as intensive care, endoscopy, otolaryngology/head and neck surgery, reproductive health, surgical procedures, urology, etc. The production bases are mainly located in the United States, Europe, and Australia. We have 6 major logistics distribution centers and multiple local warehousing and distribution centers worldwide, as well as over 10000 employees.
In the field of reproductive health, Cook Medical has been deeply involved for over 40 years, successfully developing products for obstetrics and gynecology, in vitro fertilization (IVF), and assisted reproductive technology (ART). This includes the development of the world's first needle specifically designed for in vitro fertilization (IVF) treatment, which is used to insert IVF embryos into the uterine cavity. And Microvol ™ Technology also reduces the amount of dielectric required for transmission. In addition, Bakri postpartum airbags and rapid infusion components are used to provide temporary control or reduce postpartum uterine bleeding when conservative treatment is required.

In addition, in the past few years, Cook Medical's customers, supply chain, and work methods have undergone significant changes. In order to ensure success in the new stage of development, a new five-year vision and strategic plan has been implemented by its global leadership team, which has taken into account extensive feedback from customers, employees, and leadership teams.

Public information shows that in order to implement its "five-year vision and strategic plan", Cook Medical has taken several major measures in recent years, including selling businesses, layoffs, etc.

03. Global leader in interventional radiology and cardiac therapy
Merit Medical was founded in 1987 and specializes in the development, manufacturing, and distribution of proprietary disposable medical devices for interventional, diagnostic, and therapeutic procedures, particularly in cardiology, radiology, oncology, intensive care, and endoscopy. Merit provides services to client hospitals around the world, with a total of over 700 domestic and international sales and clinical support teams, and approximately 7000 employees worldwide.

It is worth mentioning that Merit has become a global leader in interventional radiology and heart disease treatment. After more than 30 years of continuous development and innovation, the company has repeatedly entered the "Top 100 Global Medical Devices" list.

In June of this year, Merit Medical also partnered with Medtronic to provide them with a single, manipulable balloon catheter called Kyphon KyphoFlex for the treatment of minimally invasive vertebral compression fractures (VCF).

It is understood that Kyphon KyphoFlex is a manipulable curved catheter used to treat pathological vertebral fractures caused by osteoporosis, cancer, or benign lesions.

According to the agreement between both parties, Medtronic will be fully responsible for the sales, marketing, and distribution of the product, while Raytheon will be responsible for the manufacturing of the catheter, including quality and safety control, regulatory affairs, and lifecycle management. This collaboration further deepens the existing partnership between the two companies. Previously, Ruimaitong had supplied Medtronic with Kyphon Xpander inflatable syringes for balloon kyphoplasty of vertebral bodies.

It is reported that balloon kyphoplasty (BKP) is a percutaneous treatment method for tumor associated vertebral compression fractures. Intended to use orthopedic balloons to restore vertebral height and correct vertebral compression fractures caused by osteoporosis, cancer, or benign conditions.

The surgery involves introducing a small balloon into the vertebral body through a sleeve and inflating it to elevate the collapsed vertebrae. Subsequently, the balloon is deflated and removed, creating a controlled cavity that can be filled with bone cement to help form an internal scaffold and stabilize the fracture.

Merit Medical's Kyphon KyphoFlex catheter is capable of creating precise and controlled target cavities during vertebral augmentation surgery. The curved design of this catheter allows for more flexible trajectory adjustment within the vertebral body, achieving more ideal target positioning and supplementing Medtronic's existing bilateral balloon kyphoplasty products.

Currently, the market for interventional cardiology and peripheral vascular devices is growing strongly, with forecasts indicating significant expansion, expected to reach a staggering $41.9003 billion by 2030. This means that the compound annual growth rate (CAGR) from 2021 to 2030 will reach 8.5%.

These numbers highlight the growing demand and importance of cardiovascular and peripheral vascular equipment in the healthcare industry. With the continuous emergence of technological advancements and medical innovations, the growth trajectory of the market is expected to continue, benefiting patients worldwide.

Merit Medical, as a leading manufacturer of proprietary medical equipment for interventional, diagnostic, and therapeutic surgeries, holds a pivotal position in the fields of cardiology, radiology, oncology, intensive care, and endoscopy.

Source: http://qixieke.com/Font/index/detailPage.html?id=3195-142