Stryker buys surgical lighting company for $190M

Dive Brief:

Orthopaedics giant Stryker announced a definitive agreement to acquire Invuity, an advanced photonics and surgical lighting company, for $7.40 per share of common stock or approximately $190 million overall. This is the second acquisition for Stryker since late last month when it bought out spine device maker K2M for roughly $1.4 billion, or $27.50 a share.
San Francisco, California-based Invuity manufactures single-use illuminating devices with a wide range of clinical uses including orthopaedic and spine surgery, general surgery and women’s health procedures. The company, which has just recently entered the enhanced energy market, sells technology integrated into retractor systems, handheld devices and intracavity drop-in illuminators to provide broad and thermally neutral visualization inside a variety of surgical cavities.
The transaction is expected to close in the fourth quarter of 2018 and is not expected to have any material impact on yearly net earnings for either company.

Dive Insight:

The company has been executing an unrelenting M&A program for a while now, a policy that vice president of strategy Katherine Owen termed a “proven offense that helped accelerate [Stryker’s] organic sales growth” when it released recent financial results.

In its Q2 earnings call in late July, Stryker told analysts it will continue to stick with its strategy of targeting small and medium-size companies for acquisitions, with money to burn as earnings exceeded the company’s own projections for the quarter led by its neurotechnology sector.

Earlier this year, the Kalamazoo, Michigan-based company finalized the purchase of Entellus Medical, a maker of minimally invasive ear, nose and throat treatments. In June, it announced an agreement to acquire SafeAir AG, a Swiss company developing surgical smoke evacuation solutions.

Invuityls portfolio is "highly complementary" to the surgical portfolio of Stryker’s instruments business, according to the press release.

Now that Stryker has effectively quashed rumors that it’s merging with interventional device maker Boston Scientific, and is coming off a strong second quarter wherein net sales increased by 10.3% to $3.3 billion, it called the Invuity buy a logical next step.

"Invuity’s innovative products in the single-use lighted instrumentation and enhanced energy markets provide best in class illumination and help make surgery safer," said Spencer Stiles, Stryker group president of neurotechnology, instruments and spine in a statement.

Invuity’s interim CEO Scott Flora reiterated the cheer, stressing that the marriage of "Stryker’s established leadership in minimal access surgery" with "Invuity's suite of enabling visualization and surgical devices" will create better patient outcomes across the board.

Invuity also saw a solid second quarter, reporting early August that revenue grew 7.5% to $10.5 million. For 2018, the company expects revenue to exceed $46 million overall, not counting the cash influx when the deal closes (purportedly in Q4 2018). The price Invuity is reaping — $7.40 per share — is a 28.7% premium over yesterday’s closing price for the medical device company ($5.75). News of its acquisition sent Invuity’s stock up 27.8% to $7.35 this morning in premarket trading.