Dive Brief:
- Boston Scientific reached an agreement to acquire neuromodulation company Relievant Medsystems for $850 million upfront, the companies announced on Tuesday.
- Sunnyvale, California-based Relievant makes a nerve ablation system to treat chronic low back pain.
- The acquisition should drive growth in Boston Scientific’s neuromodulation business and complement its existing technologies, BTIG analyst Marie Thibault wrote in a research note on Tuesday.
Dive Insight:
Relievant says its Intracept system is the only device cleared by the Food and Drug Administration to treat vertebrogenic pain, a type of back pain caused by damage to vertebral endplates. It works by using targeted radiofrequency energy to stop the basivertebral nerve from transmitting pain.
An estimated 5.3 million people in the U.S. have vertebrogenic pain, the companies said.
Relievant’s Intracept system has been used to treat more than 10,000 patients to date, and is covered by Medicare and commercial insurance plans, Thibault wrote.
In addition to paying $850 million upfront, Boston Scientific plans to make additional undisclosed contingent payments based on sales performance over the next three years. The companies expect the acquisition to close in the first half of 2024, subject to customary closing conditions.
Relievant is expected to bring in more than $70 million in sales this year, and deliver year-over-year growth of more than 50% next year, the companies said.
RBC Capital Markets analyst Shagun Singh wrote that the deal consideration implies 12 times Relievant’s 2023 expected sales, “which is high, but reflective of Relievant's high growth profile in our view.”
The acquisition could bring growth to Boston Scientific’s neuromodulation business, which has stalled in the low-single digits in recent quarters, Thibault said.
Boston Scientific expects the acquisition to be slightly accretive to its adjusted earnings in 2025, and increasingly thereafter. Without the adjustments, the purchase is expected to be dilutive due to acquisition-related charges and amortization expense.
