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  1. Deals Analysis
March 8, 2021

Boston Scientific returning to form with second major 2021 acquisition

Boston Scientific has bought Israeli medtech Lumenis’s surgical portfolio in a £1.07bn cash deal, its second major acquisition of 2021. After a rough 2020, Boston Scientific is looking to set itself up for the year ahead.

By Chloe Kent

Boston Scientific entered into a definitive agreement last week to acquire the global surgical business of Lumenis for $1.07bn in an upfront cash deal, while Baring Private Equity Asia (BPEA) will retain ownership of the company’s global aesthetics and ophthalmology businesses.

Boston Scientific has a long-standing relationship with Lumenis and already sells the Lumenis urology laser portfolio in the US and Japan. Upon completion of the acquisition, Boston Scientific will sell these lasers and fibres, as well as Lumenis’s otolaryngology laser portfolio, in all regions, and will add Lumenis’s surgical employees and its surgical laser centre of excellence to its portfolio. The transaction is expected to complete in the second half of the year.

Lumenis’ surgical business centres around urology and otolaryngology. Foundational to its urology portfolio is its MOSES laser, a minimally invasive treatment for kidney stones which has demonstrated differentiated clinical outcomes and efficacy.

In a statement, Boston Scientific president of urology and pelvic health Meghan Scanlon said: “The MOSES laser technology, paired with our LithoVue Single-Use Digital Flexible Ureteroscope and comprehensive kidney stone management portfolio, will enable execution of our strategy for our stone franchise.

“The acquisition will expand our global footprint throughout Europe and Asia and accelerate the delivery of our robust stone management offerings to more urologists — ultimately serving more patients worldwide — while also improving our top-line growth and margins.”

Lumenis is set to grow at a healthy rate post-pandemic

Boston Scientific’s urology business struggled in 2020, as the pandemic took a company-wide toll. Sales from its urology and pelvic health segment declined by 9% last year to $1.3bn. The firm expects Lumenis’s laser portfolio to grow between 10% and 12% post-pandemic, giving its urology business a much-needed overall boost.

Lumenis’s laser portfolio posted a double-digit compound annual growth rate (CAGR) between 2015 and 2019. It netted $197m in sales in 2019, declining to $165m in 2020 as a result of the Covid-19 pandemic. This year, the surgical business is expected to bring in $200m in sales.

The impact to adjusted earnings per share is expected to be immaterial in 2021, approximately two cents accretive in 2022 and increasingly accretive thereafter. On a generally accepted accounting principles (GAAP) basis, the transaction is expected to be dilutive in 2021 and less dilutive or increasingly accretive thereafter.

Boston Scientific’s 2021 acquisitions signal a return to form

This is Boston Scientific’s second major acquisition of the year, after its agreement to purchase cardiac monitoring company Preventice Solutions in January for $925m. The acquisition is expected to complete by mid-2021. Alongside the upfront cash payment, the deal includes a potential milestone payment of $300m.

Boston Scientific has invested in Preventice since 2015 and holds a 22% stake in the business. The full acquisition is expected translate to a net payment of approximately $720m upon closing and a milestone payment of up to around $230mn.

The Preventice portfolio centres around remote cardiac monitoring for adult and paediatric patients. The monitors use a fully-integrated, cloud-based platform supported by an independent diagnostic testing facility. Clinical technicians and artificial intelligence (AI) work together to use this platform to provide insights that could help improve a patient’s diagnoses and outcomes.

In a statement, Boston Scientific rhythm management senior vice president and president of rhythm management Scott Olson said: “This acquisition will provide Boston Scientific with a foothold in the high-growth ambulatory electrocardiography space, which strongly complements our recent entrance into the implantable cardiac monitor market and will serve as an important component of our category leadership strategy in cardiac diagnostics and services – a nearly $2bn market anticipated to grow double digits annually.”

After a difficult 2020, Boston Scientific has made two major deals with companies with which it already has a historic relationship. Almost the entire medtech industry has floundered as a result Covid-19, and the crisis isn’t over yet, but Boston Scientific appears to have an optimistic outlook for the year ahead.

Related Companies

Verdict deals analysis methodology

This analysis considers only announced and completed deals from the GlobalData financial deals database and excludes all terminated and rumoured deals. Country and industry are defined according to the headquarters and dominant industry of the target firm. The term ‘acquisition’ refers to both completed deals and those in the bidding stage.

GlobalData tracks real-time data concerning all merger and acquisition, private equity/venture capital and asset transaction activity around the world from thousands of company websites and other reliable sources.

More in-depth reports and analysis on all reported deals are available for subscribers to GlobalData’s deals database.

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