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Orthopedic and Dental Industry News Complete Archive »

Merit Medical to Acquire DFINE for $98M BY ANDREW VAHRADIAN, JULY 18, 2016

Merit Medical Systems entered into an agreement to acquire DFINE, Inc., a California-based developer of minimally invasive implant systems to treat pathologies of the vertebrae, metastatic spinal tumors, and vertebral compression fractures (VCFs). The transaction price was approximately $97.5 million, which values DFINE at 2.9x 2015 revenues of $33.4 million.

Under the terms of the all-cash transaction, DFINE will become a wholly-owned subsidiary of Merit. Wells Fargo, Bank of America, HSBC and U.S. Bank all provided financing to the deal.

DFINE offers a portfolio of products directed to vertebral augmentation (kyphoplasty and vertebralplasty) systems for percutaneous delivery of bone cement and the treatment of pathological fracture, as well as targeted radiofrequency (RF) ablation of metastatic spinal tumors. The company's flagship product is its STAR device, a tumor ablation kit for palliative treatment in spinal procedures by ablation of metastatic malignant lesions in a vertebral body. Three-quarters of DFINE's revenues were generated in the United States, and the remaining one-fourth came from international operations.

With this transaction, Merit plans to create an interventional oncology and spine division (IOS) and merge it with its oncology segments, including embolics, microcatheters and biopsy products. The deal provides Merit with assets that will enhance its oncology business and the restructuring will enable the company to align sales and marketing efforts, improve growth opportunities and focus on offering a more therapeutic and disease state centered product line.

Merit anticipates the transaction to be neutral to its earnings per share (EPS) on a non-GAAP basis and dilutive by $0.24-$0.26 on a GAAP basis for 2016. The company further expects the deal to increase its gross margin by approximately 0.8% (80 basis points) on a non-GAAP basis and 0.6% (55 basis points) on a GAAP basis.

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