Dive Brief:
- Integer Holdings Corporation bought Pulse Technologies for $140 million to grow its medical device contract manufacturing capabilities.
- Pulse specializes in the micro machining of components for medical devices used in markets such as structural heart, heart pump and electrophysiology. The company has estimated full-year sales for 2023 of $42 million.
- Integer, which reported preliminary full-year sales of about $1.6 billion in 2023, believes Pulse’s growth can accelerate as part of a larger organization. The deal is offset by an expected $15 million tax benefit over 15 years and includes additional considerations based on revenue growth targets through 2025, according to the announcement.
Dive Insight:
Integer has between $250 million and $300 million acquisition capacity a year, CEO Joseph Dziedzic told attendees at a J.P. Morgan Healthcare Conference presentation last week in San Francisco. The company has closed four acquisitions over the past 25 months — Oscor, Aran Biomedical, InNeuroCo and Pulse — to grow in areas where it is targeting investment, such as neuromodulation.
Buying Pulse gives Integer control of technologies for improving electrode performance and preventing scratches on the surfaces of medical devices such as heart pumps. Pulse, which employs about 250 people in Pennsylvania, uses its technology and contract manufacturing capacity to support companies in a range of cardiovascular markets, as well as neuromodulation players that target indications including pain.
Dziedzic said during the investor presentation that Integer targets tuck-in acquisitions with differentiated capabilities that serve high-growth markets. The targets often perform development work for companies but “can't scale to high volume” and “customers won't trust them with critical programs, scaling them,” Dziedzic said. Integer sees its acquisition of Pulse as clearing that scale-based barrier to growth.
“We expect that to open up even more capabilities for them because, again, as a $42 million company, there was only so much concentration some of our customers were willing to put with a company that size. With Integer's backing now, lots of confidence in their ability now to scale, and we will be helping them accelerate their growth,” Dziedzic said.
Integer also has “a significant pipeline of precision micro machining business” that it can funnel into the acquired Pulse capacity, Dziedzic said. Growing Pulse’s revenue will add to the approximately $170 million in annualized sales that Integer has added through its four recent acquisitions.
